Vroom, Inc. 10-K

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes appearing elsewhere in this Annual Report on Form 10-K. As discussed in the section titled "Special Note Regarding Forward-Looking Statements," the following discussion and analysis contains forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements. Factors that could cause or contribute to these differences include, but are not limited to, those identified below and those incorporated by reference into the section titled "Risk Factors" in Part I Item 1A of this Annual Report on Form 10-K. Additionally, our historical results are not necessarily indicative of the results that may be expected for any period in the future. 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 56 Table of Contents 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 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 57 Table of Contents impacted, resulting in a reduction of approximately 93% of the employees not engaged in UACC’s or CarStory’s ongoing operations. Overview 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 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 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. 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. CarStory CarStory offers AI-powered analytics and digital services to dealers, automotive financial services companies and others in the automotive industry, which use CarStory’s solutions to enhance their customer experience and drive increased vehicle purchases. Leveraging computer vision and AI, CarStory has curated a comprehensive used vehicle information database, including over 245 million vehicle identification numbers ("VINs"), 183 million window stickers, 3.9 billion vehicle photos and 370 million sales cycles, along with price and price elasticity models. CarStory receives data for over three and a half million unique VINs listed for sale every day, resulting in CarStory having data for an estimated 90% of U.S. consumer vehicles. This data is aggregated with demand insights from millions of consumer sessions and data from CarStory’s proprietary VIN database to generate more accurate vehicle valuations . CarStory helps dealers optimize their pricing by leveraging data science models for retail pricing that provide predictive pricing for marketing, buying, selling and VIN-level features. Unlike simple averages, we believe CarStory’s patented neural-net algorithm can provide a highly accurate market price (the “CarStory Real Market Price”) for vehicle 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 58 Table of Contents objectives: 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 In addition to our results determined in accordance with U.S. GAAP, we believe the following non-GAAP financial measures are useful in evaluating our operating performance: 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. GAAP. Because of these limitations, these non-GAAP financial measures should be considered along with other operating and financial performance measures presented in accordance with U.S. GAAP. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with U.S. GAAP. We have reconciled all non-GAAP financial measures with the most directly comparable U.S. GAAP financial measures. 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. 59 Table of Contents 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: Year Ended December 31, 2024 2023 (in thousands) Net loss from continuing operations $ (138,240 ) $ (85,097 ) Adjusted to exclude the following: Interest expense on corporate debt 5,826 5,976 Interest income on cash and cash equivalents (3,940 ) (7,940 ) Provision for income taxes 856 642 Depreciation and amortization 29,086 29,113 EBITDA $ (106,412 ) $ (57,306 ) Stock compensation expense 5,949 6,893 Severance 2,735 — Bankruptcy costs (prepetition filing) 3,582 — Reorganization items, net 5,564 — Gain on debt extinguishment — (37,878 ) Impairment charges 5,159 — Adjusted EBITDA $ (83,423 ) $ (88,291 ) 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: 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. 60 Table of Contents 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. Seasonality Used vehicle sales have historically been seasonal. The used vehicle industry typically experiences an increase in sales early in the calendar year and reaches its highest point late in the first quarter and early in the second quarter. Vehicle sales then level off through the rest of the year, with the lowest level of sales in the fourth quarter. This seasonality has historically corresponded with the timing of income tax refunds, which are an important source of funding for vehicle purchases. 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 this Annual Report. 61 Table of Contents Macroeconomic Factors 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 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. 62 Table of Contents The following table presents our consolidated results of operations for the periods indicated: Year Ended December 31, 2024 2023 $ Change Interest income $ 201,833 $ 178,482 $ 23,351 Interest expense: Warehouse credit facility 29,276 19,914 9,362 Securitization debt 30,084 21,979 8,105 Total interest expense 59,360 41,893 17,467 Net interest income 142,473 136,589 5,884 Realized and unrealized losses, net of recoveries 119,868 122,541 (2,673 ) Net interest income after losses and recoveries 22,605 14,048 8,557 Noninterest income: Servicing income 6,501 10,041 (3,540 ) Warranties and GAP income (loss), net (2,610 ) 5,713 (8,323 ) CarStory revenue 11,610 12,384 (774 ) Gain on debt extinguishment — 37,878 (37,878 ) Other income 10,850 9,110 1,740 Total noninterest income 26,351 75,126 (48,775 ) Expenses: Compensation and benefits 97,293 86,700 10,593 Professional fees 12,035 14,552 (2,517 ) Software and IT costs 15,083 19,601 (4,518 ) Depreciation and amortization 29,086 29,113 (27 ) Interest expense on corporate debt 5,826 5,976 (150 ) Impairment charges 5,159 — 5,159 Other expenses 16,294 17,687 (1,393 ) Total expenses 180,776 173,629 7,147 Loss from continuing operations before reorganization items and provision for income taxes (131,820 ) (84,455 ) (47,365 ) Reorganization items, net 5,564 — 5,564 Loss from continuing operations before provision for income taxes (137,384 ) (84,455 ) (52,929 ) Provision for income taxes from continuing operations 856 642 214 Net loss from continuing operations $ (138,240 ) $ (85,097 ) $ (53,143 ) Net loss from discontinued operations $ (26,884 ) $ (279,514 ) $ 252,630 Net loss $ (165,124 ) $ (364,611 ) $ 199,487 Segments • UACC : 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. • CarStory : 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. 63 Table of Contents Year Ended December 31, 2024 and 2023 UACC Year Ended December 31, 2024 2023 Change % Change (in thousands) Interest income $ 203,962 $ 180,970 $ 22,992 12.7 % Interest expense: Warehouse credit facility 29,276 19,914 9,362 47.0 % Securitization debt 30,084 21,979 8,105 36.9 % Total interest expense 59,360 41,893 17,467 41.7 % Net interest income 144,602 139,077 5,525 4.0 % Realized and unrealized losses, net of recoveries 98,629 92,372 6,257 6.8 % Net interest income after losses and recoveries 45,973 46,705 (732 ) (1.6 )% Noninterest income: Servicing income 6,501 10,041 (3,540 ) (35.3 )% Warranties and GAP income, net 7,789 7,871 (82 ) (1.0 )% Other income 8,334 3,209 5,125 159.7 % Total noninterest income 22,624 21,121 1,503 7.1 % Expenses: Compensation and benefits 76,374 67,807 8,567 12.6 % Professional fees 3,506 5,395 (1,889 ) (35.0 )% Software and IT costs 10,397 10,116 281 2.8 % Depreciation and amortization 22,683 22,685 (2 ) (0.0 )% Interest expense on corporate debt 2,396 1,680 716 42.6 % Impairment charges 5,159 — 5,159 100.0 % Other expenses 9,457 7,809 1,648 21.1 % Total expenses 129,972 115,492 14,480 12.5 % Adjusted EBITDA $ (29,808 ) $ (23,185 ) $ (6,623 ) 28.6 % Interest income on cash and cash equivalents $ (2,173 ) $ (2,044 ) (129 ) 6.3 % Stock compensation expense $ 2,702 $ 2,160 542 25.1 % Severance $ 800 $ — 800 100.0 % 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 64 Table of Contents 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 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 65 Table of Contents 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 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. 66 Table of Contents CarStory Year Ended December 31, 2024 2023 Change % Change (in thousands) Noninterest income: CarStory revenue $ 11,610 $ 12,384 $ (774 ) (6.3 )% Other income 692 444 248 55.9 % Total noninterest income 12,302 12,828 (526 ) (4.1 )% Expenses: Compensation and benefits 10,293 8,953 1,340 15.0 % Professional fees 152 341 (189 ) (55.4 )% Software and IT costs 215 197 18 9.2 % Depreciation and amortization 6,403 6,428 (25 ) (0.4 )% Other expenses 414 584 (170 ) (29.1 )% Total expenses 17,477 16,503 974 5.9 % Adjusted EBITDA $ 912 $ 3,399 $ (2,487 ) (73.2 )% Interest income on cash and cash equivalents $ (691 ) $ (437 ) (254 ) 58.1 % Stock compensation expense $ 375 $ 1,083 (708 ) (65.3 )% 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. 67 Table of Contents Corporate Year Ended December 31, 2024 2023 Change % Change (in thousands) Interest income $ (2,129 ) $ (2,488 ) $ 359 14.4 % Realized and unrealized losses, net of recoveries 21,239 30,169 (8,930 ) (29.6 )% Net interest income after losses and recoveries (23,368 ) (32,657 ) 9,289 28.4 % Noninterest (loss) income: Warranties and GAP loss, net (10,399 ) (2,158 ) $ (8,241 ) 382.0 % Gain on debt extinguishment — 37,878 (37,878 ) (100.0 )% Other income 1,824 5,457 (3,633 ) (66.6 )% Total noninterest (loss) income (8,575 ) 41,177 (49,752 ) (120.8 )% Expenses: Compensation and benefits 10,626 9,940 686 6.9 % Professional fees 8,377 8,816 (439 ) (5.0 )% Software and IT costs 4,471 9,288 (4,817 ) (51.9 )% Interest expense on corporate debt 3,430 4,296 (866 ) (20.2 )% Other expenses 6,422 9,295 (2,873 ) (30.9 )% Total expenses 33,326 41,635 (8,309 ) (20.0 )% Corporate activities 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 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. 68 Table of Contents Other income 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. Vroom, Inc. 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 $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. 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. 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 69 Table of Contents 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. 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. 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. 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. 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. 70 Table of Contents UACC Risk Retention Financing Facility 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. 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 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 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. 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. Refer to Note 10 — Warehouse Credit Facilities of Consolidated VIEs to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K, for further discussion. Operating Leases 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. 71 Table of Contents Cash Flows from Operating, Investing, and Financing Activities The following table summarizes our cash flows for the years ended December 31, 2024 and 2023: Year Ended December 31, 2024 2023 (in thousands) Net cash used in operating activities from continuing operations $ (175,758 ) $ (482,027 ) Net cash provided by investing activities from continuing operations 114,883 185,334 Net cash (used in) provided by financing activities from continuing operations (14,810 ) 223,150 Net cash provided by (used in) operating activities from discontinued operations 78,721 (51,657 ) Net cash provided by (used in) investing activities from discontinued operations 17,692 (12,181 ) Net cash used in financing activities from discontinued operations (151,178 ) (125,810 ) Net decrease in cash, cash equivalents and restricted cash (130,450 ) (263,191 ) Cash and cash equivalents and restricted cash at beginning of period 208,819 472,010 Cash and cash equivalents and restricted cash at end of period $ 78,369 $ 208,819 Operating Activities 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 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 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 Our consolidated financial statements are prepared in accordance with GAAP. 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 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. Actual results may differ from these estimates. 72 Table of Contents 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 Refer to “Note 2—Summary of Significant Accounting Policies” to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for a discussion about new accounting pronouncements adopted and not yet adopted as of the date of this report. Item 7A. Quantita tive and Qualitative Disclosure About Market Risk We are a smaller reporting company as defined in Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this Item 7A. 73 Table of Contents Item 8. Financial Stateme nts and Supplementary Data INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting Firm PCAOB ID 49 75 Report of Independent Registered Public Accounting Firm PCAOB ID 238 77 Consolidated Balance Sheets as of December 31, 2024 and 2023 78 Consolidated Statements of Operations for the Years Ended December 31, 2024 and 2023 79 Consolidated Statements of Changes in Stockholders' Equity for the Years Ended December 31, 2024 and 2023 80 Consolidated Statements of Cash Flows for the Years Ended December 31, 2024 and 2023 81 Notes to Consolidated Financial Statements 83 74 Table of Contents 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. 75 Table of Contents 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 76 Table of Contents Report of Independent Registered Public Accounting Firm To the Board of Directors and Stockholders of Vroom, Inc. 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. 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 the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. 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 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 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, 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. 77 Table of Contents VROOM, INC. (DEBTOR-IN-POSSESSION) CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share amounts) As of December 31, 2024 2023 ASSETS Cash and cash equivalents $ 29,343 $ 135,585 Restricted cash (including restricted cash of consolidated VIEs of $ 48.1 million and $ 49.1 million, respectively) 49,026 73,234 Finance receivables at fair value (including finance receivables of consolidated VIEs of $ 467.3 million and $ 341.4 million, respectively) 503,848 348,670 Finance receivables held for sale, net (including finance receivables of consolidated VIEs of $ 310.0 million and $ 457.2 million, respectively) 318,192 503,546 Interest receivable (including interest receivables of consolidated VIEs of $ 13.3 million and $ 13.7 million, respectively) 14,067 14,484 Property and equipment, net 4,064 4,982 Intangible assets, net 104,869 131,892 Operating lease right-of-use assets 6,872 7,063 Other assets (including other assets of consolidated VIEs of $ 10.8 million and $ 13.3 million, respectively) 35,472 59,429 Assets from discontinued operations 943 196,537 Total assets $ 1,066,696 $ 1,475,422 LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY Warehouse credit facilities of consolidated VIEs $ 359,912 $ 421,268 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) 381,366 626,583 Operating lease liabilities 11,065 10,459 Other liabilities (including other liabilities of consolidated VIEs of $ 13.8 million and $ 14.3 million, respectively) 49,699 61,321 Liabilities subject to compromise (Note 6) 291,577 — Liabilities from discontinued operations 4,022 228,120 Total liabilities 1,097,641 1,347,751 Commitments and contingencies (Note 13) Stockholders’ (deficit) equity: Common stock, $ 0.001 par value; 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 2 2 Additional paid-in-capital 2,094,889 2,088,381 Accumulated deficit ( 2,125,836 ) ( 1,960,712 ) Total stockholders’ (deficit) equity ( 30,945 ) 127,671 Total liabilities and stockholders’ (deficit) equity $ 1,066,696 $ 1,475,422 See accompanying notes to these consolidated financial statements . 78 Table of Contents VROOM, INC. (DEBTOR-IN-POSSESSION) CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except share and per share amounts) Year Ended December 31, 2024 2023 Interest income $ 201,833 $ 178,482 Interest expense: Warehouse credit facility 29,276 19,914 Securitization debt 30,084 21,979 Total interest expense 59,360 41,893 Net interest income 142,473 136,589 Realized and unrealized losses, net of recoveries 119,868 122,541 Net interest income after losses and recoveries 22,605 14,048 Noninterest income: Servicing income 6,501 10,041 Warranties and GAP income (loss), net ( 2,610 ) 5,713 CarStory revenue 11,610 12,384 Gain on debt extinguishment — 37,878 Other income 10,850 9,110 Total noninterest income 26,351 75,126 Expenses: Compensation and benefits 97,293 86,700 Professional fees 12,035 14,552 Software and IT costs 15,083 19,601 Depreciation and amortization 29,086 29,113 Interest expense on corporate debt 5,826 5,976 Impairment charges 5,159 — Other expenses 16,294 17,687 Total expenses 180,776 173,629 Loss from continuing operations before reorganization items and provision for income taxes ( 131,820 ) ( 84,455 ) Reorganization items, net 5,564 — Loss from continuing operations before provision for income taxes ( 137,384 ) ( 84,455 ) Provision for income taxes from continuing operations 856 642 Net loss from continuing operations $ ( 138,240 ) $ ( 85,097 ) Net loss from discontinued operations $ ( 26,884 ) ( 279,514 ) Net loss $ ( 165,124 ) $ ( 364,611 ) Net loss per share attributable to common stockholders, continuing operations, basic and diluted $ ( 76.24 ) $ ( 48.82 ) Net loss per share attributable to common stockholders, discontinued operations, basic and diluted $ ( 14.83 ) $ ( 160.35 ) Total net loss per share attributable to common stockholders, basic and diluted $ ( 91.07 ) $ ( 209.17 ) Weighted-average number of shares outstanding used to compute net loss per share attributable to common stockholders, basic and diluted 1,813,168 1,743,128 See accompanying notes to these consolidated financial statements. 79 Table of Contents VRO OM, INC. (DEBTOR-IN-POSSESSION) CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (in thousands, except share amounts) Common Stock Additional Paid-in Accumulated Total Stockholders’ Shares Amount Capital Deficit Equity (Deficit) Balance at December 31, 2022 1,727,525 $ 2 $ 2,075,931 $ ( 1,596,101 ) $ 479,832 Stock-based compensation — $ — $ 10,051 $ — $ 10,051 Vesting of restricted stock units 20,278 — — — — Issuance of common stock related to at-the-market offering, net of offering costs 43,483 — 2,399 — 2,399 Net loss — — — ( 364,611 ) ( 364,611 ) Balance at December 31, 2023 1,791,286 $ 2 $ 2,088,381 $ ( 1,960,712 ) $ 127,671 Stock-based compensation — $ — $ 6,508 $ — $ 6,508 Vesting of restricted stock units 31,246 — — — — Net loss — — — ( 165,124 ) ( 165,124 ) Balance at December 31, 2024 1,822,532 $ 2 $ 2,094,889 $ ( 2,125,836 ) $ ( 30,945 ) See accompanying notes to these consolidated financial statements . 80 Table of Contents VROOM, INC. (DEBTOR-IN-POSSESSION) CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Year Ended December 31, 2024 2023 Operating activities Net loss from continuing operations $ ( 138,240 ) $ ( 85,097 ) Adjustments to reconcile net loss to net cash used in operating activities: Impairment charges 5,159 — Profit share receivable 11,643 — Gain on debt extinguishment — ( 37,878 ) Depreciation and amortization 29,086 29,113 Amortization of debt issuance costs 4,270 3,348 Losses on finance receivables and securitization debt, net 129,601 100,226 Losses on Warranties and GAP 8,020 7,110 Stock-based compensation expense 5,885 6,893 Provision to record finance receivables held for sale at lower of cost or fair value ( 4,618 ) 20,566 Amortization of unearned discounts on finance receivables at fair value ( 15,924 ) ( 25,954 ) Reorganization items 2,438 — Other, net ( 4,595 ) ( 16,708 ) Changes in operating assets and liabilities: Finance receivables, held for sale Originations of finance receivables, held for sale ( 404,203 ) ( 582,170 ) Principal payments received on finance receivables, held for sale 186,799 105,858 Other 1,642 ( 1,606 ) Interest receivable 417 ( 7,241 ) Other assets 15,323 11,653 Other liabilities ( 8,461 ) ( 10,140 ) Net cash used in operating activities from continuing operations ( 175,758 ) ( 482,027 ) Net cash provided by (used in) operating activities from discontinued operations 78,721 ( 51,657 ) Net cash used in operating activities ( 97,037 ) ( 533,684 ) Investing activities Finance receivables, held for investment at fair value Purchases of finance receivables, held for investment at fair value — ( 3,392 ) Principal payments received on finance receivables, held for investment at fair value 115,937 174,748 Consolidation of VIEs — 11,409 Principal payments received on beneficial interests 2,433 5,193 Purchase of property and equipment ( 3,487 ) ( 2,624 ) Net cash provided by investing activities from continuing operations 114,883 185,334 Net cash provided by (used in) investing activities from discontinued operations 17,692 ( 12,181 ) Net cash provided by investing activities 132,575 173,153 Financing activities Proceeds from borrowings under secured financing agreements, net of issuance costs 296,046 261,991 Principal repayment under secured financing agreements ( 251,529 ) ( 208,476 ) Proceeds from financing of beneficial interests in securitizations 15,821 24,506 Principal repayments of financing of beneficial interests in securitizations ( 13,428 ) ( 8,698 ) Proceeds from warehouse credit facilities 318,600 480,100 Repayments of warehouse credit facilities ( 379,956 ) ( 290,483 ) Repurchases of convertible senior notes — ( 36,536 ) Proceeds from the issuance of common stock in at-the-market offering, net of offering costs — 2,399 Other financing activities ( 364 ) ( 1,653 ) Net cash (used in) provided by financing activities from continuing operations ( 14,810 ) 223,150 Net cash used in financing activities from discontinued operations ( 151,178 ) ( 125,810 ) Net cash (used in) provided by financing activities ( 165,988 ) 97,340 Net decrease in cash, cash equivalents and restricted cash ( 130,450 ) ( 263,191 ) Cash, cash equivalents and restricted cash at the beginning of period 208,819 472,010 Cash, cash equivalents and restricted cash at the end of period $ 78,369 $ 208,819 (Continued on following page) 81 Table of Contents VROOM, INC. (DEBTOR-IN-POSSESSION) CONSOLIDATED STATEMENTS OF CASH FLOWS (continued) (in thousands) Supplemental disclosure of cash flow information: Cash paid for interest $ 57,688 $ 40,460 Cash paid for professional fees for services rendered in connection with the Chapter 11 proceedings $ 3,009 $ — Cash paid for income taxes $ ( 1,426 ) $ 5,363 Supplemental disclosure of non-cash investing and financing activities: Finance receivables from consolidation of 2022-2 securitization transaction $ — $ 180,706 Elimination of beneficial interest from the consolidation of 2022-2 securitization transaction $ — $ 9,811 Securitization debt from consolidation of 2022-2 securitization transaction $ — $ 186,386 Reclassification of finance receivables held for sale to finance receivables at fair value, net $ — $ 248,081 See accompanying notes to these consolidated financial statements . 82 Table of Contents VROOM, INC. (DEBTOR-IN-POSSESSION) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Description of Business and Basis of Presentation Description of Business and Organization 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). On February 1, 2022 (the "Acquisition Date"), the Company completed the acquisition of Unitas Holdings Corp. (now known as Vroom Finance Corporation), including its wholly owned subsidiaries United PanAm Financial Corp. (now known as Vroom Automotive Financial Corporation) and United Auto Credit Corporation ("UACC"). The Company was incorporated in Delaware on January 31, 2012 under the name BCM Partners III, Corp. On June 25, 2013, the Company changed its name to Auto America, Inc. and on July 9, 2015, the Company changed its name to Vroom, Inc. Value Maximization Plan 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. 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 (as defined below). 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 83 Table of Contents VROOM, INC. (DEBTOR-IN-POSSESSION) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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 . 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"). 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 The consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). 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. Principles of Consolidation The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. 2. Summary of Significant Accounting Policies Use of Estimates The preparation of consolidated financial statements in accordance with U.S. 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 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. 84 Table of Contents VROOM, INC. (DEBTOR-IN-POSSESSION) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Comprehensive Loss The Company did no t have any other comprehensive income or loss for the years ended December 31, 2024, and 2023 . Accordingly, net loss and comprehensive loss are the same for the periods presented. Cash and Cash Equivalents Cash and cash equivalents include cash deposits at financial institutions and highly liquid investments with original maturities of three months or less. Outstanding checks that are in excess of the cash balances at certain financial institutions are included in “Accounts payable” in the consolidated balance sheets and changes in these amounts are reflected in operating cash flows in the consolidated statements of cash flows. Restricted Cash 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. Finance Receivables 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 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 Finance receivables that the Company intends to sell and not hold to maturity are classified as held for sale. The Company intends to sell finance receivables through securitization transactions. 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 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 "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 85 Table of Contents VROOM, INC. (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 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. 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): Year Ended December 31, 2024 2023 Interest income $ 105,786 103,034 Interest expense ( 30,263 ) ( 22,178 ) Realized and unrealized losses, net of recoveries ( 64,754 ) ( 71,062 ) Noninterest income (loss), net ( 2,103 ) ( 4,532 ) 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. Property and Equipment, Net Property and equipment are recorded at cost less accumulated depreciation and amortization. Charges for repairs and maintenance that do not improve or extend the life of the respective assets are expensed as incurred. 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. Depreciation and amortization are calculated using the straight-line method over the following estimated useful lives of the assets: Equipment 1 to 10 years Furniture and fixtures 2 to 5 years Leasehold improvements Lesser of useful life or lease term Internal-use software 1 to 10 years 86 Table of Contents VROOM, INC. (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. The Company also capitalizes payroll and payroll-related costs for employees who are directly associated with and who devote time to the development of software products for internal use, to the extent of the time spent directly on the project. Capitalization of costs begins during the application development stage and ends when the software is available for general use. Costs incurred during the preliminary project and post-implementation stages are charged to expense as incurred. Additionally, the Company capitalizes implementation costs incurred in a cloud computing arrangement that is a service contract. The capitalized implementation costs related to a cloud computing arrangement are amortized over the term of the arrangement. 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. Intangible Assets The Company's intangible assets are amortized on a straight-line basis over the following estimated weighted average useful lives: Developed technology 7 years Trademarks 9 years Customer relationships 8 years 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. Leases 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. Right-of-use ("ROU") assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. The Company assesses whether the lease is an operating or finance lease at its inception. Operating lease liabilities are recognized at commencement date based on the present value of the lease payments over the lease term. 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. 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," 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. 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. 87 Table of Contents VROOM, INC. (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. Income Taxes The Company accounts for income taxes under the asset and liability method. The Company recognizes deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis, as well as for operating loss and tax credit carry forwards. The Company measures deferred tax assets and liabilities using enacted tax rates expected to apply to taxable income in the years in which the Company expects to recover or settle those temporary differences. The Company recognizes the effect of a change in tax rates on deferred tax assets and liabilities in the results of operations in the period that includes the enactment date. The Company reduces the measurement of a deferred tax asset, if necessary, by a valuation allowance if it is more likely than not that the Company will not realize some or all of the deferred tax asset. The Company accounts for uncertain tax positions by recognizing the financial statement effects of a tax position only when, based upon technical merits, it is more likely than not that the position will be sustained upon examination. Potential interest and penalties associated with unrecognized tax positions are recognized in income tax expense. Stock-Based Compensation 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 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. If an award is not considered probable of being earned, no amount of stock-based compensation is recognized. To the extent the estimate of awards considered probable of being earned changes, the amount of stock-based compensation recognized will also change. The Company uses the Black-Scholes-Merton (“Black-Scholes”) option pricing model to determine the fair value of its stock options. Estimating the fair value of stock options requires the input of subjective assumptions, including the estimated fair value of the Company’s common stock, the expected life of the options, stock price volatility, which is determined based on the historical volatilities of several publicly listed peer companies as the Company has only a short trading history for its common stock, the risk-free interest rate and expected dividends. 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. 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 finance receivables. The Company’s cash balances are maintained at various large, reputable financial institutions. Deposits held with financial institutions may at times exceed the amount of insurance provided on such deposits. Generally, these deposits may be redeemed upon demand and, therefore, management believes they bear minimal risk. The Company’s cash equivalents primarily consist of money market funds that hold investments in highly liquid U.S. government securities. 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 88 Table of Contents VROOM, INC. (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 . Bankruptcy 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. Liquidity 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. Vroom, Inc. 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 $ 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. 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. 89 Table of Contents VROOM, INC. (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. 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 Basic and diluted net loss per share attributable to common stockholders is presented in conformity with the two-class method required for participating securities. 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 90 Table of Contents VROOM, INC. (DEBTOR-IN-POSSESSION) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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 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 October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers , which requires contract assets and contract liabilities acquired in a business combination to be recognized in accordance with Topic 606 as if the acquirer had originated the contracts. 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. 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 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): Improvements to Income Tax Disclosures , which requires disclosure of incremental income tax information within the rate reconciliation and expanded disclosures of income taxes paid, among other disclosure requirements. The guidance will be effective for fiscal years beginning after December 15, 2024, 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. 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. 3. Revenue Recognition 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. 91 Table of Contents VROOM, INC. (DEBTOR-IN-POSSESSION) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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. 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 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, 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. The Company recognizes profit-sharing revenues 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 customers, as well as other qualitative assumptions. 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." 92 Table of Contents VROOM, INC. (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. 4. Variable Interest Entities and Securitizations A VIE is an entity that either (i) has insufficient equity to finance its activities without additional subordinated financial support, or (ii) has equity investors who lack the characteristics of a controlling financial interest. The Company consolidates VIEs for which it is the primary beneficiary. The Company is the primary beneficiary of a VIE when 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. Assets recognized as a result of consolidating VIEs do not represent additional assets that could be used to satisfy claims against the Company's general assets. 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. 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. UACC generally retains a portion of the economic interests in UACC-sponsored asset-backed securitization transactions, which could be retained in the form of a portion of the senior interests, the subordinated interests, residual interests, or servicing rights. UACC has 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. 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. 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. 93 Table of Contents VROOM, INC. (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. Securitization investors have no recourse to UACC or its other assets and have no right to require UACC to repurchase the investments. 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 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. 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. UACC also retained a portion of the economic interests in the 2024-1 and 2023-1 asset-backed securitization transactions, in the form of residual interests in accordance with Regulation RR of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the "Risk Retention Rules"). The Risk Retention Rules require the Company to retain at least 5 % of the beneficial interests issued by the securitization trusts. Refer to Note 11 – Long Term Debt for further details. In July 2022, UACC sold a pool of finance receivables in the 2022-2 securitization transaction. UACC retained the servicing rights to these finance receivables and receives an "at market" servicing fee. UACC retained an insignificant amount of the asset-backed securities issued in the securitization in order to comply with risk retention rules. Originally, the Company concluded that it is not the primary beneficiary of the 2022-2 securitization trust because UACC retained interests in the VIE are insignificant. Therefore, the Company did not originally 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, which transferred more than an insignificant portion of the corresponding risk of loss from the VIE to the Company. 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, the Company concluded that it is the primary beneficiary of the VIE. In March 2023, the Company accounted for the transaction as secured borrowings and consolidated the 2022-2 securitization trust. The beneficial interest was then eliminated. The VIE model allows for a measurement alternative when a reporting entity elects the fair value option and consolidates a collateralized financing entity (“CFE”). This measurement alternative eliminates the accounting mismatch that may arise from measurement differences between the CFE’s financial assets and third-party financial liabilities in earnings and attributes those earnings to the controlling equity interest in the consolidated income statement. The 2022-2 and 2023-1 securitization trusts consolidated by UACC meet the definition of a CFE, therefore, the Company has elected to apply the measurement alternative when consolidating these VIEs. Refer to Note 16 – Financial Instruments and Fair Value Measurements for further detail. 94 Table of Contents VROOM, INC. (DEBTOR-IN-POSSESSION) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS UACC has four senior secured warehouse credit facilities. Through trusts, UACC entered into warehouse facility agreements with certain banking institutions, primarily to finance the purchase and origination of finance receivables as well as to provide funding for general operating activities. These trusts are secured by eligible finance receivables which are pledged as collateral for the warehouse facilities. These trusts are consolidated VIEs. Refer to Note 10 – Warehouse Credit Facilities of Consolidated VIEs for further details on the warehouse facilities. 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. The following table presents the total assets and total liabilities associated with the Company's variable interests in consolidated VIEs, as classified in the consolidated balance sheets (in thousands): As of December 31, 2024 Securitization Vehicles Warehouse Facilities 1 Total Assets: Restricted cash $ 29,213 $ 18,895 $ 48,108 Finance receivables at fair value 214,420 252,900 467,320 Finance receivables held for sale 178,845 131,120 309,965 Interest receivable 6,892 6,370 13,262 Other assets 6,057 4,700 10,757 Total Assets $ 435,427 $ 413,985 $ 849,412 Liabilities: Securitization debt $ 353,356 $ — $ 353,356 Warehouse credit facilities — 359,912 359,912 Other liabilities 3,597 10,244 13,841 Total Liabilities $ 356,953 $ 370,156 $ 727,109 As of December 31, 2023 Securitization Vehicles Warehouse Facilities 1 Total Assets: Restricted cash $ 28,458 $ 20,688 $ 49,146 Finance receivables at fair value 316,998 24,446 341,444 Finance receivables held for sale — 457,185 457,185 Interest receivable 6,107 7,586 13,693 Other assets 6,283 6,987 13,270 Total Assets $ 357,846 $ 516,892 $ 874,738 Liabilities: Securitization debt $ 314,095 $ — $ 314,095 Warehouse credit facilities — 421,268 421,268 Other liabilities 4,534 9,801 14,335 Total Liabilities $ 318,629 $ 431,069 $ 749,698 1 Refer to Note 10 – Warehouse Credit Facilities of Consolidated VIEs for further details of the warehouse facilities. UACC establishes securitization trusts to purchase finance receivables. The securitization trusts issue asset-backed securities, which are collateralized by the finance receivables that UACC sells to the securitization trusts. Upon sale of the finance receivables to the securitization trusts, the Company recognizes a gain or loss on sales of finance receivables if it determines it qualifies for sale accounting treatment and it is not the primary beneficiary of the VIE. In February 2022, UACC sold a pool of finance receivables in the 2022-1 securitization transaction. UACC retained the servicing rights to these finance receivables and receives an "at market" servicing fee. 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 95 Table of Contents VROOM, INC. (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. 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. The beneficial interests in securitizations are subject to restrictions on transfer pursuant to UACC’s obligations as a sponsor under Risk Retention Rules. These securities are interests in securitization trusts, thus there are no contractual maturities. 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. The following table summarizes the amortized cost, the carrying amount, which is the fair value, and the maximum exposure to losses of UACC's assets related to unconsolidated VIEs (in thousands): As of December 31, 2024 As of December 31, 2023 Aggregate Principal Balance Carrying Value Total Exposure Aggregate Principal Balance Carrying Value Total Exposure Rated notes $ 2,106 $ 1,992 $ 1,992 $ 4,538 $ 4,345 $ 4,345 Certificates — 192 192 — 140 140 Other assets 310 310 310 310 310 310 Total unconsolidated VIEs $ 2,416 $ 2,494 $ 2,494 $ 4,848 $ 4,795 $ 4,795 Total exposure represents the estimated loss UACC would incur under severe, hypothetical circumstances, such as if the value of the interests in the securitization trusts and any associated collateral declined to zero. The Company believes the possibility of this is remote. As such, the total exposure presented above is not an indication of the Company's expected losses. 5. 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. 96 Table of Contents VROOM, INC. (DEBTOR-IN-POSSESSION) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The following table summarizes the major income and expense line items from discontinued operations as reported in the consolidated statements of operations (in thousands): Year Ended December 31, 2024 2023 Revenue: Retail vehicle, net $ 47,320 $ 566,560 Wholesale vehicle 140,714 104,119 Product, net 1,635 16,536 Total revenue 189,669 687,215 Cost of sales: Retail vehicle 43,673 553,565 Wholesale vehicle 142,343 138,472 Total cost of sales 186,016 692,037 Total gross profit 3,653 ( 4,822 ) Selling, general and administrative expenses 39,562 205,857 Loss (gain) on disposal of long lived assets ( 10,159 ) 120 Depreciation and amortization 383 13,656 Impairment charges — 48,748 Loss from operations ( 26,133 ) ( 273,203 ) Interest expense 1,607 19,556 Interest income ( 856 ) ( 13,218 ) Loss before provision for income taxes ( 26,884 ) ( 279,541 ) Provision (benefit) for income taxes - ( 27 ) Net loss from discontinued operations $ ( 26,884 ) $ ( 279,514 ) The following table summarizes the major classes of assets and liabilities from discontinued operations as reported in the consolidated balance sheets: As of December 31, 2024 2023 ASSETS Inventory $ — $ 163,250 Property and equipment, net 800 19,150 Other assets 143 14,137 Assets from discontinued operations $ 943 $ 196,537 LIABILITIES Accounts payable $ 116 $ 6,439 Accrued expenses 3,906 27,133 Vehicle floorplan — 151,178 Deferred revenue — 14,025 Operating lease liabilities — 23,461 Other liabilities — 5,884 Liabilities from discontinued operations $ 4,022 $ 228,120 97 Table of Contents VROOM, INC. (DEBTOR-IN-POSSESSION) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 6. 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): As of December 31, 2024 Convertible senior notes 291,577 Total liabilities subject to compromise $ 291,577 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): Year Ended December 31, 2024 Debt valuation adjustments $ 2,438 Professional fees 3,126 Total reorganization items, net $ 5,564 98 Table of Contents VROOM, INC. (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: VROOM, INC. (DEBTOR-IN-POSSESSION) CONDENSED BALANCE SHEETS (in thousands, except share and per share amounts) As of December 31, 2024 ASSETS Cash and cash equivalents $ 5,356 Restricted cash 839 Investments in subsidiaries 253,210 Other assets 1,343 Total assets $ 260,748 LIABILITIES AND STOCKHOLDERS’ EQUITY Other liabilities 116 Due to affiliates — Long-term debt — Liabilities subject to compromise 291,577 Total liabilities 291,693 Total stockholders’ equity ( 30,945 ) Total liabilities and stockholders’ equity $ 260,748 VROOM, INC. (DEBTOR-IN-POSSESSION) CONDENSED STATEMENTS OF OPERATIONS (in thousands, except share and per share amounts) Year Ended December 31, 2024 Noninterest income: Gain on debt extinguishment $ — Other income 943 Total noninterest income 943 Expenses: Professional fees 2,727 Interest expense on corporate debt 3,428 Other expenses 738 Total expenses 6,893 Loss from continuing operations before reorganization items and provision for income taxes ( 5,950 ) Reorganization items, net 5,564 Loss from continuing operations before provision for income taxes ( 11,514 ) Provision for income taxes from continuing operations — Net loss from continuing operations $ ( 11,514 ) Net loss from discontinued operations $ ( 205 ) Net loss $ ( 11,719 ) 99 Table of Contents VROOM, INC. (DEBTOR-IN-POSSESSION) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS VROOM, INC. (DEBTOR-IN-POSSESSION) CONDENSED STATEMENTS OF CASH FLOWS (in thousands) Year Ended December 31, 2024 Operating activities Net cash (used in) provided by operating activities from continuing operations ( 29,459 ) Net cash provided by (used in) operating activities from discontinued operations ( 205 ) Net cash (used in) provided by operating activities ( 29,664 ) Investing activities Net cash provided by investing activities from continuing operations 34,291 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 4,627 Cash, cash equivalents and restricted cash at the beginning of period 1,568 Cash, cash equivalents and restricted cash at the end of period $ 6,195 7. Property and Equipment, Net Property and equipment, net consisted of the following (in thousands): December 31, 2024 2023 Equipment $ 2,841 $ 2,653 Furniture and fixtures 333 503 Leasehold improvements 693 434 Internal-use software 5,366 4,807 Other 693 1,370 9,926 9,767 Accumulated depreciation and amortization ( 5,862 ) ( 4,785 ) Property and equipment, net $ 4,064 $ 4,982 Depreciation and amortization expense was $ 2.1 million and $ 2.1 million for the years ended December 31, 2024 and 2023, respectively. 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. 100 Table of Contents VROOM, INC. (DEBTOR-IN-POSSESSION) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 8. Intangible Assets Intangible assets, net consisted of the following (in thousands): December 31, 2024 December 31, 2023 Gross Carrying Value Accumulated Amortization Carrying Value Gross Carrying Value Accumulated Amortization Carrying Value Developed and purchased technology $ 108,700 $ ( 55,047 ) $ 53,653 $ 108,700 $ ( 38,050 ) $ 70,650 Customer relationships 69,400 ( 26,011 ) 43,389 69,400 ( 17,336 ) 52,064 Trademarks and trade names 12,200 ( 4,373 ) 7,827 12,200 ( 3,022 ) 9,178 Total intangible assets $ 190,300 $ ( 85,431 ) $ 104,869 $ 190,300 $ ( 58,408 ) $ 131,892 Amortization expense for intangible assets was $ 27.0 million and $ 27.0 million for the years ended December 31, 2024 and 2023, respectively. The estimated amortization expense for intangible assets subsequent to December 31, 2024, consists of the following (in thousands): Year Ending December 31: 2025 $ 27,022 2026 21,979 2027 21,882 2028 21,882 Thereafter 12,104 $ 104,869 9. Other Liabilities The Company’s other liabilities consisted of the following (in thousands): December 31, 2024 2023 Warranty and GAP liabilities $ 17,163 $ 21,279 Dealer related liabilities 4,184 6,934 Accrued compensation and benefits 12,165 8,923 Accrued professional services 532 2,542 Accrued software and IT costs 252 1,011 Interest payable 4,096 4,183 Insurance payable 29 2,142 Other 11,278 14,307 Total other liabilities $ 49,699 $ 61,321 101 Table of Contents VROOM, INC. (DEBTOR-IN-POSSESSION) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 10. Warehouse Credit Facilities of Consolidated VIEs UACC has four senior secured warehouse facility agreements (the “Warehouse Credit Facilities”) with banking institutions as of December 31, 2024. The Warehouse Credit Facilities are collateralized by eligible finance receivables and available borrowings are computed based on a percentage of eligible finance receivables. As of December 31, 2024 and 2023, the Company had excess borrowing capacity of $ 28.2 million and $ 56.9 million on UACC's Warehouse Credit Facilities, respectively. The terms of the Warehouse Credit Facilities include the following (in thousands): Facility One Facility Two Facility Three Facility Four Execution date May 30, 2012 November 19, 2013 July 11, 2019 November 18, 2022 Commitment termination date July 21, 2025 June 2, 2025 August 29, 2025 September 12, 2025 Aggregate borrowings limit $ 200,000 $ 200,000 $ 200,000 $ 225,000 As of December 31, 2024 Aggregate principal balance of finance receivables pledged as collateral $ — $ 76,523 $ 223,901 $ 143,514 Outstanding balance $ — $ 62,290 $ 175,568 $ 122,054 Restricted cash $ — $ 3,169 $ 10,398 $ 5,328 As of December 31, 2023 Aggregate principal balance of finance receivables pledged as collateral $ 223,207 $ 64,970 $ 165,927 $ 92,978 Outstanding balance $ 177,375 $ 51,012 $ 117,264 $ 75,617 Restricted cash $ 8,961 $ 2,550 $ 6,485 $ 2,692 As of December 31, 2024 and 2023, the Company's weighted average interest rate on the Warehouse Credit Facilities borrowings was approximately 6.32 % and 6.98 %, respectively. The Company's ability to utilize its Warehouse Credit Facilities is primarily conditioned on the satisfaction of certain legal, operating, administrative and financial covenants contained within the agreements. These include covenants that require UACC to maintain a minimum tangible net worth, minimum liquidity levels, specified leverage ratios and certain indebtedness levels. Failure to satisfy these and or any other requirements contained within the agreements would restrict access to the Warehouse Credit Facilities. Certain breaches of covenants may also result in acceleration of the repayment of borrowings prior to the scheduled maturity. As of December 31, 2024 and 2023, the Company was in compliance with all covenants related to the Warehouse Credit Facilities. 11. 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): December 31, 2024 2023 Convertible senior notes $ — $ 286,800 Securitization debt of consolidated VIEs at fair value 142,629 314,095 Securitization debt of consolidated VIEs at amortized cost 210,727 — Financing of beneficial interest in securitizations 17,700 15,378 Junior subordinated debentures 10,310 10,310 Total debt $ 381,366 $ 626,583 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. 102 Table of Contents VROOM, INC. (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. 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 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 principal and interest under the Indenture. 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. 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. The Company accounts for the Notes as a single liability-classified instrument measured at amortized cost. 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. 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 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 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. 103 Table of Contents VROOM, INC. (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. UACC also retains the servicing rights for all finance receivables that were securitized; therefore, it is responsible for the administration and collection of the amounts owed under the contracts. In the first quarter of 2023, UACC waived its servicing fees related to the 2022-2 securitization and subsequently consolidated the 2022-2 trust. The securitization agreements also require certain funds to be held in restricted cash accounts to provide additional collateral for the borrowings or to be applied to make payments on the securitization debt. Restricted cash under the various agreements totaled approximately $ 29.2 million and $ 28.5 million as of December 31, 2024 and 2023, respectively. Wholly owned bankruptcy remote subsidiaries of UACC were formed to facilitate the above asset-backed financing transactions. Bankruptcy remote refers to a legal structure in which it is expected that the applicable entity would not be included in any bankruptcy filing by its parent or affiliates. All of the assets of these subsidiaries have been pledged as collateral for the related debt. 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 "Long-term debt" on the condensed consolidated balance sheet. The securitization debt of consolidated VIEs consisted of the following (in thousands): As of December 31, 2024 Series Final Scheduled Payment Date Initial Principal Contractual Interest Rate Outstanding Principal Fair Value United Auto Credit 2022-2-C May 10, 2027 $ 26,533 5.81 % $ 5,265 $ 5,265 United Auto Credit 2022-2-D January 10, 2028 32,889 6.84 % 32,889 32,836 United Auto Credit 2022-2-E April 10, 2029 33,440 10.00 % 28,440 16,922 United Auto Credit 2023-1-C July 10, 2028 33,326 6.28 % 27,657 27,731 United Auto Credit 2023-1-D July 10, 2028 35,653 8.00 % 35,653 36,149 United Auto Credit 2023-1-E September 10, 2029 23,256 10.98 % 23,256 23,726 Total rated notes at fair value $ 185,097 $ 153,160 $ 142,629 United Auto Credit 2024-1-A August 10, 2026 $ 132,340 6.17 % $ 45,490 United Auto Credit 2024-1-B June 10, 2027 42,770 6.57 % 42,770 United Auto Credit 2024-1-C October 10, 2029 35,190 7.06 % 35,190 United Auto Credit 2024-1-D November 12, 2029 52,160 8.30 % 52,160 United Auto Credit 2024-1-E November 12, 2030 37,540 10.45 % 37,540 Total rated notes at amortized cost $ 300,000 $ 213,150 Unamortized debt issuance costs $ 2,423 Net carrying value $ 210,727 104 Table of Contents VROOM, INC. (DEBTOR-IN-POSSESSION) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS As of December 31, 2023 Series Final Scheduled Payment Date Initial Principal Contractual Interest Rate Outstanding Principal Net Carrying Value United Auto Credit 2021-1-D June 10, 2026 $ 29,380 1.14 % $ 3,246 $ 3,235 United Auto Credit 2021-1-E June 10, 2026 20,800 2.58 % 20,800 20,540 United Auto Credit 2021-1-F September 10, 2027 13,910 4.30 % 13,910 13,644 United Auto Credit 2022-2-B December 10, 2025 30,324 5.41 % 28,786 28,745 United Auto Credit 2022-2-C May 10, 2027 26,533 5.81 % 26,533 26,331 United Auto Credit 2022-2-D January 10, 2028 32,889 6.84 % 32,889 32,642 United Auto Credit 2022-2-E April 10, 2029 33,440 10.00 % 33,440 29,691 United Auto Credit 2023-1-A July 10, 2025 118,598 5.57 % 15,089 15,083 United Auto Credit 2023-1-B July 10, 2028 51,157 5.91 % 51,157 51,019 United Auto Credit 2023-1-C July 10, 2028 33,326 6.28 % 33,326 33,199 United Auto Credit 2023-1-D July 10, 2028 35,653 8.00 % 35,653 36,152 United Auto Credit 2023-1-E September 10, 2029 23,256 10.98 % 23,256 23,814 Total rated notes $ 449,266 $ 318,085 $ 314,095 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 $ 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 net carrying value of finance receivables pledged to the securitization debt consists of the following (in thousands): As of December 31, 2024 2023 Aggregate Principal Balance Net Carrying Value Aggregate Principal Balance Net Carrying Value United Auto Credit 2021-1 $ — $ — $ 38,951 $ 35,790 United Auto Credit 2022-2 65,096 57,130 125,072 111,379 United Auto Credit 2023-1 106,920 92,041 197,586 169,829 United Auto Credit 2024-1 275,567 244,094 — — Total finance receivables of CFEs $ 447,583 $ 393,265 $ 361,609 $ 316,998 Financing of Beneficial Interests in Securitizations 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. Under this facility, UACC sells such retained interests and agrees to repurchase them on a future date. 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 . 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 105 Table of Contents VROOM, INC. (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. In the event of a decline in the fair value of the pledged collateral, UACC may be required to transfer cash or additional securities as pledged under this facility. 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 $ 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 On July 31, 2003, UACC issued junior subordinated debentures (trust preferred securities) of $ 10.0 million through a subsidiary, UPFC Trust I. The trust issuer is a 100 percent owned finance subsidiary and the securities are fully and unconditionally guaranteed by Vroom Automotive Finance Corporation. The interest is paid quarterly at a variable rate, equal to SOFR + 3.05 %. The final maturity of these securities is on October 7, 2033 ; however, they can be called at par any time at the Company’s discretion. 12. Leases 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. 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 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. 106 Table of Contents VROOM, INC. (DEBTOR-IN-POSSESSION) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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, 2024 and 2023 were as follows (in thousands): Year Ended December 31, 2024 2023 Lease Cost Operating lease cost 2,063 $ 1,840 Short-term lease cost 39 — Variable lease cost 671 526 Sublease income ( 868 ) ( 379 ) Net lease cost $ 1,905 $ 1,987 Year Ended December 31, 2024 2023 Other information Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 3,424 $ 2,480 Right-of-use assets obtained in exchange for operating lease liabilities $ 3,428 $ 7,155 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 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, 2024 were as follows (in thousands): 2025 2,863 2026 2,041 2027 2,099 2028 2,162 2029 1,844 Thereafter 3,139 Total lease payments 14,148 Less: interest ( 3,083 ) Present value of lease liabilities $ 11,065 Operating lease liabilities $ 11,065 107 Table of Contents VROOM, INC. (DEBTOR-IN-POSSESSION) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 13. Commitments and Contingencies Litigation 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. 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. The Company accrues a liability when a loss is considered probable and the amount can be reasonably estimated. When a material loss contingency is reasonably possible but not probable, the Company does not record a liability, but instead discloses the nature and the amount of the claim, and an estimate of the loss or range of loss, if such an estimate can be made. Legal fees are expensed as incurred. Beginning in March 2021, multiple putative class actions were filed in the U.S. District Court for the Southern District of New York by certain of the Company’s stockholders against the Company and certain of the Company’s officers alleging violations of federal securities laws. The lawsuits were captioned Zawatsky et al. v. Vroom, Inc. et al., Case No. 21-cv-2477; Holbrook v. Vroom, Inc. et al., Case No. 21-cv-2551; and Hudda v. Vroom, Inc. et al., Case No. 21-cv-3296. All three of the lawsuits asserted similar claims under Sections 10(b) and 20(a) of the Exchange Act, and SEC Rule 10b-5. In each case, the named plaintiff(s) sought to represent a proposed class of all persons who purchased or otherwise acquired the Company’s securities during a period from June 9, 2020 to March 3, 2021 (in the case of Holbrook and Hudda), or November 11, 2020 to March 3, 2021 (in the case of Zawatsky). In August 2021, the Court consolidated the cases under the new name In re: Vroom, Inc. Securities Litigation, Case No. 21-cv-2477, appointed a lead plaintiff and lead counsel and ordered a consolidated amended complaint to be filed. The court-appointed lead plaintiff subsequently filed a consolidated amended complaint that reasserts claims under Sections 10(b) and 20(a) of the Exchange Act, and SEC Rule 10b-5 against the Company and certain of the Company’s officers, and added new claims under Sections 11, 12 and 15 of the Securities Act against the Company, certain of its officers, certain of its directors, and the underwriters of the Company’s September 2020 secondary offering. The Company filed a motion to dismiss all claims, and briefing of this motion is complete. The Company believes this lawsuit is without merit and intends to vigorously contest these claims. While the outcome of any complex legal proceeding is inherently unpredictable and subject to significant uncertainties, based upon information presently known to management, the Company believes that the potential liability, if any, will not have a material adverse effect on the Company’s financial condition, cash flows, or results of operations. In August 2021, November 2021, January 2022, and February 2022, various Company stockholders filed purported shareholder derivative lawsuits on behalf of the Company in the U.S. District Court for the Southern District of New York against certain of the Company’s officers and directors, and nominally against the Company, alleging violations of the federal securities laws 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: Vroom, Inc. Securities Litigation. All four lawsuits have been consolidated under the case caption In re Vroom, Inc. Shareholder Derivative Litigation, Case No. 21-cv-6933, and the court has approved the parties’ stipulation that the cases would remain stayed pending final resolution of In re: Vroom, Inc. Securities Litigation. All four derivative suits remain in preliminary stages and there have been no substantive developments in any matter. 108 Table of Contents VROOM, INC. (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: Vroom, Inc. Securities Litigation. The case filed in April 2022 is captioned Godlu v. Hennessy et al., Case No. 22-cv-569, the case filed in April 2024 is captioned Hudda v. Hennessy et al. Case No. 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: Vroom, Inc. Securities Litigation. 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. On February 23, 2024, the FTC notified the Company that it has reason to believe that the Company violated Section 5(a) of the Federal Trade Commission Act, 15 U.S.C. § 45(a); the FTC's Mail, Internet, or Telephone Order Merchandise Rule, 16 C.F.R. Part 435; the FTC’s Used Motor Vehicle Trade Regulation Rule,16 C.F.R. Part 455; and the FTC’s Pre-Sale Availability Rule, 16 C.F.R. Part 702. 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. Vroom, Inc. 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. According to the petition, 80% of the customer complaints referenced in the petition were received in the 12 months prior to April 2022. The petition is captioned State of Texas v. Vroom Automotive LLC, and Vroom Inc., Case No. D-1-GN-001809. 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 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 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 109 Table of Contents VROOM, INC. (DEBTOR-IN-POSSESSION) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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 The Company enters into agreements with third parties in the ordinary course of business that may contain indemnification provisions. In the event that an indemnification claim is asserted, the Company’s liability, if any, would be limited by the terms of the applicable agreement. Historically, the Company has not incurred material costs to defend lawsuits or settle claims related to indemnification provisions. 14. Preferred Stock and Stockholders’ Equity Preferred Stock On June 11, 2020, the Company amended its certificate of incorporation to authorize the issuance of up to 10,000,000 shares of preferred stock. 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. Common Stock 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 . The shares of Common Stock authorized for issuance remained unchanged at 500,000,000 and the par value per share of Common Stock remained unchanged at $ 0.001 . Each share of Common Stock entitles the holder to one vote on all matters submitted to a vote of the Company’s stockholders. 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. 15. Stock-based Compensation On May 28, 2020, the Company adopted the 2020 Incentive Award Plan (“the 2020 Plan”), which authorized the issuance of (i) up to 37,379 shares of the Company’s common stock, (ii) an annual increase on the first day of each year beginning on January 1, 2022 and ending on January 1, 2030 of up to 4 % of the shares of common stock outstanding on an as-converted basis on the last day of the immediately preceding fiscal year, and (iii) any shares of the Company’s common stock subject to awards under the 2014 Plan which are forfeited or lapse unexercised and which following the effective date are not issued under the 2014 Plan. Awards may be issued in the form of restricted stock units, restricted stock, stock appreciation rights, and stock options. 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. On May 20, 2022, the Company adopted the 2022 Inducement Award Plan (the “Inducement Award Plan”). 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 110 Table of Contents VROOM, INC. (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. RSUs The following table summarizes restricted stock unit ("RSUs") activity for the year ended December 31, 2024: Shares Weighted Average Grant Date Fair Value per Share Unvested and outstanding as of December 31, 2023 174,114 $ 124.59 Granted 6,203 12.54 Vested and released ( 31,257 ) 181.01 Forfeited / cancelled ( 17,610 ) 91.67 Outstanding as of December 31, 2024 131,450 $ 87.02 Vested and exercisable ( 6,430 ) 93.32 Unvested and outstanding as of December 31, 2024 125,020 $ 86.69 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. 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. 16. Financial Instruments and Fair Value Measurements U.S. GAAP defines fair value as the price that would be received from selling an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. These estimates are subjective in nature and involve uncertainties and matters of judgment, and therefore cannot be determined with precision. U.S. GAAP establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value and establishes the following three levels of inputs that may be used to measure fair value: Level 1—Quoted prices in active markets for identical assets or liabilities Level 2—Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted market prices in markets that are not active; or model-derived valuations or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities Items Measured at Fair Value on a Recurring Basis 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 to be sold, and certain other finance receivables held for sale. 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. 111 Table of Contents VROOM, INC. (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): As of December 31, 2024 Level 1 Level 2 Level 3 Total Financial Assets Cash and cash equivalents: Money market funds $ 17,626 $ — $ — $ 17,626 CFE assets: Finance receivables — — 214,420 214,420 Finance receivables at fair value — — 289,428 289,428 Other assets (beneficial interests in securitizations) — 2,184 — 2,184 Total financial assets $ 17,626 $ 2,184 $ 503,848 $ 523,658 Financial Liabilities CFE liabilities: Securitization debt of consolidated VIEs — 125,707 16,922 142,629 Total financial liabilities $ — $ 125,707 $ 16,922 $ 142,629 As of December 31, 2023 Level 1 Level 2 Level 3 Total Financial Assets Cash and cash equivalents: Money market funds $ 27,121 $ — $ — $ 27,121 CFE assets: Finance receivables — — 316,998 316,998 Finance receivables at fair value — — 31,672 31,672 Other assets (beneficial interests in securitizations) — 4,485 — 4,485 Total financial assets $ 27,121 $ 4,485 $ 348,670 $ 380,276 Financial Liabilities CFE liabilities: Securitization debt of consolidated VIEs — 314,095 — 314,095 Total financial liabilities $ — $ 314,095 $ — $ 314,095 Valuation Methodologies of Financial Instruments Measured at Fair Value on a Recurring Basis The following is a description of the valuation methodologies used for financial instruments carried at fair value. These methodologies are applied to financial assets and liabilities across the fair value levels discussed above, and it is the observability of the inputs used that determines the appropriate level in the fair value hierarchy for the respective asset or liability. Money Market Funds: Money market funds primarily consist of investments in highly liquid U.S. treasury securities, with original maturities of three months or less and are classified as Level 1. The Company determines the fair value of cash equivalents based on quoted prices in active markets. Financial assets and liabilities of 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 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. 112 Table of Contents VROOM, INC. (DEBTOR-IN-POSSESSION) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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. The Company determined that the fair value of the liabilities of the securitization CFEs are more observable, since market prices of their liabilities are based on non-binding quoted prices provided by broker dealers who make markets in similar financial instruments. The assets of the securitization CFEs are not readily marketable, and their fair value measurement requires information that may be limited in availability. In determining the fair value of the securitization debt of consolidated CFEs, the broker dealers consider contractual cash payments and yields expected by market participants. Broker dealers also incorporate common market pricing methods, including a spread measurement to the treasury curve or interest rate swap curve as well as underlying characteristics of the particular security including ratings, coupon, collateral type and seasoning or age of the security. 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 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. The Company determined that CFEs finance receivables in their entirety should be classified as Level 3 of the fair value hierarchy. Finance receivables at fair value: Finance receivables at fair value represent finance receivables for which the Company elected the fair value option in accordance with ASC 825. 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: Beneficial interests in securitization relate to the 2022-1 securitization completed in February 2022 and include rated notes as well as certificates. The beneficial interests in the 2022-2 securitization completed in July 2022 were eliminated upon consolidation of the VIE in March 2023. Refer to Note 4 – Variable Interest Entities and Securitizations. The Company elected the fair value option on its beneficial interests in securitization. Beneficial interests may initially be classified as Level 2 if the transactions occur within close proximity to the end of each respective reporting period. Subsequently, similar to the securitization debt described above, fair value is determined by requesting a non-binding quote from broker dealers, or by utilizing market acceptable valuation models, such as discounted cash flows. 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 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. Broker dealer quotes may also be based on a market approach that considers recent transactions involving identical or similar securities. 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, the Company utilizes an internally developed model using unobservable inputs. 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. 113 Table of Contents VROOM, INC. (DEBTOR-IN-POSSESSION) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Changes in Level 3 Recurring Fair Value Measurements The following table presents a reconciliation of the financial assets, which were measured at fair value on a recurring basis using Level 3 inputs (in thousands): Finance Receivables of Consolidated CFEs Finance Receivables at Fair Value Securitization Debt of Consolidated CFEs Fair value as of January 1, 2024 $ 316,998 $ 31,672 $ — Transfer within Level 3 categories 52,279 ( 52,279 ) — Transfers into Level 3 — — 20,864 Losses included in realized and unrealized losses ( 55,166 ) ( 21,513 ) ( 3,942 ) Losses included in Warranties and GAP ( 2,571 ) ( 1,931 ) — Issuances, net of discount — 404,089 — Paydowns ( 109,136 ) ( 68,163 ) — Other 12,016 ( 2,447 ) — Fair value as of December 31, 2024 $ 214,420 $ 289,428 $ 16,922 Finance Receivables of Consolidated CFEs Finance Receivables at Fair Value Fair value as of January 1, 2023 $ 77,904 $ 75,270 Reclassification of finance receivables held for sale to finance receivables at fair value, net 248,081 — Transfer within Level 3 categories 23,338 ( 23,338 ) Consolidation of VIEs 180,706 — Losses included in realized and unrealized losses ( 80,677 ) ( 1,398 ) Losses included in Warranties and GAP ( 4,296 ) ( 78 ) Issuances, net of discount — 3,392 Paydowns ( 151,032 ) ( 23,716 ) Other 22,974 1,540 Fair value as of December 31, 2023 $ 316,998 $ 31,672 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. 114 Table of Contents VROOM, INC. (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 "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, 2024 2023 Financial Assets Finance receivables of CFEs $ 45,569 $ 75,064 Finance receivables at fair value 21,455 ( 2,103 ) Beneficial interests in securitizations ( 216 ) 1,103 Financial Liabilities Debt of securitized VIEs ( 7,358 ) ( 5,635 ) Total net loss included in "Realized and unrealized losses, net of recoveries" $ 59,450 $ 68,429 The following table presents other relevant data related to the finance receivables carried at fair value (in thousands): As of December 31, 2024 Finance Receivables of CFEs at Fair Value Finance Receivables at Fair Value Aggregate unpaid principal balance included within finance receivables that are reported at fair value $ 244,345 $ 331,882 Aggregate fair value of finance receivables that are reported at fair value $ 214,420 $ 289,428 Unpaid principal balance of receivables within finance receivables that are reported at fair value and are on nonaccrual status (90 days or more past due) $ 5,969 $ 3,663 Aggregate fair value of receivables carried at fair value that are on nonaccrual status (90 days or more past due) $ 5,228 $ 2,551 As of December 31, 2023 Finance Receivables of CFEs at Fair Value Finance Receivables at Fair Value Aggregate unpaid principal balance included within finance receivables that are reported at fair value $ 361,609 $ 36,207 Aggregate fair value of finance receivables that are reported at fair value $ 316,998 $ 31,672 Unpaid principal balance of receivables within finance receivables that are reported at fair value and are on nonaccrual status (90 days or more past due) $ 6,700 $ 717 Aggregate fair value of receivables carried at fair value that are on nonaccrual status (90 days or more past due) $ 5,921 $ 544 All finance receivables of CFEs are pledged to the CFEs trusts. The following table presents other relevant data related to securitization debt of consolidated VIEs carried at fair value (in thousands): As of December 31, 2024 Securitization debt of consolidated VIEs at Fair Value Aggregate unpaid principal balance of rated notes of securitized VIEs $ 153,160 Aggregate fair value of rated notes of securitized VIEs $ 142,629 As of December 31, 2023 Securitization debt of consolidated VIEs at Fair Value Aggregate unpaid principal balance of rated notes of securitized VIEs $ 318,085 Aggregate fair value of rated notes of securitized VIEs $ 314,095 115 Table of Contents VROOM, INC. (DEBTOR-IN-POSSESSION) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Fair Value of Financial Instruments Not Carried at Fair Value 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 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. 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 2024 Cumulative net loss 24.2 % Recoveries 30 % Discount Rate 17 %- 19 % 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 2024 2023 Cumulative net loss 19.3 % - 33.2 % 20.6 % - 27.3 % Recoveries 26.3 % - 47.2 % 12.7 % - 20.1 % Discount Rate 14.5 % 15.0 % Convertible Senior Notes: The fair value of the Notes, which are not carried at fair value on the accompanying consolidated balance sheets, was determined utilizing actual bids and offer prices of the Notes in markets that are not active and are classified within Level 2 of the fair value hierarchy. December 31, 2024 2023 Carrying value $ 290,488 $ 286,800 Fair value $ 145,244 $ 152,506 116 Table of Contents VROOM, INC. (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. December 31, 2024 Carrying value $ 210,727 Fair value $ 213,988 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, 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. 17. Segment Information 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. 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 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. 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 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, 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. 117 Table of Contents VROOM, INC. (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): Year Ended December 31, 2024 2023 UACC CarStory Corporate Total UACC CarStory Corporate Total Interest income $ 203,962 $ — $ ( 2,129 ) $ 201,833 $ 180,970 $ — $ ( 2,488 ) $ 178,482 Interest expense: Warehouse credit facility 29,276 — — 29,276 19,914 — — 19,914 Securitization debt 30,084 — — 30,084 21,979 — — 21,979 Total interest expense 59,360 — — 59,360 41,893 — — 41,893 Net interest income 144,602 — ( 2,129 ) 142,473 139,077 — ( 2,488 ) 136,589 Realized and unrealized losses, net of recoveries 98,629 — 21,239 119,868 92,372 — 30,169 122,541 Net interest income after losses and recoveries 45,973 — ( 23,368 ) 22,605 46,705 — ( 32,657 ) 14,048 Noninterest (loss) income: Servicing income 6,501 — — 6,501 10,041 — — 10,041 Warranties and GAP income (loss), net 7,789 — ( 10,399 ) ( 2,610 ) 7,871 — ( 2,158 ) 5,713 CarStory revenue — 11,610 — 11,610 — 12,384 — 12,384 Gain on debt extinguishment — — — — — — 37,878 37,878 Other income 8,334 692 1,824 10,850 3,209 444 5,457 9,110 Total noninterest (loss) income 22,624 12,302 ( 8,575 ) 26,351 21,121 12,828 41,177 75,126 Expenses: Compensation and benefits 76,374 10,293 10,626 97,293 67,807 8,953 9,940 86,700 Professional fees 3,506 152 8,377 12,035 5,395 341 8,816 14,552 Software and IT costs 10,397 215 4,471 15,083 10,116 197 9,288 19,601 Depreciation and amortization 22,683 6,403 — 29,086 22,685 6,428 — 29,113 Interest expense on corporate debt 2,396 — 3,430 5,826 1,680 — 4,296 5,976 Impairment charges 5,159 — — 5,159 — — — — Other expenses 9,457 414 6,422 16,294 7,809 584 9,295 17,687 Total expenses 129,972 17,477 33,326 180,776 115,492 16,503 41,635 173,629 Adjusted EBITDA $ ( 29,808 ) $ 912 $ ( 23,185 ) $ 3,399 118 Table of Contents VROOM, INC. (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): Year Ended December 31, 2024 2023 Adjusted EBITDA by Segment UACC $ ( 29,808 ) $ ( 23,185 ) CarStory 912 3,399 Total $ ( 28,896 ) $ ( 19,786 ) Interest expense on corporate debt ( 2,396 ) ( 1,680 ) Interest income on cash and cash equivalents 2,864 2,481 Depreciation and amortization ( 29,086 ) ( 29,113 ) Stock compensation expense ( 3,077 ) ( 3,243 ) Severance ( 800 ) — Impairment charges ( 5,159 ) — Corporate loss from continuing operations before reorganization items and provision for income taxes ( 65,270 ) ( 33,114 ) Loss from continuing operations before reorganization items and provision for income taxes $ ( 131,820 ) $ ( 84,455 ) 18. Income Taxes Income Tax Provision Domestic and foreign pretax income (loss) from continuing operations are as follows for the years ended December 31, 2024 and 2023 (in thousands): Year Ended December 31, 2024 2023 Domestic $ ( 138,554 ) $ ( 85,050 ) Foreign 1,170 595 Total $ ( 137,384 ) $ ( 84,455 ) The components of the provision for income taxes from continuing operations are as follows (in thousands): Year Ended December 31, 2024 2023 Current: Federal $ — $ — State and local 680 553 Foreign 176 89 Total current tax expense 856 642 Deferred tax (benefit): Federal — — State and local — — Foreign — — Total deferred tax (benefit) — — Provision (benefit) for income taxes $ 856 $ 642 119 Table of Contents VROOM, INC. (DEBTOR-IN-POSSESSION) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS On August 16, 2022, the Inflation Reduction Act of 2022 ("IRA") was signed into law. The IRA includes implementation of a new alternative minimum tax, an excise tax on stock buybacks, and significant tax incentives for energy and climate initiatives, among other provisions. The Company evaluated the provisions included under the IRA and the provisions do not have a material impact to the Company's consolidated financial statements. Tax Rate Reconciliation 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): Year Ended December 31, 2024 2023 Income taxes at statutory rate $ ( 28,850 ) $ ( 17,736 ) State income taxes, net of federal benefit ( 9,747 ) ( 14,694 ) Foreign Rate Differential ( 70 ) ( 36 ) Permanent differences 476 1,437 Change in valuation allowance 38,970 32,185 Other 77 ( 514 ) Provision for income taxes $ 856 $ 642 Deferred Tax Assets (Liabilities) The Company computes income taxes using the liability method. This method requires recognition of deferred tax assets and liabilities, measured by enacted rates, attributable to temporary differences between the financial statements and the income tax basis of assets and liabilities. In assessing the realizability of deferred tax assets, the Company considers whether it is more likely than not that certain deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income in those specific jurisdictions prior to the dates on which such net operating losses expire. 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. 120 Table of Contents VROOM, INC. (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, 2024 2023 Deferred tax assets: Net operating loss carryforwards $ 415,372 $ 365,841 Warranty Chargeback reserves 2,324 1,634 Stock-based compensation 3,637 2,169 Depreciation 645 — Lease Liability 2,853 2,677 Unrealized Gains/Losses 795 3,636 Other 4,228 2,213 Total deferred tax assets 429,854 378,170 Less: valuation allowance ( 395,293 ) ( 337,871 ) Net deferred tax assets 34,561 40,299 Deferred tax liabilities: Intangible amortization ( 26,837 ) ( 33,419 ) Depreciation — ( 121 ) Repo Expenses ( 5,948 ) ( 4,966 ) Right of Use Asset ( 1,776 ) ( 1,793 ) Net deferred tax liabilities ( 34,561 ) ( 40,299 ) Net deferred income taxes $ — $ — 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 As of December 31, 2024 , the Company had total net operating loss carryforwards for U.S. federal income tax purposes of $ 1,697.0 million, of which $ 168.5 million expire from 2028 through 2037 and $ 1,528.5 million do not expire. The Company has net operating loss carryforwards for state income tax purposes of $ 919.2 million, which expire from 2034 through 2042 . The Company is subject to tax in the United States and many state and local jurisdictions. The Company, with certain exceptions, is no longer subject to income tax examinations by U.S. federal, state and local for tax years 2018 and prior. The company is not currently under audit for any US federal or state income tax audits. The Internal Revenue Code (IRC) Section 382 provides for a limitation of the annual use of net operating loss and tax credit carryforwards following certain ownership changes (as defined by the IRC Section 382) that limits the Company’s ability to utilize these carryforwards. The Company completed a Section 382 study to determine the applicable limitation, if any. It was determined that the Company has undergone four ownership changes the most recent of which was April 2021. These changes will substantially limit the use of the net operating losses generated before the change in control. Uncertain Tax Positions The Company has no t identified any uncertain tax positions as of December 31, 2024 or 2023 . Any interest and penalties related to uncertain tax positions shall be recorded as a component of income tax expense. To date, no interest or penalties have been accrued in relation to uncertain tax positions. 121 Table of Contents VROOM, INC. (DEBTOR-IN-POSSESSION) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 19. Net Loss Per Share The following table sets forth the computation of basic and diluted net loss per share attributable to common stockholders: Year Ended December 31, (in thousands, except share and per share amounts) 2024 2023 Net loss from continuing operations $ ( 138,240 ) $ ( 85,097 ) Net loss from discontinued operations $ ( 26,884 ) $ ( 279,514 ) Net loss $ ( 165,124 ) $ ( 364,611 ) Weighted-average number of shares outstanding used to compute net loss per share attributable to common stockholders, basic and diluted 1,813,168 1,743,128 Net loss per share attributable to common stockholders, continuing operations, basic and diluted $ ( 76.24 ) $ ( 48.82 ) Net loss per share attributable to common stockholders, discontinued operations, basic and diluted $ ( 14.83 ) $ ( 160.35 ) Total net loss per share attributable to common stockholders, basic and diluted $ ( 91.07 ) $ ( 209.17 ) 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: As of December 31, 2024 2023 Convertible senior notes 64,829 64,830 Stock options 23,214 26,088 Restricted stock units 131,450 175,266 Total 219,493 266,184 20. 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. 122 Table of Contents VROOM, INC. (DEBTOR-IN-POSSESSION) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Year ended December 31, 2023 As Reported Adjustments Discontinued Operations Presentation Reclasses (1) As Recasted and Revised Total revenue $ 893,203 $ — $ ( 687,215 ) $ ( 205,988 ) $ — Total cost of sales 731,256 — ( 692,037 ) ( 39,219 ) — Total gross profit 161,947 — 4,822 ( 166,769 ) — Selling, general and administrative expenses 340,657 ( 929 ) ( 205,977 ) ( 133,751 ) — Depreciation and amortization 42,769 ( 13,656 ) ( 29,113 ) — Impairment charges 48,748 ( 48,748 ) — Loss from operations ( 270,227 ) 929 273,203 ( 3,905 ) — Gain on debt extinguishment ( 37,878 ) — — 37,878 — Interest expense 45,445 ( 19,556 ) ( 25,889 ) — Interest income ( 21,158 ) 13,218 7,940 — Other loss (income), net 108,289 — — ( 108,289 ) — Interest income $ 178,482 $ 178,482 Total interest expense 41,893 41,893 Net interest income 136,589 136,589 Realized and unrealized losses, net of recoveries 122,541 122,541 Net interest income after losses and recoveries 14,048 14,048 Total noninterest (loss) income 75,126 75,126 Total expenses 173,629 173,629 Loss before provision (benefit) for income taxes ( 364,925 ) 929 279,541 ( 84,455 ) ( 84,455 ) Provision (benefit) for income taxes 615 27 642 Net loss from continuing operations ( 85,097 ) Net loss from discontinued operations ( 279,514 ) Total net loss $ ( 365,540 ) $ 929 ( 364,611 ) Net loss per share attributable to common stockholders, continuing operations, basic and diluted ( 48.82 ) Net loss per share attributable to common stockholders, discontinued operations, basic and diluted ( 160.35 ) Total net loss per share attributable to common stockholders, basic and diluted $ ( 209.70 ) $ ( 209.17 ) Weighted-average number of shares outstanding used to compute net loss per share attributable to common stockholders, basic and diluted 1,743,128 1,743,128 (1) Reflects revised presentation as a result of the Ecommerce Wind-Down. 123 Table of Contents VROOM, INC. (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 As Reported Adjustments Discontinued Operations Presentation Reclasses (1) As Recasted and Revised ASSETS Current Assets: Cash and cash equivalents $ 135,585 $ 135,585 Restricted cash 73,234 73,234 Accounts receivable, net of allowance 9,139 ( 4,413 ) ( 4,726 ) — Finance receivables at fair value 12,501 ( 12,501 ) — Finance receivables held for sale, net 503,546 503,546 Inventory 163,250 ( 163,250 ) — Beneficial interests in securitizations 4,485 ( 4,485 ) — Prepaid expenses and other current assets 50,899 ( 8,818 ) ( 42,081 ) — Total current assets 952,639 — ( 176,481 ) ( 63,793 ) Finance receivables at fair value 336,169 12,501 348,670 Property and equipment, net 24,132 ( 19,150 ) 4,982 Intangible assets, net 131,892 131,892 Operating lease right-of-use assets 7,063 7,063 Interest Receivable 14,484 14,484 Other assets (including other assets of consolidated VIEs of $ 1.8 million) 23,527 ( 906 ) 36,808 59,429 Assets from discontinued operations 196,537 196,537 Total assets $ 1,475,422 $ — $ — $ — $ 1,475,422 LIABILITIES AND STOCKHOLDERS’ EQUITY Current Liabilities: Accounts payable $ 26,762 $ ( 4,138 ) $ ( 6,439 ) $ ( 16,185 ) $ — Accrued expenses 52,452 ( 27,133 ) ( 25,319 ) — Vehicle floorplan 151,178 ( 151,178 ) — Warehouse credit facilities of consolidated VIEs 421,268 — 421,268 Current portion of long-term debt 172,410 — ( 172,410 ) — Deferred revenue 14,025 ( 14,025 ) — Operating lease liabilities, current 8,737 ( 6,105 ) ( 2,632 ) — Other current liabilities 9,974 ( 1,382 ) ( 5,884 ) ( 2,708 ) — Total current liabilities 856,806 ( 5,520 ) ( 210,764 ) ( 219,254 ) Long-term debt, net of current portion 454,173 — 172,410 626,583 Operating lease liabilities, excluding current portion 25,183 ( 17,356 ) 2,632 10,459 Other long-term liabilities 17,109 — 44,212 61,321 Liabilities from discontinued operations 228,120 228,120 Total liabilities 1,353,271 ( 5,520 ) — — 1,347,751 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 2 2 Additional paid-in-capital 2,088,381 2,088,381 Accumulated deficit ( 1,966,232 ) 5,520 ( 1,960,712 ) Total stockholders’ equity 122,151 5,520 — — 127,671 Total liabilities and stockholders’ equity $ 1,475,422 $ — $ — $ — $ 1,475,422 (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. 124 Table of Contents VROOM, INC. (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. 21. 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. 125 Table of Contents VROOM, INC. (DEBTOR-IN-POSSESSION) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Amendments. 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”). Voting. 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. 126 Table of Contents Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Not applicable.