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YoY shift: Neutral
Year-over-year tone shift - average net-tone change across Risk Factors and MD&A vs the prior 10-K. This filing is 0.13pp more bullish than last year's.
Why YoY instead of absolute: the LM lexicon has ~6.6× more negative words than positive (legal/risk-disclosure language is heavy on hedging), so every 10-K reads bearish on raw tone. Year-over-year change strips that bias and surfaces the actual shift in management's framing.
Tone shift by section
The two components the gauge averages: how Risk Factors and MD&A each shifted in net tone versus last year's 10-K. The headline above is their average, so a green needle over a soft section just means the other section carried it.
Risk Factors
-
Not scored
Net-tone change vs last year's 10-K.
MD&A
+0.13pp
Flat
Net-tone change vs last year's 10-K.
Per-snippet highlights
Sentence-level sentiment highlighting with category and subcategory filters is coming once the snippet-scoring pipeline lands. For now, dig into the actual section text on the Sections tab.
No section text extracted for this filing. The 10-K may use a non-standard template that the parser doesn't recognize - the original doc is still linked in the Stats tab.
Language change vs prior 10-K
MD&A (Item 7) - words with the biggest YoY frequency increase
Negative rising
loss+14
delayed+11
against+8
default+7
critical+6
Positive rising
effective+39
improvements+5
satisfied+3
profitability+3
gains+3
MD&A (Item 7)
41,841 words
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
Issuance of Preferred Stock Units
On January 16, 2026, Vroom Automotive, LLC, a Delaware limited liability company and an indirect subsidiary of Vroom Inc. issued to SPE Holdings 2026-1, a Delaware statutory trust (“SPE Holdings”), 15,000 newly issued Series A preferred units and 7,500 newly issued Series B preferred units (collectively, the "Vroom Automotive Preferred Units") for aggregate gross proceeds of $22.5 million, pursuant to a Preferred Unit Purchase Agreement.
The Vroom Automotive Preferred Units will be entitled to receive a quarterly preferential distribution, equal to the liquidation preference of such Vroom Automotive Preferred Units multiplied by a variable distribution rate, which will reset on each quarterly distribution date in an amount equal to the ninety (90) day average of the Secured Overnight Financing Rate (SOFR) plus a spread of 8.25% for Series A Preferred Units and 9% for Series B Preferred Units. The Series B Preferred Units are convertible into common units of Vroom Automotive at the option of the Counterparty at any time. The Series A Preferred Units are not convertible.
Issuance of Related Party Notes
On November 25, 2025, we entered into a Note Purchase Agreement with Robert J. Mylod, Jr., pursuant to which the Company issued Senior Secured Delayed Draw Notes due 2026 (the “Delayed Draw Notes”) in a maximum aggregate principal commitment amount of $10.5 million, which matures on November 25, 2026. As of December 31, 2025, the Company drew $10.5 million against the Delayed Draw Notes.
On August 29, 2025, we issued $10.0 million aggregate principal amount of 5.00% Convertible Notes due 2030 (the “2030 Notes”). The 2030 Notes were issued pursuant to a Note Purchase Agreement with Annox Capital, LLC and Robert J. Mylod, Jr., the Managing Partner of Annox Capital, LLC and the Independent Executive Chair of the board of directors of the Company.
Recapitalization of Balance Sheet Debt: 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 time in the United States Bankruptcy Court for the Southern District of Texas 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 prepackaged plan of reorganization (the “Plan”) were satisfied or waived and the Plan became effective. We emerged from the Prepackaged Chapter 11 Case on January 14, 2025. On February 20, 2025, our Common Stock was listed for trading on the Nasdaq Global Market.
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 Convertible Notes due 2026 (the “2026 Notes”).
The Prepackaged Chapter 11 Case was intended to address the impact of the 2026 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.
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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 as we may not realize 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. Additionally, other risks we face, as described in this Annual Report on Form 10-K, may be exacerbated by the impact 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. See “Liquidity and Capital Resources” for more information on our 2026 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. 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 “Common Stock”).
Issuance of Warrants
On the Effective Date, we 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, we issued warrants (the “Warrants”) to purchase an aggregate of 364,516 shares of the Common Stock, at an exercise price of $60.95 per share, to our stockholders 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. On July 7, 2025, the Warrants commenced trading on the OTCQX Best Market under the symbol “VRMWW”.
Going Concern
On the Effective Date, we emerged from the Prepackaged Chapter 11 Case 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.
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 is an indirect lender that offers vehicle financing to consumers through a network of motor vehicle dealers under the UACC brand, focusing primarily on the non-prime market. Our non-prime credit programs aim to broaden access to vehicle ownership for individuals who would not otherwise qualify for financing. UACC’s financing is intended to help consumers build credit and ultimately be eligible for more traditional sources of financing. 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
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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, 2025, UACC serviced a portfolio of approximately 76,000 retail installment sales contracts with an aggregate principal outstanding balance of approximately $950.0 million.
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 256 million vehicle identification numbers ("VINs"), 203 million window stickers, 4.2 billion vehicle photos and 411 million sales cycles, along with price and price elasticity models. CarStory receives data for over 4.1 million unique VINs listed for sale every day, resulting in CarStory having data for an estimated 80% 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 by accounting 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 announcing the Value Maximization Plan in January 2024, the Company has pivoted to executing a long-term strategic plan ("Long-Term Strategic Plan") that leverages our core assets, including Vroom and CarStory technology, to improve the profitability of the business through four strategic initiatives:
Build a world class lending program by focusing on using advanced models and analytics to better predict losses and drive profitable growth at UACC. We modernized our lending infrastructure by launching a proprietary automated underwriting decision engine in June 2025. This technology greatly accelerates application processing. In September 2025, we launched our redeveloped custom credit-scoring model, which we believe should better evaluate segments of risk and enhance our risk precision. We expect to continue making improvements to our advanced models and analytics in furtherance of this initiative.
Build a world class sales and marketing program by attracting and retaining the best dealers and driving deeper dealer engagement to enable growth. In 2025, our technology teams made substantial progress towards modernizing our infrastructure to drive speed and scalability. This included a complete overhaul of Fast Lane, UACC’s online dealer portal. Launched in early 2026, this upgraded platform leverages direct dealer feedback to minimize friction, increase application volume, and streamline the user experience.
Build operational excellence in originations by enhancing systemic capabilities and decisioning for a more efficient process. In 2025, we drove operational efficiency by integrating Vroom’s patented AI agent into certain aspects of UACC’s funding process. This integration helped automate verification and is intended to reduce fraud and lower the cost-per-funded contract.
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Build operational excellence in servicing by utilizing data science, advanced analytics and technology to enable an improved approach to servicing effectiveness. We are transforming servicing effectiveness through a digital-first strategy. The launch of our native mobile apps, for iOS and Android, in 2024 and redesigned website in 2025 drove digital adoption among accountholders. These platforms empower accountholders with self-service options, reducing manual service burden. We expect to continue making targeted improvements to the mobile app, website and other components of servicing based on our data science and advanced analytics.
We remain focused on returning the UACC business to profitability by improving cumulative net loss (“CNL”), origination cost per funded contract, servicing cost per contract, and fixed costs.
Non-GAAP Financial Measures
In addition to our results determined in accordance with U.S. GAAP, we believe certain non-GAAP financial measures are useful in evaluating our operating performance.
In the period from January 15, 2025, to December 31, 2025, we changed one of the measures that we review to evaluate our performance from Adjusted EBITDA to Adjusted net income (loss). Adjusted net income (loss) is a supplemental performance measure that our management uses to assess our operating performance and the operating leverage in our business. Adjusted net income (loss) facilitates internal comparisons of our historical operating performance on a more consistent basis, therefore we use this measure for business planning purposes.
Management believes Adjusted net income (loss) is a better indication of our profitability on a Non-GAAP basis as we no longer have significant depreciation and amortization expenses as a result of the fresh start accounting and we recorded our intangible assets at fair value upon emergence from the Prepackaged Chapter 11 Case. Additionally, due to the elimination of our long-term debt in the Prepackaged Chapter 11 Case we have significantly lower interest expense.
Adjusted net income (loss) has limitations as an analytical tool because it does not reflect all of the amounts associated with our results of operations as determined in accordance with U.S. GAAP. Additionally, it may not be comparable to similarly titled measures of other companies. Other companies, including companies in our industry, may calculate non-GAAP financial measures differently than we do, limiting the usefulness of those measures for those comparative purposes. Because of these limitations, this non-GAAP financial measure should be considered along with other operating and financial performance measures presented in accordance with U.S. GAAP. The presentation of this non-GAAP financial measure 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 this non-GAAP financial measure with the most directly comparable U.S. GAAP financial measure below.
Adjusted net loss
We calculate Adjusted net loss as net income (loss) from continuing operations adjusted for stock compensation expense, severance expense, bankruptcy costs (which represent professional fees incurred related to the bankruptcy prior to filing of the petition and post-emergence), 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), operating lease right-of-use assets impairment and long-lived asset impairment charges.
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The following table presents a reconciliation of Adjusted net loss to net income (loss) from continuing operations, which is the most directly comparable U.S. GAAP measure (in thousands):
Successor
Predecessor
Non-GAAP Combined
Predecessor
Period from January 15 through December 31,
Period from January 1 through January 14,
Year Ended
December 31,
Year Ended
December 31,
(in thousands)
Net income (loss) from continuing operations
Adjusted to exclude the following:
Stock compensation expense
Severance expense
Bankruptcy costs (prepetition filing and post-emergence)
Reorganization items, net
Impairment charges
Adjusted net loss
Non-GAAP Combined Year Ended December 31, 2025
Our financial results for the periods from January 1, 2025 through January 14, 2025 and the year ended December 31, 2024 are referred to as those of the “Predecessor” periods. Our financial results for the periods from January 15, 2025 through December 31, 2025 is referred to as those of the “Successor” periods. Our results of operations as reported in our Consolidated Financial Statements for these periods are prepared in accordance with U.S. GAAP. Although U.S. GAAP requires that we report our results for the period from January 1, 2025 through January 14, 2025 and the period from January 15, 2025 through December 31, 2025 separately, management views our operating results for the year ended December 31, 2025 by combining the results of the applicable Predecessor and Successor periods because such presentation provides the most meaningful comparison of our results to prior periods. We believe we cannot adequately benchmark the operating results of the period from January 15, 2025 through December 31, 2025 against any of the previous periods reported in our Consolidated Financial Statements without combining it with the period from January 1, 2025 through January 14, 2025, and do not believe that reviewing the results of this period in isolation would be useful in identifying trends in or reaching conclusions regarding our overall operating performance. Management believes that the key performance metrics for the Successor period when combined with the Predecessor period provide more meaningful comparisons to other periods and are useful in identifying current business trends. Accordingly, in addition to presenting our results of operations as reported in our Consolidated Financial Statements in accordance with U.S. GAAP, the tables and discussion below also present the combined results for the year ended December 31, 2025. The combined results for the year ended December 31, 2025 represent the sum of the reported amounts for the Predecessor period from January 1, 2025 through January 14, 2025 and the Successor period from January 15, 2025 through December 31, 2025. These combined results are not considered to be prepared in accordance with U.S. GAAP and have not been prepared as pro forma results per applicable regulations. The combined operating results do not reflect the actual results we would have achieved absent our emergence from the Prepackaged Chapter 11 Case and are not necessarily indicative of future results. Accordingly, the results for the combined year ended December 31, 2025 (prepared on a Non-GAAP basis) and year ended December 31, 2024 (prepared on a GAAP basis) may not be comparable, particularly for statement of operations line items significantly impacted by the Reorganization transactions and the impact of fresh start accounting.
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:
Fresh Start Accounting
Upon emergence from the Prepackaged Chapter 11 Case, we adopted fresh start accounting in accordance with FASB Codification Topic 852, Reorganizations ("ASC 852") and became a new entity for financial reporting purposes. As a result, the consolidated financial statements after the Effective Date are not comparable with the consolidated financial
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statements on or before that date as indicated by the “black line” division in the financial statements and footnote tables, which emphasizes the lack of comparability between amounts presented. References to “Successor” relate to our financial position and results of operations after the Effective Date. References to “Predecessor” refer to our financial position and results of operations on or before the Effective Date. For further information on comparability of Predecessor and Successor periods, see discussion within Results of Operations section below.
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 higher interest rates, the current inflationary environment and vehicle depreciation, which has negatively impacted the fair value of our finance receivables and the losses recognized for the year ended December 31, 2025. While we expect long term improvements in our finance receivable portfolio, we expect some downward trends to continue to negatively impact our business into 2026. 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 tighten our credit program. We initially saw some improvements with the 2023 and 2024 vintages as a result of these changes. Subsequently, macroeconomic factors have negatively impacted these vintages. This unfavorable loan performance continued on 2025 originations, resulting in us making further refinements to our credit program in order to improve performance. 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 and any future decreases on available advance rates may have an adverse impact on our liquidity.
Enhanceprofitability at UACC
In addition to higher credit losses, UACC’s ability to achieveprofitability 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 three senior secured warehouse credit facility agreements (the “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. There can be no assurance that UACC will be able to complete additional securitizations in the future, particularly if the securitization markets become constrained.
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 lossseverity. Certain advance rates available to UACC on borrowings from UACC’s Warehouse Credit Facilities have decreased and any future decreases on available advance rates may have an adverse impact on our liquidity. Events in our industry or in industries adjacent to ours could make it more difficult for UACC to obtain financing. For example, in September 2025, an unrelated subprime auto lender declared bankruptcy. Subsequently, federal authorities alleged that the bankruptcy was due to fraudulent activity. We continue to evaluate our controls to ensure appropriate pledging of collateral balances continues to be effective.
As of December 31, 2025, we had three of our Warehouse Credit Facilities, with an aggregate borrowing capacity of $600 million, expiring in June 2026, August 2026 and April 2027, respectively. We are in ongoing discussions with the warehouse 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
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available to us on acceptable terms, or at all. The remaining fourth Warehouse Credit Facility, which had a borrowing capacity of $200 million, expired on July 21, 2025, pursuant to its terms, and we elected not to renew this commitment on the basis that borrowing capacity from our other Warehouse Credit Facilities is sufficient to support our current operational needs.
See "Risk Factors—We may not generate sufficient liquidity to operate our business, UACC's securitizations may expose it to financing and other risks, and there can be no assurance that it will be able to access the securitization market in the future, which may require it to seek more costly financing, and, UACC may be unable to continue to access or renew funding sources and obtain capital needed to maintain and grow its business" in this Annual Report on Form 10-K for the year ended December 31, 2025.
Ability to optimize our dealer network to increase vehicle finance offerings
We intend to moderately grow our automotive financing business while focusing on achievingprofitability. UACC intends 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. In mid-2024, we began indirectly offering competitive vehicle financing services to consumers with slightly higher, or “near-prime,” credit scores compared to our historical customer base. The Near-Prime Program is still in its early stages and a small percentage of our portfolio. 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.
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 impacting consumer sentiment 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 that year. While additional cuts were made in 2025, based on the March 2026 meeting, the Federal Reserve officials voted to keep interest rates steady. We are not able to predict if, when, and to what degree rates may change and the impact it may have on the economy and our business.
In addition, the current U.S. Presidential administration has implemented significant tariffs on imports to the United States, including tariffs on automobiles, auto parts, steel, and aluminum. While the U.S. has reached trade agreements with certain countries that reduced tariff rates on some automotive goods, tariffs on imports from other countries, including Canada and Mexico, remain elevated. Many countries have imposed retaliatory tariffs as well as other trade restrictions and retaliatory measures. Such significant tariffs, restrictions or other retaliatory measures have had, and could continue to have a major impact on the United States automotive industry, which depends heavily on cross border trade. Should additional tariffs be implemented and sustained by the United States and other countries for an extended period of time, they would have a significant adverse effect, including financial, on the automotive industry. Further, any additional restrictions by the United States or other governments would exacerbate the impact, as could the uncertainty regarding the magnitude or duration of these measures. Additionally, fragility in the supply chain exacerbated by tariffs and other industry concerns, such as restrictions related to rare earth minerals, increases the risk of production disruptions in the automotive industry. Steps taken by governments to implement tariffs or other restrictions on raw materials (including steel, aluminum and rare earth minerals), automobiles, parts, and other products and materials have
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disrupted existing supply chains and imposed additional costs on businesses in the automotive industry in the United States and globally. While negotiations regarding tariffs and other restrictions are ongoing and changing rapidly, the resulting environment of tariffs and other trade restrictions or barriers have increased automobile prices in the U.S. and caused volatility, this could lead to negative consumer sentiment and in turn, decreased consumer demand for automobiles, and in turn, decreased demand for motor vehicle contracts financed through UACC, which has negatively impacted and could continue to negatively impact our results of operations, cash flows, and financial condition.
Moreover, events in our industry or in industries adjacent to ours could make it more difficult for UACC to obtain financing. For example, in September 2025, an unrelated subprime auto lender declared bankruptcy. Subsequently, federal authorities alleged that the bankruptcy was due to fraudulent activity. We continue to evaluate our controls to ensure appropriate pledging of collateral balances continues to be effective.
Further, 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. Ongoing economic and political disruption, or a significant escalation or expansion of such disruption could continue to impact consumer sentiment and spending, broaden inflationary costs, and could have a material adverse effect on our results of operations. For example, recent escalations of conflict may cause oil and gasoline inflation, reduce consumer purchasing power, and increase default rates within the UACC portfolio, while heightening the risk of cyberattacks.
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 into 2026.
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.
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The following table presents our consolidated results of operations for the periods indicated:
Successor
Predecessor
Non-GAAP Combined
Predecessor
Non-GAAP
Non-GAAP
Period from January 15 through December 31,
Period from January 1 through January 14,
Year Ended
December 31,
Year Ended
December 31,
$ Change
% Change
(in thousands)
Interest income
Interest expense:
Warehouse credit facility
Securitization debt
Total interest expense
Net interest income
Realized and unrealized losses, net of recoveries
Net interest income after losses and recoveries
Noninterest income:
Servicing income
Warranties and GAP income, net
CarStory revenue
Other income
Total noninterest income
Expenses:
Compensation and benefits
Professional fees
Software and IT costs
Depreciation and amortization
Interest expense on corporate debt
Impairment charges
Other expenses
Total expenses
Loss from continuing operations before reorganization items and provision for income taxes
Reorganization items, net
Income (loss) from continuing operations before provision for income taxes
Provision for income taxes from continuing operations
Net income (loss) from continuing operations
Net income (loss) from discontinued operations
Net income (loss)
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
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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.
Non-GAAP Combined Year Ended December 31, 2025 and 2024
The Successor Period and the Predecessor Periods are distinct reporting periods as a result of our emergence from the Prepackaged Chapter 11 Case on January 14, 2025. References in these results of operations to the change and the percentage change combine the period from January 1, 2025, to January 14, 2025 (Predecessor) with the period from January 15, 2025 to December 31, 2025 (Successor) Period, which we refer to as the Year Ended December 31, 2025, in order to provide some comparability of such information to the Year Ended December 31, 2024. See "Non-GAAP Financial Measures" above.
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Year Ended December 31, 2025 and 2024
UACC
Successor
Predecessor
Non-GAAP Combined
Predecessor
Non-GAAP
Non-GAAP
Period from January 15 through December 31,
Period from January 1 through January 14,
Year Ended
December 31,
Year Ended
December 31,
Change
% Change
(in thousands)
Interest income
Interest expense:
Warehouse credit facility
Securitization debt
Total interest expense
Net interest income
Realized and unrealized losses, net of recoveries
Net interest income (loss) after losses and recoveries
Noninterest income:
Servicing income
Warranties and GAP income, net
Other income
Total noninterest income
Expenses:
Compensation and benefits
Professional fees
Software and IT costs
Depreciation and amortization
Interest expense on corporate debt
Impairment charges
Other expenses
Total expenses
Provision for income taxes from continuing operations
Adjusted net loss
Stock compensation expense
Severance
Interest income
UACC acquires and services finance receivables from its network of third-party dealership customers and generates interest income. Prior to our Prepackaged Chapter 11 Case this consisted of discount income and interest income. However, upon emergence and on the Effective Date, we made an accounting policy election to recognize discount income as a component of 'Realized and unrealized losses, net of recoveries' on a prospective basis. Discount income represents the amortization of unearned discounts over the contractual life of the underlying finance receivables held for investment at fair value. We also made an accounting policy election to elect the fair value option on all finance receivables and classify them as held for investment. Discounts on the finance receivables held-for-sale were previously deferred until they were sold.
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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.
Interest income decreased $25.1 million, or 12.3%, to $178.9 million for the year ended December 31, 2025 from $204.0 million for the year ended December 31, 2024. This decrease was primarily a result of the accounting policy change which resulted in lower discount income as well as lower finance receivable balances. The loan portfolio decreased to $808.6 million as of December 31, 2025, from $822.0 million as of December 31, 2024.
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 decreased $6.7 million or 11.1% to $52.7 million for the year ended December 31, 2025 from $59.4 million for the year ended December 31, 2024. The decrease was a result of lower interest expense incurred on the Warehouse Credit Facilities, which decreased $10.7 million to $18.6 million for the year ended December 31, 2025 from $29.3 million for the year ended December 31, 2024. The decrease is attributable to a lower average outstanding balance in 2025 of $227.1 million as compared to $367.2 million in 2024, as well as a decrease in weighted average interest rate to 5.55% in 2025 from 6.32% in 2024. The decrease in interest expense is partially offset by higher interest expense incurred on securitization debt, which increased $4.0 million to $34.1 million for the year ended December 31, 2025 from $30.1 million for the year ended December 31, 2024, as a result of a higher average outstanding balance in 2025 of $498.2 million as compared to $368.3 million in 2024.
Realized and unrealized losses, net of recoveries
Upon emergence from the Prepackaged Chapter 11 Case, and application of fresh start accounting, we made an accounting policy election to report discount income as a component of "Realized and unrealized losses, net of recoveries". We also made an accounting policy election to elect the fair value option for all finance receivables held for sale on a prospective basis. Realized and unrealized losses, net of recoveries, represents changes in the fair value of finance receivables for which the fair value option was selected, changes in the fair value of securitization debt , changes in the fair value of beneficial interests, as well as collection expenses related to servicing finance receivables. Prior to emergence from the Prepackaged Chapter 11 Case, realized and unrealized losses, net of recoveries also represented charge-offs of finance receivables held for sale and changes in the valuation allowance on the held for sale portfolio.
Realized and unrealized losses, net of recoveries, increased $5.9 million or 6.0% to $104.5 million for the year ended December 31, 2025 from $98.6 million for the year ended December 31, 2024, primarily driven by an increase in the number and severity of delinquencies as well as lower recoveries of finance receivables, partially offset by discount income being recognized as a component of realized and unrealized losses, net of recoveries.
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 $1.6 million or 24.9% to $4.9 million for the year ended December 31, 2025 from $6.5 million for the year ended December 31, 2024, 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.
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United Auto Credit GAP is a debt waiver product that provides protection for consumers who purchase the product by waiving the difference between the actual cash value of the consumer’s vehicle and the balance of the consumer’s finance receivable, subject to the terms and conditions of the United Auto Credit GAP, in the event of a total loss resulting from collision or theft. The total fees are earned over the contractual life of the related financial receivables on straight-line basis.
Warranties and GAP income increased $5.7 million or 72.8% to $13.5 million for the year ended December 31, 2025 from $7.8 million for the year ended December 31, 2024, primarily as a result of lower cancellation and claim losses, along with funding more contracts with GAP and warranty products and charging higher fees in the current year period.
Other Income
Other income decreased $0.4 million or 4.8% to $7.9 million for the year ended December 31, 2025 from $8.3 million for the year ended December 31, 2024, primarily driven by lower interest income on investments.
Compensation and benefits
Compensation and benefits decreased $14.3 million or 18.7% to $62.1 million for the year ended December 31, 2025 from $76.4 million for the year ended December 31, 2024. The decrease was primarily a result of lower salary expense as a result of fewer employees as we continue right-sizing our workforce, a decrease in variable compensation, lower severance expense related to the termination of certain employees in the prior year period, and an increase in internal software capitalization as we continue to invest in building our technology assets.
Professional fees
Professional fees increased $3.8 million or 109.1% to $7.3 million for the year ended December 31, 2025 from $3.5 million for the year ended December 31, 2024, primarily as a result of an increase in legal and audit services.
Depreciation and amortization
Depreciation and amortization decreased $19.0 million or (83.5)% to $3.7 million for the year ended December 31, 2025 from $22.7 million for the year ended December 31, 2024, primarily as a result of lower intangible assets upon emergence from our Prepackaged Chapter 11 Case, leading to lower amortization expense in the current year period.
Impairment charges
Impairment charges decreased $1.7 million to $3.5 million for the year ended December 31, 2025 from $5.2 million for the year ended December 31, 2024. In 2025 we had lease impairment charges of $3.5 million. In 2024 we impaired capitalized internal-use software that no longer has a planned future use of $2.8 million as well as lease impairment charges of $2.4 million.
Other expenses
Other expenses decreased $1.9 million or 19.8% to $7.6 million for the year ended December 31, 2025 from $9.5 million for the year ended December 31, 2024, primarily as a result of changing the existing dealer incentives program and recording a loss on the repurchase of the non-investment grade securities related to the 2022-2 securitization transaction in the prior year period.
Adjusted net loss
Adjusted net loss decreased $11.4 million to $42.0 million for the year ended December 31, 2025 from $53.4 million for the year ended December 31, 2024, primarily due to lower compensation and benefit expense and lower depreciation and amortization expense, partially offset by higher realized and unrealized losses, net of recoveries and a decrease in interest income, as discussed above.
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CarStory
Successor
Predecessor
Non-GAAP Combined
Predecessor
Non-GAAP
Non-GAAP
Period from January 15 through December 31,
Period from January 1 through January 14,
Year Ended
December 31,
Year Ended
December 31,
Change
% Change
(in thousands)
Noninterest income:
CarStory revenue
Other income
Total noninterest income
Expenses:
Compensation and benefits
Professional fees
Software and IT costs
Depreciation and amortization
Other expenses
Total expenses
Provision for income taxes from continuing operations
Adjusted net income (loss)
Stock compensation expense
CarStory revenue
CarStory generates advertiser, publisher and other user service revenue by offering its AI-powered analytics and digital retailing services to dealers, automotive financial services companies and others in the automotive industry.
CarStory revenue decreased $4.3 million or 36.7% to $7.3 million for the year ended December 31, 2025 from $11.6 million for the year ended December 31, 2024, primarily as a result of a change in the scope of service and data provided to our customers and the loss of a major customer.
Compensation and benefits
Compensation and benefits decreased $4.2 million or 41.0% to $6.1 million for the year ended December 31, 2025 from $10.3 million for the year ended December 31, 2024. The decrease was primarily a result of an increase in the allocation of CarStory resources to UACC.
Depreciation and amortization
Depreciation and amortization decreased $5.7 million or 89.6% to $0.7 million for the year ended December 31, 2025 from $6.4 million for the year ended December 31, 2024, primarily as a result of lower intangible assets upon emergence from our Prepackaged Chapter 11 Case, leading to lower amortization expense in the current year period.
Adjusted net income (loss)
Adjusted net income (loss) increased $5.6 million or 113.9% to $0.7 million income for the year ended December 31, 2025 as compared to $4.9 million loss for the year ended December 31, 2024 primarily due to lower compensation and benefit expense and lower depreciation and amortization expense, partially offset by a decrease in revenue, as discussed above.
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Corporate
Successor
Predecessor
Non-GAAP Combined
Predecessor
Non-GAAP
Non-GAAP
Period from January 15 through December 31,
Period from January 1 through January 14,
Year Ended
December 31,
Year Ended
December 31,
Change
% Change
(in thousands)
Interest income (expense)
Realized and unrealized losses (gains), net of recoveries
Net interest income after losses and recoveries
Noninterest (loss) income:
Warranties and GAP income (loss), net
Other income
Total noninterest (loss) income
Expenses:
Compensation and benefits
Professional fees
Software and IT costs
Interest expense on corporate debt
Impairment expense
Other expenses
Total expenses
Provision for income taxes from continuing operations
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, changed $11.7 million to $1.3 million income for the year ended December 31, 2025 from $10.4 million loss for the year ended December 31, 2024, primarily as a result of a revised estimate of proceeds we expect to recover as a result of the Ecommerce Wind-Down that was recorded in the prior year period.
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Other income
Other income increased $0.5 million to $2.3 million for the year ended December 31, 2025 from $1.8 million for the year ended December 31, 2024, primarily driven by a release of aged accruals, partially offset by lower interest earned on cash and cash equivalents.
Compensation and benefits
Compensation and benefits expense decreased $5.7 million or 54.1% to $4.9 million for the year ended December 31, 2025 from $10.6 million for the year ended December 31, 2024, primarily as a result of lower expense due to the departure of certain key executives and retention bonuses granted to retain key employees paid out in the prior year period subsequent to the Ecommerce Wind-Down.
Professional fees
Professional fees decreased $3.3 million or 38.9% to $5.1 million for the year ended December 31, 2025 from $8.4 million for the year ended December 31, 2024, primarily as a result of legal fees incurred in 2024 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 $2.5 million or 55.3% to $2.0 million for the year ended December 31, 2025 from $4.5 million for the year ended December 31, 2024, primarily as a result of more efficient targeted software use as well as renegotiating and right-sizing our Software and IT contracts.
Interest expense on corporate debt
Interest expense on corporate debt decreased $3.0 million or 87.0% to $0.4 million for the year ended December 31, 2025 from $3.4 million for the year ended December 31, 2024, primarily related to the extinguishment of our 2026 Notes that were converted to equity as part of our Prepackaged Chapter 11 Case.
Other expenses
Other expenses decreased $4.3 million or 67.4% to $2.1 million for the year ended December 31, 2025 from $6.4 million for the year ended December 31, 2024, primarily related to a decrease in public company related insurance costs as we renegotiated our insurance policies 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 2026 Notes received a pro rata share of 92.94% of the Common Stock (subject to dilution) and all of the Company’s outstanding obligations under the 2026 Notes and the Indenture were deemed fully satisfied and discharged.
As of December 31, 2025, we had cash and cash equivalents of $10.4 million and restricted cash of $55.9 million. Restricted cash primarily includes restricted cash required under UACC's securitization transactions and Warehouse Credit Facilities of $55.8 million. Additionally, we had excess borrowing capacity of $11.3 million under UACC's Warehouse Credit Facilities as of December 31, 2025 and $27.0 million available under our Delayed Draw Facility (as defined below). We have historically had negative cash flows and generated losses from operations and our primary source of liquidity has been cash generated through financing activities.
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 one to two years and we typically renew those facilities in the ordinary course. As of December 31, 2025, we had three Warehouse Credit Facilities, with an aggregate borrowing capacity of $600.0 million and outstanding borrowings of $318.7 million, expiring in June 2026, August 2026 and April 2027, respectively. We are in ongoing discussions with the warehouse 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
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available to us on acceptable terms, or at all. On July 21, 2025, the remaining fourth Warehouse Credit Facility, which had a borrowing capacity of $200 million, expired pursuant to its terms and was not extended or renewed. We believe that our borrowing capacity from our other Warehouse Credit Facilities is sufficient to support our current operational needs and therefore elected not to renew this commitment. Refer to Note 10 — Warehouse Credit Facilities and Consolidated VIEs to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K. Failure to retain sufficient warehouse borrowing capacity 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”). On October 9, 2025 the maximum facility amount was amended from $25.0 million to $35.0 million effective as of September 30, 2025. The Delayed Draw Facility matures on December 31, 2026. As of December 31, 2025, we have drawn $8.0 million against the Delayed Draw Facility. Refer to Note 20 — Related Party Transactions to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
On August 29, 2025, we issued $10.0 million aggregate principal amount of 2030 Notes to support our long-term business strategy. The 2030 notes were issued pursuant to a Note Purchase Agreement with Annox Capital, LLC and Robert J. Mylod, Jr., the Managing Partner of Annox Capital, LLC and the Independent Executive Chair of the board of directors of the Company. Refer to Note 11 — Long Term Debt to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K, for further discussion.
On November 25, 2025, Vroom, Inc. entered into a Note Purchase Agreement with Robert J. Mylod, Jr., the Independent Executive Chair of the board of directors of the Company. Pursuant to the Note Purchase Agreement, the Company issued Senior Secured Delayed Draw Notes due 2026 (the “Delayed Draw Notes”) in a maximum aggregate principal commitment amount of $10.5 million, which matures on November 25, 2026. As of December 31, 2025, the Company drew $10.5 million against the Delayed Draw Notes. Refer to Note 20 — Related Party Transactions to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
On January 16, 2026, Vroom Automotive, LLC issued to SPE Holdings 15,000 newly issued Series A preferred units and 7,500 newly issued Series B preferred units for aggregate gross proceeds of $22.5 million.
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 Prepackaged Chapter 11 Case and our Long-Term Strategic Plan, available advance rates on the Warehouse Credit Facilities, our ability to complete additional securitization transactions on favorable terms, and future credit losses. We anticipate that our existing cash and cash equivalents, the delayed draw facility, the delayed draw notes, 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. On February 5, 2026, UACC completed the 2026-1 securitization transaction, in which it issued approximately $225.0 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 $224.1 million. The trust is collateralized by finance receivables with an aggregate principal balance of $274.9 million as of February 5, 2026. These finance receivables are serviced by UACC and UACC receives an "at market" servicing fee. UACC retained the residual interests, which required us to account for the 2026-1 securitization as secured borrowings and the assets and liabilities of the trust remain on balance sheet.
During the first quarter of 2025, UACC completed the 2025-1 securitization transaction, in which it issued approximately $307.8 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 $306.5 million. The trust is collateralized by finance receivables with an aggregate principal balance of $382.1 million as of March 12, 2025. These finance receivables
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are serviced by UACC and UACC receives an "at market" servicing fee. UACC retained the residual interests, which required us to account for the 2025-1 securitization as secured borrowings and the assets and liabilities of the trust remain on balance sheet.
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.
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. As of December 31, 2025, UACC pledged $27.6 million of its retained beneficial interests as collateral, and the outstanding borrowings related to this risk retention financing facility were $19.8 million with expected repurchase dates ranging from June 2027 to October 2031. 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 .
Warehouse Credit Facilities
UACC has three 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.
During the year ended December 31, 2025 we renewed three of our previous four Warehouse Credit Facilities. The significant terms of the agreements remained unchanged except for certain reductions in advance rates and increases in minimum liquidity and tangible net worth requirements as well as a decrease of the aggregate borrowing limit under one of the facilities from $225.0 million to $200.0 million. On July 21, 2025, the remaining Warehouse Credit Facility, which had a borrowing capacity of $200 million, expired pursuant to its terms and was not extended or renewed. We believe that our borrowing capacity from our other Warehouse Credit Facilities is sufficient to support our current operational needs and therefore elected not to renew this commitment. The remaining Warehouse Credit Facilities expire in June 2026, August 2026 and April 2027, respectively. We are in ongoing discussions with the warehouse 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.
The aggregate borrowing limit under the Warehouse Credit Facilities as of December 31, 2025 was $600.0 million. Our ability to utilize the 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, and specified leverage ratios. Failure to satisfy these and or any other requirements contained within the agreements would restrict access to or cause us to be in default of the terms of the Warehouse Credit Facilities and could have a material adverse effect on our financial condition, results of operations and liquidity. Certain breaches of covenants or events of default may also result in acceleration of the repayment of borrowings prior to the scheduled maturity. As of December 31, 2025, outstanding borrowings related to the Warehouse Credit Facilities were $318.7 million and we were in compliance with all covenants under the terms of the Warehouse Credit Facilities. 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, 2025 operating lease obligations were $11.3 million, with $2.0 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.
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Cash Flows from Operating, Investing, and Financing Activities
The following table summarizes our cash flows for the years ended December 31, 2025 and 2024:
Successor
Predecessor
Non-GAAP Combined
Predecessor
Period from January 15 through December 31,
Period from January 1 through January 14,
Year Ended
December 31,
Year Ended
December 31,
(in thousands)
Net cash provided by (used in) operating activities from continuing operations
Net cash (used in) provided by investing activities from continuing operations
Net cash provided by (used in) financing activities from continuing operations
Net cash (used in) provided by operating activities from discontinued operations
Net cash provided by investing activities from discontinued operations
Net cash used in financing activities from discontinued operations
Net increase (decrease) in cash, cash equivalents and restricted cash
Cash and cash equivalents and restricted cash at beginning of period
Cash and cash equivalents and restricted cash at end of period
Operating Activities
Net cash flows provided by (used in) operating activities from continuing operations decreased by $247.6 million, from $175.8 million net cash used in operating activities for the year ended December 31, 2024 to $71.8 million net cash provided by operating activities for the year ended December 31, 2025. The reduction of cash used in operating activities was primarily due to a $389.9 million decrease in originations of finance receivables held for sale. As a result of emerging from the Prepackaged Chapter 11 Case and applying fresh start accounting, our finance receivables are originated and accounted for as held for investment at fair value and are classified as investing activities prospectively. The increase in net cash flows provided by operating activities was also due to a $37.8 million improvement in net income (loss) from continuing operations after reconciling adjustments, offset by a decrease in principal payments received on finance receivables held for sale of $180.3 million.
Investing Activities
Net cash flows (used in) provided by investing activities from continuing operations changed $220.7 million, from $114.9 million net cash provided by investing activities for the year ended December 31, 2024 to $105.8 million net cash used in investing activities for the year ended December 31, 2025. The decrease in cash provided by investing activities was primarily due to a $419.7 million increase in originations of finance receivables held for investment, offset by a $203.8 million increase in principal payments received on finance receivables at fair value. As a result of emerging from the Prepackaged Chapter 11 Case and applying fresh start accounting, our finance receivables are originated and accounted for as held for investment at fair value and are classified as investing activities prospectively.
Financing Activities
Net cash flows provided by (used in) financing activities from continuing operations changed $38.8 million, from $14.8 million net cash used in financing activities for the year ended December 31, 2024 to $24.0 million net cash provided by financing activities for the year ended December 31, 2025. The change was primarily related to a $20.1
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million increase in net cash flows from the borrowings under our Warehouse Credit Facilities, $18.5 million received from the related party line of credit in 2025, and $10.0 million received in connection with the issuance of the related party note in 2025, offset by a $7.4 million decrease in net cash flows related to higher repayments of secured financing agreements.
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.
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.
Fresh Start Accounting
We 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 and up to and including the Effective Date, which includes 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 connection with our emergence from the Prepackaged Chapter 11 Case and in accordance with ASC Topic 852, we qualified for and adopted fresh start accounting on the Effective Date. We were required to adopt fresh start accounting because (i) the holders of existing voting shares of the Predecessor received less than 50% of the voting shares of the Successor Company, and (ii) the reorganization value of our assets immediately prior to confirmation of the Plan was less than the post-petition liabilities and allowed claims. In accordance with ASC Topic 852, with the application of fresh start accounting, we allocated the reorganization value to our individual assets and liabilities (except for deferred income taxes) based on their estimated fair values in conformity with ASC Topic 805, Business Combinations. The amount of deferred taxes was determined in accordance with ASC Topic 740, Income Taxes. The Effective Date fair values of our assets and liabilities differed materially from their recorded values as reflected on the historical balance sheets. Refer to Note 6 – Fresh Start Accounting to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further details.
The results of our analysis indicated that the principal assets requiring fair value adjustments on the Effective Date included finance receivables held for sale, identified intangible assets and leased assets. The finance receivables held for sale include both finance receivables that are held in a collateralized financing entity ("CFE") and those that are not held in a CFE.
Finance Receivables at Fair Value
Upon emergence from the Prepackaged Chapter 11 Case, and application of fresh start accounting, we made an accounting policy election to elect the fair value option for all finance receivables held for sale, net. The finance receivables held for sale, net were reclassified to finance receivables at fair value.
The valuation of finance receivables at fair value, for which we elected the fair value option in accordance with ASC 825 but are not related to consolidated CFEs, is measured on a recurring basis and 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
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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.
Financial assets and liabilities of CFEs
Upon emergence from the Prepackaged Chapter 11 Case, and application of fresh start accounting, we made an accounting policy election to apply the measurement alternative to the 2024-1 consolidated CFE. All consolidated CFEs now apply the measurement alternative and the fair value of financial assets and liabilities of CFEs are measured on a recurring basis.
We are required to determine whether the fair value of the financial assets or the fair value of the financial liabilities of the 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. We 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, 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 we obtain prices from multiple broker dealers for the same security and have a consensus among them, we deem 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 we have multiple quotes that are not within determined range, we classify 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 and the valuation of residual interests, which is derived from an internal valuation model and calculated in line with the valuation of finance receivables at fair value not related to consolidated CFEs discussed above. We determined that finance receivables of CFEs in their entirety should be classified as Level 3 of the fair value hierarchy.
The estimates for the aforementioned assumptions significantly affect the reported amount (and changes thereon) of our financial assets and liabilities of CFEs on our consolidated balance sheets and consolidated statements of operations.
Intangible Assets
The identified intangible assets of $14.2 million upon emergence, which principally consists of technology, trade names and trademarks, and customer relationships were estimated based on either the cost approach, relief from royalty or multi-period excess earnings methods. Significant assumptions for identified intangibles included royalty rates, discount rates, margins, attrition rates, revenue growth rates, and economic lives. Such fair value measurement of intangible assets is considered Level 3 of the fair value hierarchy.
For the technology-based intangibles that were valued using the relief from royalty income approach, the royalty rate was estimated to be 5.0% and the discount rate 25%. For the technology-based intangibles that were valued using the cost approach, the margin was estimated to be 8.5%. For trade names and trademarks valued under the relief from royalty income approach, the royalty rate was estimated to be 0.5% and the discount rate 25%. For customer related intangible assets that were valued using the multi-period excess earnings method, the attrition rate was estimated to be 10% and the discount rate 25%.
The estimates for the aforementioned assumptions significantly affect the reported amount of our intangible assets on our consolidated balance sheets and consolidated statements of operations.
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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.
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Item 8. Financial Stateme nts and Supplementary Data
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
Report of Independent Registered Public Accounting Firm PCAOB ID 49
Consolidated Balance Sheets as of December 31, 2025 and 2024
Consolidated Statements of Operations for the Years Ended December 31, 2025 and 2024
Consolidated Statements of Changes in Stockholders' Equity for the Years Ended December 31, 2025 and 2024
Consolidated Statements of Cash Flows for the Years Ended December 31, 2025 and 2024
Notes to Consolidated Financial Statements
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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. and its subsidiaries (Successor) (the Company) as of December 31, 2025, the related consolidated statements of operations, changes in stockholders’ equity and cash flows for the period from January 15, 2025 through December 31, 2025, 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, 2025, and the results of its operations and its cash flows for the period from January 15, 2025 through December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.
Basis of Accounting
As discussed in Note 1, The Prepackaged Chapter 11 Case and Basis of Presentation , 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. In connection with its emergence from bankruptcy, the Company adopted fresh start accounting as of January 14, 2025.
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.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates 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 matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.
Fair Value of Finance Receivables
The Company’s finance receivables at fair value, that are not financial assets of consolidated collateralized financing entities, totaled $367,552 thousand at December 31, 2025. As discussed in Notes 2 and 16 to the consolidated financial statements, the Company estimates the fair value of finance receivable that are not financial assets of consolidated collateralized financing entities 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 that are not financial assets of consolidated collateralized financing entities as a critical audit matter due to the significant judgement required by management in determining assumptions, including the prepayment speed, default rate, recovery rate and discount rate.
Our audit procedures related to the valuation of finance receivables that are not financial assets of consolidated collateralized financing entities as of December 31, 2025 included the following procedures, amongst others:
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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.
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.
/s/ RSM US LLP
Los Angeles, California
March 26, 2026
We have served as the Company’s auditor since 2024.
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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. and its subsidiaries (Predecessor) (the Company) as of December 31, 2024, the related consolidated statements of operations, changes in stockholders’ equity and cash flows for the period from January 1, 2025 through January 14, 2025 and for the year ended December 31, 2024, 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 period from January 1, 2025 through January 14, 2025 and for the year ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.
Basis of Accounting
As discussed in Note 1, The Prepackaged Chapter 11 Case and Basis of Presentation , 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. In connection with its emergence from bankruptcy, the Company adopted fresh start accounting. This matter is also described in the “Critical Audit Matter” section of our report.
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 audits. 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, Description of Business and Organization , 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.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates 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 matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.
Fair Value of Finance Receivables in Connection with the Application of Fresh Start Accounting
As discussed in Note 2, Note 6 and Note 16, in accordance with ASC Topic 852, with the application of fresh start accounting the Company allocates its equity value to its individual assets and liabilities based on their estimated fair values determined in conformity with ASC Topic 820, Fair Value. Included in the fair value estimates are finance receivables of $825,012 thousand of which $437,568 thousand are not financial assets of consolidated collateralized financing entities. The Company estimates the fair value of finance receivable at fair value that are not financial assets of consolidated collateralized financing entities utilizing valuation models that include discounted cash flow models, incorporating key inputs including prepayment speeds, default rates, recovery rates and discount rates.
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We identified the valuation of finance receivables at fair value that are not financial assets of consolidated collateralized financing entities as a critical audit matter due to the significant judgement required by management in determining assumptions, including the prepayment speed, default rate, recovery rate and discount rate.
Our audit procedures related to the valuation of finance receivables that are not financial assets of consolidated collateralized financing entities as the Company’s application of fresh start accounting 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.
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.
/s/ RSM US LLP
Los Angeles, California
March 26, 2026
We have served as the Company’s auditor since 2024.
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VROOM, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
Successor
Predecessor
December 31,
December 31,
ASSETS
Cash and cash equivalents
Restricted cash (including restricted cash of consolidated VIEs of $ 55.8 million and $ 48.1 million, respectively)
Finance receivables at fair value (including finance receivables of consolidated VIEs of $ 777.0 million and $ 467.3 million, respectively)
Finance receivables held for sale, net (including finance receivables of consolidated VIEs of $ 0.0 and $ 310.0 million, respectively)
Interest receivable (including interest receivables of consolidated VIEs of $ 12.4 million and $ 13.3 million, respectively)
Property and equipment, net
Intangible assets, net
Operating lease right-of-use assets
Other assets (including other assets of consolidated VIEs of $ 9.8 million and $ 10.8 million, respectively)
Assets from discontinued operations
Total assets
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Warehouse credit facilities of consolidated VIEs
Related party line of credit (Note 20)
Long-term debt (including securitization debt of consolidated VIEs of $ 393.2 million at fair value as of December 31, 2025 and $ 210.7 million at amortized cost and $ 142.6 million at fair value as of December 31, 2024)
Related party note (Note 20)
Operating lease liabilities
Other liabilities (including other liabilities of consolidated VIEs of $ 15.7 million and $ 13.8 million, respectively)
Liabilities subject to compromise (Note 6)
Liabilities from discontinued operations
Total liabilities
Commitments and contingencies (Note 13)
Stockholders’ equity (deficit):
Common stock, $ 0.001 par value; 250,000,000 shares authorized as of December 31, 2025 and 500,000,000 shares authorized as of December 31, 2024; 5,199,641 and 1,822,532 shares issued and outstanding as of December 31, 2025 and December 31, 2024, respectively
Additional paid-in-capital
Accumulated deficit
Total stockholders’ equity (deficit)
Total liabilities and stockholders’ equity (deficit)
See accompanying notes to these consolidated financial statements .
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VROOM, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share amounts)
Successor
Predecessor
Period from January 15 through December 31,
Period from January 1 through January 14,
Year Ended
December 31,
Interest income
Interest expense:
Warehouse credit facility
Securitization debt
Total interest expense
Net interest income
Realized and unrealized losses, net of recoveries
Net interest income (loss) after losses and recoveries
Noninterest income:
Servicing income
Warranties and GAP income (loss), net
CarStory revenue
Other income
Total noninterest income
Expenses:
Compensation and benefits
Professional fees
Software and IT costs
Depreciation and amortization
Interest expense on corporate debt
Impairment charges
Other expenses
Total expenses
Loss from continuing operations before reorganization items and provision for income taxes
Reorganization items, net
(Loss) income from continuing operations before provision for income taxes
Provision for income taxes from continuing operations
Net income (loss) from continuing operations
Net income (loss) from discontinued operations
Net (loss) income
(Continued on following page)
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VROOM, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (continued)
(in thousands, except share and per share amounts)
Successor
Predecessor
Period from January 15 through December 31,
Period from January 1 through January 14,
Year Ended
December 31,
Net (loss) income per share attributable to common stockholders, basic:
Continuing operations
Discontinued operations
Basic
Net (loss) income per share attributable to common stockholders, diluted:
Continuing operations
Discontinued operations
Diluted
Weighted-average number of shares outstanding used to compute net (loss) income per share attributable to common stockholders:
Basic
Diluted
See accompanying notes to these consolidated financial statements.
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VRO OM, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(in thousands, except share amounts)
Common Stock
Additional
Total
Stockholders’
Shares
Amount
Paid-in Capital
Accumulated Deficit
Equity (Deficit)
Predecessor:
Balance at December 31, 2023 (Predecessor)
Stock-based compensation
Vesting of restricted stock units
Net loss
Balance at December 31, 2024 (Predecessor)
Stock-based compensation
Vesting of restricted stock units
Net income
Elimination of Predecessor equity balances
Issuance of Successor equity
Issuance of stock warrants
Balance at January 14, 2025 (Predecessor)
Successor:
Balance at January 15, 2025 (Successor)
Stock-based compensation
Vesting of restricted stock units
Net loss
Balance at December 31, 2025 (Successor)
See accompanying notes to these consolidated financial statements .
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VROOM, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Successor
Predecessor
Period from January 15 through December 31,
Period from January 1 through January 14,
Year Ended
December 31,
Operating activities
Net (loss) income from continuing operations
Adjustments to reconcile net (loss) income to net cash used in operating activities:
Impairment charges
Profit share receivable
Depreciation and amortization
Amortization of debt issuance costs
Losses on finance receivables and securitization debt, net
Losses on Warranties and GAP
Stock-based compensation expense
Provision to record finance receivables held for sale at lower of cost or fair value
Amortization of unearned discounts on finance receivables at fair value
Non-cash reorganization items, net
Other, net
Changes in operating assets and liabilities:
Finance receivables, held for sale
Originations of finance receivables, held for sale
Principal payments received on finance receivables, held for sale
Other
Interest receivable
Other assets
Other liabilities
Net cash provided by (used in) operating activities from continuing operations
Net cash (used in) provided by operating activities from discontinued operations
Net cash provided by (used in) operating activities
Investing activities
Finance receivables, held for investment at fair value
Purchases of finance receivables, held for investment at fair value
Principal payments received on finance receivables, held for investment at fair value
Principal payments received on beneficial interests
Purchase of property and equipment
Net cash (used in) provided by investing activities from continuing operations
Net cash provided by investing activities from discontinued operations
Net cash (used in) provided by investing activities
Financing activities
Proceeds from borrowings under secured financing agreements
Principal repayment under secured financing agreements
Proceeds from financing of beneficial interests in securitizations
Principal repayments of financing of beneficial interests in securitizations
Proceeds from warehouse credit facilities
Repayments of warehouse credit facilities
Proceeds from issuance of related party note
Proceeds from related party line of credit
Other financing activities
Net cash provided by (used in) financing activities from continuing operations
Net cash used in financing activities from discontinued operations
Net cash provided by (used in) financing activities
Net increase (decrease) in cash, cash equivalents and restricted cash
Cash, cash equivalents and restricted cash at the beginning of period
Cash, cash equivalents and restricted cash at the end of period
(Continued on following page)
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VROOM, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(in thousands)
Supplemental disclosure of cash flow information:
Cash paid for interest
Cash paid for reorganization items, net
Cash paid for income taxes
See accompanying notes to these consolidated financial statements .
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VROOM, INC.
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.
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.
In January 2021, the Company completed the acquisition of Vast Holdings, Inc. (d/b/a CarStory). In February 2022, 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 previously operated an end-to-end ecommerce platform to buy and sell used vehicles through its subsidiary Vroom Automotive, LLC. On January 22, 2024, the Company announced that its Board of Directors (“Board”) had approved a value maximization plan, pursuant to which the Company wound down its used vehicle dealership business in order to preserve liquidity and enable the Company to maximize stakeholder value through its remaining businesses (the “Value Maximization Plan”). 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 details.
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 time (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”) under the name “In re Vroom, Inc.” Case No. 24-90571 (CML). 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 .
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VROOM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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 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 "Common Stock").
Warrants to Purchase Common Stock
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 Common Stock, at an exercise price of $ 60.95 per share, to stockholders of the Predecessor 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. On July 7, 2025, the Company's Warrants commenced trading on the OTCQX Best Market under the symbol "VRMWW".
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”).
Upon emergence from the Prepackaged Chapter 11 Case, the Company adopted fresh start accounting in accordance with FASB Codification Topic 852, Reorganizations ("ASC 852") and became a new entity for financial reporting purposes. As a result, the consolidated financial statements after the Effective Date are not comparable with the consolidated financial statements on or before that date as indicated by the “black line” division in the financial statements and footnote tables. 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. Refer to Note 6 — Fresh Start Accounting for further details.
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
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VROOM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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.
Comprehensive Loss
The Company did no t have any other comprehensive income or loss for the years ended December 31, 2025, and 2024 . 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 “Other liabilities” 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 at Fair Value
Finance receivables for which the fair value option was elected under ASC 825 are classified as finance receivables at fair value.
Upon emergence from the Prepackaged Chapter 11 Case, and application of fresh start accounting, the Company made an accounting policy election to account for all finance receivables as finance receivables held for investment at fair value. Prior to the accounting policy change, the Company's finance receivables at fair value included both finance receivables held for sale at fair value as well as finance receivables held for investment at fair value. The Company did not have any finance receivables held for sale at fair value as of December 31, 2025, and the aggregate principal balance and the fair value of the finance receivables held for investment was $ 909.9 million and $ 808.6 million, respectively as of December 31, 2025. 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 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 receivables and recognizes the acquisition costs to underwrite the finance receivables as an expense in the period incurred. For finance receivables held for investment at
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fair value, any discounts are amortized over the contractual life of the underlying finance receivables and is recognized in realized and unrealized loss, net of recoveries on the consolidated statement of operations.
Refer to Note 16 – Financial Instruments and Fair Value Measurements.
Finance Receivables Held for Sale, Net
Upon emergence from the Prepackaged Chapter 11 Case, and application of fresh start accounting, the Company made an accounting policy election to elect the fair value option for all finance receivables held for sale, net. The Company reports all finance receivables on a prospective basis as Finance Receivables at Fair Value. Refer to Note 6 — Fresh Start Accounting for further details.
The finance receivables that the Company intended to sell were classified as held for sale and recorded at the lower of cost or fair value. The Company intended to sell finance receivables through securitization transactions. Deferred acquisition costs and any discounts were deferred until the finance receivables were sold and were then recognized as part of the total gain or loss on sale. Refer to Note 3 — Revenue Recognition for further details.
Prior to the Effective Date, the Company recorded a valuation allowance to report finance receivables held for sale at the lower of cost or fair value. To determine the valuation allowance, finance receivables were evaluated collectively as they represent a large group of smaller-balance homogeneous loans. To the extent that actual experience differed from estimates, significant adjustments to the Company's valuation allowance were needed. Fair value adjustments were 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 were charged-off when the Company was unable to sell the finance receivable and the related vehicle had been repossessed and liquidated, or the receivable had otherwise been deemed uncollectible. As of December 31, 2025, the Company did no t have any finance receivables classified as held for sale, net and therefore did not have a valuation allowance. As of December 31, 2024, the valuation allowance for finance receivables classified as held for sale was $ 31.1 million. Refer to No te 16 – Financial Instruments and Fair Value Measurements .
Consolidated CFEs
The Company's securitization transactions are consolidated collateralized financing entities (CFEs) that are VIEs. Refer to Note 4 — Variable Interest Entities and Securitizations for further details. The Company recognized the following revenue and expenses associated with these CFEs in the consolidated statements of operations (in thousands):
Successor
Predecessor
Period from January 15 through December 31,
Period from January 1 through January 14,
Year Ended
December 31,
Interest income
Interest expense
Realized and unrealized losses, net of recoveries
Noninterest income (loss), net
Reorganization items, net
The assets and liabilities of the CFEs are presented as part of "Restricted cash", “Finance receivables at fair value”, "Interest receivable", "Other Assets", "Long term debt", and "Other liabilities", respectively, on the consolidated balance sheets. Refer to Note 4 – Variable Interest Entities and Securitizations and Note 16 – Financial Instruments and Fair Value Measurements for further details.
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
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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 4 years
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 3 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.
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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.
The Company incurred impairment charges related to operating lease right-of-use assets of $ 4.2 million for the period from January 15, 2025, to December 31, 2025, 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.
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.
As a result of filing of the Prepackaged Chapter 11 Case on November 13, 2024, the Company determined a triggering event existed as of December 31, 2024, indicating the carrying amount of our asset groups may not be recoverable. Therefore, the Company performed an evaluation of its assets for impairment. For the UACC asset group, as the carrying value of the asset group did not exceed the estimated undiscounted future cash flows, the asset group was deemed recoverable and no impairment charges were recognized. For the CarStory asset group, the carrying value of the asset group exceeded the estimated undiscounted future cash flows, however, it did not exceed the estimated fair value, as such, no impairment charges were recognized. The Company determined there were no triggering events as of December 31, 2025.
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
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examination. Potential interest and penalties associated with unrecognized tax positions are recognized in income tax expense.
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law. OBBBA includes, among other provisions, changes affecting (i) the deductibility and/or amortization of domestic research or experimental expenditures for taxable years beginning after December 31, 2024, (ii) the timing and availability of certain clean energy tax incentives (including an accelerated phase-out for certain credits for projects beginning after June 30, 2026), and (iii) certain international tax rules impacting foreign income and the calculation of Foreign-Derived Intangible Income (“FDII”), among other cross-border considerations. The Company evaluated the relevant provisions of OBBBA and determined that OBBBA did not have a material impact on the Company’s consolidated financial statements.
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 companies and others in the automotive industry who purchase CarStory’s digital retailing services. For the years ended December 31, 2025 and 2024, 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, 2025 and 2024 .
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
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classified on the consolidated balance sheets as of December 31, 2024 as liabilities subject to compromise. Refer to Note 6 — Fresh Start Accounting
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 2026 Notes received a pro rata share of 92.94 % of the Common Stock (subject to dilution) and all of the Company’s outstanding obligations under the 2026 Notes and the Indenture were deemed fully satisfied and discharged.
As of December 31, 2025, the Company had cash and cash equivalents of $ 10.4 million and restricted cash of $ 55.9 million. Restricted cash primarily includes restricted cash required under UACC's securitization transactions and Warehouse Credit Facilities of $ 55.8 million. The Company has historically had negative cash flows and generated losses from operations and the Company’s primary source of liquidity has been cash generated through financing activities.
As of December 31, 2025 , UACC had three warehouse credit facilities with an aggregate borrowing limit of $ 600.0 million and outstanding borrowings related to the Warehouse Credit Facilities were $ 318.7 million and excess borrowing capacity was $ 11.3 million. The Warehouse Credit Facilities have expiration dates in June 2026, August 2026 and April 2027, respectively. The Company is in ongoing discussions with the warehouse lenders to extend the terms beyond the current expiration dates and expect facilities to be amended and renewed at sufficient borrowing capacity. As of December 31, 2025, the Company was in compliance with all covenants related to the Warehouse Credit Facilities. Refer to Note 10 - Warehouse Credit Facilities and Consolidated VIEs.
Failure to secure warehouse borrowing capacity beyond their expiration 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 details.
On March 8, 2025, Vroom, Inc., UACC and its indirect subsidiary Darkwater Funding LLC, as co-borrowers, entered into a credit agreement for a delayed draw term loan facility (“Delayed Draw Facility”), which matures on December 31, 2026 , with Mudrick Capital Management, L.P. (“Lender”), who is a 76.5 % shareholder of the Company, and as of January 14, 2025, became a related party . On October 9, 2025 the maximum facility amount was amended from $ 25.0 million to $ 35.0 million effective as of September 30, 2025. As of December 31, 2025, the Company drew $ 8.0 million against the Delayed Draw Facility. Refer to Note 20 — Related Party Transactions for further details.
On August 29, 2025, the Company issued $ 10.0 million aggregate principal amount of 2030 Notes to Annox Capital, LLC and Robert J. Mylod, Jr., the Managing Partner of Annox Capital, LLC and the Independent Executive Chair of the board of directors of the Company. Refer to Note 11 — Long Term Debt for further details.
On November 25, 2025, Vroom, Inc. entered into a Note Purchase Agreement with Robert J. Mylod, Jr., the Independent Executive Chair of the board of directors of the Company. Pursuant to the Note Purchase Agreement, the Company issued Senior Secured Delayed Draw Notes due 2026 (the “Delayed Draw Notes”) in a maximum aggregate principal commitment amount of $ 10.5 million, which mature on November 25, 2026 . As of December 31, 2025, the Company drew $ 10.5 million against the Delayed Draw Notes. Refer to Note 20 — Related Party Transactions for further details.
Upon the Company's emergence from the Prepackaged Chapter 11 Case on January 14, 2025, the Company continues to operate as a viable going concern. The accompanying 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.
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The Company’s future capital requirements will depend on many factors, including the ability to realize the intended benefits of the Prepackaged Chapter 11 Case and Long-Term Strategic Plan, available advance rates on and the renewal of the Warehouse Credit Facilities and delayed draw facility, 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 delayed draw facility, the delayed draw notes, 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 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 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.
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 Company adopted the guidance for fiscal year beginning January 1, 2025, on a retroactive basis, which did not have a material impact on the Company's consolidated financial statements and related disclosures. Refer to Note 18 — Income Taxes.
Accounting Standards Issued But Not Yet Adopted
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 consolidated financial statements and related disclosures.
In September 2025, the FASB issued ASU 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. The amendments modernize the recognition and disclosure framework for internal-use software costs, removing the previous “development stage” model and introducing a more judgment-based approach. ASU 2025-06 is effective for fiscal years beginning after December 15, 2027, and for interim periods within those annual reporting periods, with early adoption permitted. The Company is currently evaluating the impact of ASU 2025-06 on the consolidated financial statements.
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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.
Upon emergence from the Prepackaged Chapter 11 Case, and application of fresh start accounting, the Company made an accounting policy election to recognize discount income on finance receivables held for investment at fair value as a component of "Realized and unrealized losses, net of recoveries". In the Predecessor periods discount income on finance receivables held for investment at fair value was recognized as a component of "Interest income" on the Company’s consolidated statement of operations. The discount income 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.
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, of the outstanding principal balance of the finance receivables serviced. Late charges and other permitted fees are assessed in accordance with contractual terms and applicable state law, generally at the maximum allowable amounts or as a percentage of overdue finance receivable balances and are recorded on a cash basis. Refer to Note 4 — Variable Interest Entities and Securitizations for further details.
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. The Company continues to runoff the legacy Vroom third party vehicle service and GAP policies sold prior to the Ecommerce Wind-Down
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.
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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, 2025 and December 31, 2024, the Company’s reserve for chargebacks was $ 7.3 million and $ 9.1 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, 2025 and December 31, 2024, the Company recognized $ 9.9 million and $ 11.0 million, respectively, related to cumulative profit-sharing payments to which it expects to be entitled, which are included within “Other assets."
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 satisfyclaimsagainst 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 claimsagainst 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.
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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 2025, UACC completed the 2025-1 securitization transaction, in which it issued approximately $ 307.8 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 $ 306.5 million. The trust was collateralized by finance receivables with an aggregate principal balance of $ 382.1 million as of March 12, 2025. These finance receivables are serviced by UACC and UACC receives an "at market" servicing fee. The Company retained the residual interests, which required the Company to account for the 2025-1 securitization as secured borrowings and the assets and liabilities of the trust remain on balance sheet.
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.
UACC is the primary beneficiary of the 2025-1, 2024-1, 2023-1, and 2022-2 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 2025-1, 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.
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. All of the consolidated securitization trusts meet the definition of a CFE and the Company has elected to apply the measurement alternative when consolidating these VIEs. Upon emergence from the Prepackaged Chapter 11 Case, and application of fresh start accounting, the Successor made an accounting policy election to apply the measurement alternative to the 2024-1 CFE. Refer to Note 16 – Financial Instruments and Fair Value Measurements for further detail.
UACC had three senior secured warehouse credit facilities as of December 31, 2025. 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.
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):
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VROOM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Successor
As of December 31, 2025
Securitization Vehicles
Warehouse
Facilities 1
Total
Assets:
Restricted cash
Finance receivables at fair value
Interest receivable
Other assets
Total Assets
Liabilities:
Securitization debt at fair value
Warehouse credit facilities
Other liabilities
Total Liabilities
Predecessor
As of December 31, 2024
Securitization Vehicles
Warehouse
Facilities 1
Total
Assets:
Restricted cash
Finance receivables at fair value
Finance receivables held for sale
Interest receivable
Other assets
Total Assets
Liabilities:
Securitization debt at fair value
Warehouse credit facilities
Other liabilities
Total Liabilities
1 Refer to Note 10 – Warehouse Credit Facilities of Consolidated VIEs for further details of the warehouse facilities.
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, the Company reported the ecommerce operations and used vehicle dealership business as discontinued operations.
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.
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VROOM, INC.
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):
Successor
Predecessor
Period from January 15, to
December 31,
Year Ended
December 31,
Revenue:
Retail vehicle, net
Wholesale vehicle
Product, net
Total revenue
Cost of sales:
Retail vehicle
Wholesale vehicle
Total cost of sales
Total gross profit (loss)
Selling, general and administrative expenses
Gain (loss) on disposal of long lived assets
Depreciation and amortization
Income (loss) from operations
Interest expense
Interest loss
Income (loss) before provision for income taxes
Provision for income taxes
Net income (loss) from discontinued operations
Net income (loss) from discontinued operations for the period from January 1, 2025, to January 14, 2025, was not material.
The following table summarizes the major classes of assets and liabilities from discontinued operations as reported in the consolidated balance sheets:
Successor
Predecessor
December 31,
December 31,
ASSETS
Property and equipment, net
Other assets
Assets from discontinued operations
LIABILITIES
Accounts payable
Accrued expenses
Liabilities from discontinued operations
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VROOM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. Fresh Start Accounting
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 January 14, 2025, the Effective Date, the conditions to the effectiveness of the Plan were satisfied or waived and the Plan became effective. On January 14, 2025 , the Company emerged from the Prepackaged Chapter 11 Case. On the Effective Date, each holder of the Notes received a pro rata share of 92.94 % of the 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. There were no other creditors of the Company impaired in connection with the Prepackaged Chapter 11 Case.
The Company adopted an Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”) to, among other changes to its 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 the Common Stock as of the Effective Date.
On the Effective Date, the Company entered into 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 the Warrants to purchase an aggregate of 364,516 shares of the Common Stock, at an exercise price of $ 60.95 per share, to stockholders of the Predecessor 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.
In connection with the emergence from the Prepackaged Chapter 11 Case 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 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. In accordance with ASC Topic 852, with the application of fresh start accounting, the Company allocated its equity value to its individual assets and liabilities based on their estimated fair values. 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, are not comparable with the consolidated financial statements as of or prior to that date.
Reorganization Value
In accordance with ASC Topic 852, with the application of fresh start accounting, the Company allocates the equity value to its individual assets and liabilities based on their estimated fair values in conformity with ASC Topic 820, Fair Value.
As set forth in the Plan and the disclosure statement, the value of the Successor Company was assigned to its equity and estimated to be between $ 115.6 million and $ 179.4 million. The Company estimated the enterprise value and corresponding equity value utilizing two valuation methods: a comparable public company analysis, and a discounted cash flow (“DCF”) method.
The DCF analysis is a forward-looking enterprise valuation methodology that estimates fair value by calculating the present value of expected future cash flows to be generated plus a present value of the estimated terminal value. The Company established an estimate of future cash flows through December 31, 2029, based on the financial projections and assumptions utilized in the Company’s disclosure statement to the Plan, which were derived from earnings forecasts and assumptions regarding growth and profit projections. A terminal value was calculated using the constant growth method based on the projected cash flows for the final year of the forecast period. The cash flow assumptions used in the DCF analysis reflected the Company’s best estimates at the time the analysis was prepared.
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VROOM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The selected public companies analysis is based on the enterprise values of selected publicly traded companies that have operating and financial characteristics comparable in certain respects to the Company. Under this methodology, certain financial multiples that measure financial performance and value are calculated for the selected company. A reference range was determined utilizing such multiples and is applied to certain of the Company's financial metrics to imply an estimated equity value for the business.
Based on the estimates and assumptions discussed below, the Company estimated the Successor’s equity value to be $ 164.5 million for financial reporting purposes, which is within the range of equity value per the Plan. The following table reconciles the enterprise value to the estimated fair value of the Successor Common Stock as of the Effective Date (in thousands, except per share data):
Enterprise value
Plus:
Cash and cash equivalents
Restricted cash
Less:
Warehouse credit facilities of consolidated VIEs
Long-term debt
Fair value of Successor Equity
Less:
Successor warrants
Fair value of Successor common stock
Shares issued upon emergence
Per share value
The reconciliation of the Company’s enterprise value to reorganization value as of the Effective Date is as follows: (in thousands):
Enterprise value
Plus:
Cash and cash equivalents
Restricted cash
Other liabilities
Reorganization value of Successor assets
The enterprise value and corresponding equity value are dependent upon achieving the future financial results set forth in the Company’s projections, as well as the realization of certain other assumptions. All estimates, assumptions, valuations and financial projections, including the fair value adjustments, the financial projections, the enterprise value and equity value projections, are inherently subject to significant uncertainties and the resolution of contingencies beyond the Company’s control. Accordingly, the Company cannot assure that the estimates, assumptions, valuations or financial projections will be realized and actual results could vary materially.
The results of the Company's analysis indicated that the principal assets requiring fair value adjustments on the Effective Date include finance receivables held for sale, identified intangible assets and leased assets. Further detail regarding the valuation process is described below.
Finance receivables held for sale, net
As of the Effective Date, the finance receivables held for sale, net were reclassified to finance receivables at fair value, refer to Note 2 — Summary of Significant Accounting Policies for further details. To estimate the fair value of the finance receivables the Company utilized the valuation methodologies which are used to value finance receivables at fair value on a recurring basis. Refer to the Fair Value of Financial Instruments Not Carried at Fair Value section in Note 15 — Financial Instruments and Fair Value Measurements for further details.
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VROOM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Intangible Assets
The identified intangible assets of $ 14.2 million, which principally consisted of technology, trade names and trademarks, and customer relationships were estimated based on either the cost approach, relief from royalty or multi-period excess earnings methods. Significant assumptions for identified intangibles included royalty rates, discount rates, margins, attrition rates, revenue growth rates, and economic lives. Such fair value measurement of intangible assets is considered Level 3 of the fair value hierarchy.
For the technology-based intangibles that were valued using the relief from royalty income approach, the royalty rate was estimated to be 5.0 % and the discount rate 25 %. For the technology-based intangibles that were valued using the cost approach, the margin was estimated to be 8.5 %. For trade names and trademarks valued under the relief from royalty income approach, the royalty rate was estimated to be 0.5 % and the discount rate 25 %. For customer-related intangible assets that were valued using the multi-period excess earnings method, the attrition rate was estimated to be 10 % and the discount rate 25 %.
Lease Liabilities and Right of Use Assets
The present value of lease liabilities was measured as the present value of the remaining lease payments, as if the leases were new leases as of the Effective Date. The Company used its incremental borrowing rate (“IBR”) as the discount rate in determining the present value of the remaining lease payments using a fundamental credit rating analysis. Based upon the corresponding lease terms, the IBRs ranged between approximately 6.2 % - 7.6 %. Right of use asset values were estimated based on the lease liability.
Consolidated Balance Sheet
The adjustments set forth in the following consolidated balance sheet as of January 14, 2025 reflect the effects of the transactions contemplated by the Plan and executed on the Effective date (reflected in the column “Reorganization Adjustments”), and fair value and other required accounting adjustments resulting from the adoption of fresh start accounting (reflected in the column “Fresh Start Accounting Adjustments”), (in thousands):
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VROOM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
As of January 14, 2025
Reorganization
Fresh Start Accounting
Predecessor
Adjustments
Notes
Adjustments
Notes
Successor
ASSETS
Cash and cash equivalents
Restricted cash
Finance receivables at fair value
Finance receivables held for sale, net
Interest receivable
Property and equipment, net
Intangible assets, net
Operating lease right-of-use assets
Other assets
Assets from discontinued operations
Total assets
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Warehouse credit facilities of consolidated VIEs
Long-term debt
Operating lease liabilities
Other liabilities
Liabilities subject to compromise
Liabilities from discontinued operations
Total liabilities
Stockholders’ (deficit) equity:
Common stock - Predecessor
Common stock - Successor
Additional paid-in-capital - Predecessor
Additional paid-in-capital - Successor
Warrants - Successor
Accumulated deficit
Total stockholders’ (deficit) equity
Total liabilities and stockholders’ equity
Reorganization adjustments
1. Represents write-off of prepaid asset related to predecessor directors and officers insurance tail policy.
2. Represents the settlement of the Company's pre-petition Convertible Notes, as of the Effective date, which is calculated as follows (in thousands):
Convertible note
Accrued interest on convertible senior note
Liabilities subject to compromise
Issuance of 92.94 % of Successor common shares to prepetition convertible note holders (1)
Gain on settlement of liabilities subject to compromise
(1) Note the total issuances of Successor equity in the amount of $ 164.4 million was issued to Predecessor note holders in the amount of $ 150.2 million and Predecessor equity holders in the amount of $ 14.2 million. The total issuance to the Predecessor equity holders of $ 14.2 million included warrants of $ 2.8 million and 7.06 % of Successor common shares totaling $ 11.4 million.
3. Represents the cancellation of Predecessor common stock.
4. Represents the issuance of Successor common stock.
5. Represents the cancellation of Predecessor additional paid-in capital.
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VROOM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. Represents the fair value of 5,163,109 Successor common shares totaling $ 161.7 million and 364,516 Successor warrants totaling $ 2.8 million. This results in total Successor equity in the amount of $ 164.5 million.
Fresh Start Adjustments
7. Represents reclassification of finance receivables held for sale to finance receivables at fair value due to a change in Accounting Policy in accordance with fresh start accounting. Upon reclassification, the finance receivables were adjusted to fair value.
8. Represents a fair value adjustment to property, plant and equipment, net.
9. Represents a fair value adjustment to intangible assets, net.
10. Represents a fair value adjustment to record the initial measurement of the operating lease right-of-use assets to the amount of the operating lease liabilities in accordance with fresh start accounting.
11. Represents a fair value adjustment to other assets, which includes the write-off of debt issuance costs of warehouse credit facilities.
12. Represents an adjustment to long-term debt, which includes the write-off of debt issuance costs of $ 2.9 million and an adjustment related to the fair value option election for the 2024-1 securitization debt, which resulted in a fair value adjustment to the securitization debt of $ 1.6 million . The fair value of the debt was determined using a non-binding quote from broker dealers.
13. Represents the cumulative impact, as of the Effective Date, to accumulated deficit from the reorganization adjustments and fresh start accounting adjustments. The cumulative impact to accumulated deficit from the reorganization adjustments is calculated, as follows (in thousands):
Adjustment to Predecessor common stock and additional paid-in-capital
Gain on settlement of liabilities subject to compromise
Warrants and common stock issued to Predecessor equity holders
Reorganization adjustment to total assets
Cumulative impact to accumulated deficit
Reorganization items, net
The Company applied 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 and up to and including the Effective Date, 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.
Certain expenses resulting from and recognized during the Company's bankruptcy proceedings, gains on the settlement of liabilities under the Plan and the net impact of fresh start accounting adjustments are recorded in
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VROOM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Reorganization items, net in the Company's Consolidated Statements of Operations. Reorganization items, net consisted of the following (in thousands):
Predecessor
Period from January 1 through January 14,
Year Ended
December 31,
Net gain on settlement of debt
Net loss on fresh start adjustments
Net loss on reorganization adjustment of other assets
Debt valuation adjustments
Professional fees
Total reorganization items, net
7. Property and Equipment, Net
Property and equipment, net consisted of the following (in thousands):
Successor
Predecessor
December 31,
December 31,
Equipment
Furniture and fixtures
Leasehold improvements
Internal-use software
Other
Accumulated depreciation and amortization
Property and equipment, net
Upon emergence from the Prepackaged Chapter 11 Case, and application of fresh start accounting, the Company recorded property and equipment at fair value as of the Effective Date, as discussed in Note 6 — Fresh Start Accounting for further details.
Depreciation and amortization expense was $ 1.5 million for the period from January 15, 2025 to December 31, 2025 and $ 2.1 million for the year ended December 31, 2024, respectively. Depreciation and amortization expense for the period from January 1, 2025, to January 14, 2025, was not material.
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.
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VROOM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
8. Intangible Assets
Intangible assets, net consisted of the following (in thousands):
Successor
Predecessor
December 31, 2025
December 31, 2024
Gross Carrying Value
Accumulated Amortization
Carrying Value
Gross Carrying Value
Accumulated Amortization
Carrying Value
Developed and purchased technology
Customer relationships
Trademarks and trade names
Total intangible assets
Amortization expense for intangible assets was $ 1.0 million for the period from January 1, 2025 to January 14, 2025, $ 1.8 million for the period from January 15, 2025 to December 31, 2025, and $ 27.0 million for the years ended December 31, 2024.
The estimated amortization expense for intangible assets subsequent to December 31, 2025, consists of the following (in thousands):
Year Ending December 31:
Thereafter
9. Other Liabilities
The Company’s other liabilities consisted of the following (in thousands):
Successor
Predecessor
December 31,
December 31,
Warranty and GAP liabilities
Dealer related liabilities
Accrued compensation and benefits
Accrued professional services
Accrued software and IT costs
Interest payable
Insurance payable
Other
Total other liabilities
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VROOM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
10. Warehouse Credit Facilities of Consolidated VIEs
UACC has three senior secured warehouse facility agreements (the “Warehouse Credit Facilities”), through consolidated VIEs, with banking institutions as of December 31, 2025. 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, 2025 and 2024, the Company had excess borrowing capacity of $ 11.3 million and $ 28.2 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
Execution date
November 19, 2013
July 11, 2019
November 18, 2022
Commitment termination date
June 2, 2026
August 28, 2026
April 12, 2027
Aggregate borrowings limit
As of December 31, 2025 (Successor)
Aggregate principal balance of finance receivables pledged as collateral
Outstanding balance
Restricted cash
As of December 31, 2024 (Predecessor)
Aggregate principal balance of finance receivables pledged as collateral
Outstanding balance
Restricted cash
As of December 31, 2025 and 2024, the Company's weighted average interest rate on the Warehouse Credit Facilities borrowings was approximately 5.55 % and 6.32 %, respectively.
During the year ended December 31, 2025 the Company renewed three of its previous four Warehouse Credit Facilities. The significant terms of the agreements remained unchanged except for certain reductions in advance rates and increases in minimum liquidity and tangible net worth requirements as well as a decrease of the aggregate borrowing limit under one of the facilities from $ 225.0 million to $ 200.0 million. On July 21, 2025 , the remaining fourth Warehouse Credit Facility, which had a borrowing capacity of $ 200 million, expired pursuant to its terms and was not extended or renewed. The Company believes that its borrowing capacity from its other Warehouse Credit Facilities is sufficient to support its current operational needs and therefore elected not to renew this commitment.
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, 2025 and 2024, the Company was in compliance with all covenants related to the Warehouse Credit Facilities.
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VROOM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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):
Successor
Predecessor
December 31,
December 31,
Securitization debt of consolidated VIEs at fair value
Securitization debt of consolidated VIEs at amortized cost
Financing of beneficial interest in securitizations
Junior subordinated debentures
Total debt
Convertible Notes due 2026
On June 18, 2021, the Company issued $ 625.0 million aggregate principal amount of 0.75 % unsecured Convertible Senior Notes due 2026 (the “2026 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 2026 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. On the Effective Date, the conditions to the effectiveness of the Plan were satisfied or waived and the Plan became effective. On January 14, 2025, the Company emerged from the Prepackaged Chapter 11 Case. On the Effective Date, each holder of the 2026 Notes received a pro rata share of 92.94 % of the Common Stock, as defined below, and all of the Company’s outstanding obligations under the 2026 Notes and the Indenture were deemed fully satisfied and discharged.
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 2026 Notes and the Indenture were deemed fully satisfied and discharged.
Prior to the Effective Date, t he 2026 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 Company accounted for the 2026 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 recorded in "Liabilities subject to compromise" in the consolidated balance sheet.
The 2026 Notes were issued at par value and fees associated with the issuance of these 2026 Notes were amortized to interest expense using the effective interest method over the contractual term of the 2026 Notes. The interest expense for the year ended December 31, 2024 was $ 3.4 million. The effective interest rate of the Notes was 1.3 % as of December 31, 2024.
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VROOM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Securitization Debt of Consolidated VIEs
The securitization debt was issued under UACC's securitization program. The Company elected to account for the 2022-2, 2023-1, and 2025-1 securitization debt under the fair value option using the measurement alternative. Upon emergence from the Prepackaged Chapter 11 Case, and application of fresh start accounting, the Company made an accounting policy election to apply the measurement alternative to the 2024-1 securitization debt. Fair value adjustments are recorded in "Realized and unrealized losses, net of recoveries" in the consolidated statements of operations. Refer to Note 16 — Financial Instruments and Fair Value Measurements. For the 2022-2, 2023-1, 2024-1, and 2025-1 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.
UACC retained the residual interests in the 2023-1, 2024-1, and 2025-1 securitization transactions. 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. 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 $ 39.7 million and $ 29.2 million as of December 31, 2025 and 2024, 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 consolidated balance sheet. The securitization debt of consolidated VIEs consisted of the following (in thousands):
As of December 31, 2025 (Successor)
Series
Final Scheduled Payment Date
Initial Principal
Contractual Interest Rate
Outstanding Principal
Fair Value
United Auto Credit 2022-2-D
January 10, 2028
United Auto Credit 2022-2-E
April 10, 2029
United Auto Credit 2023-1-D
July 10, 2028
United Auto Credit 2023-1-E
September 10, 2029
United Auto Credit 2024-1-C
October 10, 2029
United Auto Credit 2024-1-D
November 12, 2029
United Auto Credit 2024-1-E
November 12, 2030
United Auto Credit 2025-1-A
June 10, 2027
United Auto Credit 2025-1-B
February 10, 2028
United Auto Credit 2025-1-C
June 10, 2030
United Auto Credit 2025-1-D
July 10, 2030
United Auto Credit 2025-1-E
October 10, 2031
Total rated notes at fair value
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VROOM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
As of December 31, 2024 (Predecessor)
Series
Final Scheduled Payment Date
Initial Principal
Contractual Interest Rate
Outstanding Principal
Fair Value
United Auto Credit 2022-2-C
May 10, 2027
United Auto Credit 2022-2-D
January 10, 2028
United Auto Credit 2022-2-E
April 10, 2029
United Auto Credit 2023-1-C
July 10, 2028
United Auto Credit 2023-1-D
July 10, 2028
United Auto Credit 2023-1-E
September 10, 2029
Total rated notes at fair value
United Auto Credit 2024-1-A
August 10, 2026
United Auto Credit 2024-1-B
June 10, 2027
United Auto Credit 2024-1-C
October 10, 2029
United Auto Credit 2024-1-D
November 12, 2029
United Auto Credit 2024-1-E
November 12, 2030
Total rated notes at amortized cost
Unamortized debt issuance costs
Net carrying value
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 $ 199.1 million in 2026, $ 113.4 million in 2027, $ 52.3 million in 2028, and $ 38.6 million in 2029.
The aggregate principal balance and the net carrying value of finance receivables pledged to the securitization debt consists of the following (in thousands):
Successor
Predecessor
As of December 31,
As of December 31,
Aggregate Principal Balance
Net Carrying Value (1)
Aggregate Principal Balance
Net Carrying Value
United Auto Credit 2022-2
United Auto Credit 2023-1
United Auto Credit 2024-1
United Auto Credit 2025-1
Total finance receivables of CFEs
(1) For the Successor period, net carrying value is equal to fair value.
Financing of beneficial interest in securitizations
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VROOM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
On May 3, 2023, UACC entered into a Risk Retention Financing Facility enabling it to finance a portion of its 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. As of December 31, 2025, UACC pledged $ 27.6 million of its retained beneficial interests as collateral, and the outstanding borrowings related to this risk retention financing facility were $ 19.8 million, with expected repurchase dates ranging from June 2027 to October 2031 . The securitization trusts will distribute payments related to UACC's pledged beneficial interests in securitizations directly to the lender, which will reduce the beneficial interests in securitizations and the related debt balance. 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 $ 19.6 million and $ 17.7 million as of December 31, 2025 and 2024, respectively, and is included in "Long-term debt" on the consolidated balance sheet. As of December 31, 2025 and 2024, the fair value of the collateral pledged under this facility was $ 20.0 million and $ 18.3 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.
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Lease term and discount rate
The weighted-average remaining lease term and discount rate for the Company’s operating leases, excluding short-term operating leases, were 5.4 years and 8.0 % as of December 31, 2025 , respectively, and 6.0 years and 7.9 % as of December 31, 2024, respectively.
As the rate implicit in the lease is generally not readily determinable for the Company’s operating leases, the discount rates used to determine the present value of the Company’s lease liabilities are based on the Company’s incremental borrowing rate at the lease commencement date and commensurate with the remaining lease term. The incremental borrowing rate for a lease is the rate of interest the Company would have to pay to borrow on a collateralized basis over a similar term for an amount equal to the lease payments in a similar economic environment. The Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments.
Lease costs and activity
The Company’s lease costs and activity for the years ended December 31, 2025 and 2024 were as follows (in thousands):
Period from January 15 through December 31,
Year Ended
December 31,
Lease Cost
Operating lease cost
Short-term lease cost
Variable lease cost
Sublease income
Net lease cost
Successor
Predecessor
Period from January 15 through December 31,
Year Ended
December 31,
Other information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases
Right-of-use assets obtained in exchange for operating lease liabilities
Lease costs and activity for the period from January 1, 2025, to January 14, 2025, was not material.
The Company incurred impairment charges related to operating lease right-of-use assets of $ 4.2 million for the period from January 15, 2025, to December 31, 2025 and $ 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.
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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, 2025 were as follows (in thousands):
Thereafter
Total lease payments
Less: interest
Present value of lease liabilities
Operating lease liabilities
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.
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 Vroom, Inc., Vroom Automotive, LLC, and certain of their officers allegingviolations 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 I n 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. On March 19, 2025, the Court entered an order granting Vroom’s motion to dismiss all claims, and the plaintiffs elected not to file a motion to amend their complaint. Thereafter, on May 30, 2025, the Court entered a final judgment of dismissal, for which the time period to appeal has expired. Accordingly, the cases have been closed.
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 Vroom’s officers and directors, and nominally against the Company, allegingviolations 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 . The stockholders who filed these lawsuits have voluntarily dismissed their claims and these cases have been closed.
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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 Vroom’s officers and directors, and nominally against the Company, allegingviolations 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 . The stockholders who filed these lawsuits have voluntarily dismissed their claims and these cases have been closed.
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 Vroom, Inc. and Vroom Automotive, LLC, allegingviolation of the Texas Deceptive Trade Practices − Consumer Protection Act, Texas Business and Commerce Code § 17.41 et seq., based on allegeddeficiencies and other issues in Vroom’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 & 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 Vroom entities agreed to pay a total of $ 2 million in civil penalties and $ 1 million in attorneys' fees, with the first half due in September 2024 and the remaining half due in September 2025, and abide permanently by an injunction of certain operational practices that were previously implemented. As of September 1, 2025, the Vroom entities completed their payment obligations under the agreement.
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 time (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”) under the name In re Vroom, Inc ., Case No. 24-90571 (CML). On January 8, 2025, the Bankruptcy Court entered an order (a) approving the 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 involved in various claims and legal actions that arise in the ordinary course of business and an unfavorable resolution of any of these matters could materially affect the Company’s future results of operations, cash flows or financial position. The Company is also party to various disputes that the Company considers routine and incidental to its business. 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.
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.
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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 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.
As of December 31, 2025 and December 31, 2024, there was no preferred stock issued or outstanding.
Common Stock
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 .
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. 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.
Pursuant to the Plan, the 2020 Plan was further amended on January 14, 2025, 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 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. The amended and restated 2020 Plan authorizes the issuance of: (i) 1,166,880 shares of common stock, (ii) any shares which are subject to awards under the 2014 Plan or any other prior plans which are forfeited or lapse unexercised and are not issued under the prior plans; and (iii) an annual increase on the first day of each calendar year beginning on January 1, 2022, and ending on and including January 1, 2030, equal to the lesser of (A) 4 % of the shares outstanding (on an as‑converted basis) on the last day of the immediately preceding fiscal year and (B) such smaller number of shares as determined by the Board of Directors or the Compensation Committee. As of December 31, 2025, there were 49,022 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 aggregate of 7,500 shares of the Company’s common stock are reserved for issuance under the Inducement Award Plan. The Inducement Award Plan continues to govern awards granted and outstanding under that plan but no new awards may be granted under that plan.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Stock Options
The following table summarizes stock option activity for the year ended December 31, 2025:
Shares
Weighted
Average
Exercise Price
Weighted
Average
Remaining
Contractual Life
Successor
Unvested and outstanding as of January 15, 2025
Granted
Exercised
Expired
Forfeited / cancelled
Outstanding as of December 31, 2025
Vested and exercisable as of December 31, 2025
Stock option activity for the period from January 1, 2025, to January 14, 2025, was not material.
The Company recognized $ 0.8 million for the period from January 15, 2025 to December 31, 2025 and $ 0.1 million for the year ended December 31, 2024. The stock-based compensation expense related to stock options for the period from January 1, 2025 to January 14, 2025 was not material. As of December 31, 2025, the Company had $ 2.7 million of unrecognized stock-based compensation expense related to stock options that is expected to be recognized over a weighted-average period of 3.0 years. As of December 31, 2024, the Company had $ 0.1 million of unrecognized stock-based compensation expense that is expected to be recognized over a weighted-average period of 0.4 years.
On March 12, 2025, 259,400 stock options were granted to the CEO whereby 129,700 have a fair value of $ 11.25 per share and an exercise price of $ 45.70 per share, and the remaining 129,700 have a fair value of $ 9.62 per share and an exercise price of $ 60.95 per share. Additionally, on March 12, 2025, an aggregate of 65,000 stock options were granted to certain members of key management whereby 32,500 have a fair value of $ 11.25 per share and an exercise price of $ 45.70 per share, and the remaining 32,500 have a fair value of $ 9.62 per share and an exercise price of $ 60.95 per share. The fair values of these stock options were determined using the Black-Scholes option pricing model. The stock options vest ratably over a four-year period subject to continued employment through each applicable vesting date.
The grant date fair value of stock options granted during the year ended December 31, 2025 was estimated at the time of grant using the Black-Scholes option-pricing model and utilized the following assumptions:
Stock Option 1
Stock Option 2
Fair value of common stock (per share)
Expected term (in years)
Risk-free interest rate
Expected volatility
Dividend yield
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
RSUs
The following table summarizes restricted stock unit ("RSUs") activity for the year ended December 31, 2025:
Shares
Weighted Average
Grant Date Fair
Value per Share
Successor
Unvested and outstanding as of January 15, 2025
Granted
Vested and released
Forfeited / cancelled
Outstanding as of December 31, 2025
RSU activity for the period from January 1, 2025, to January 14, 2025, was not material.
The Company recognized $ 4.3 million for the period from January 15, 2025 to December 31, 2025 and $ 5.8 million of stock-based compensation expense related to RSUs for the year ended December 31, 2024. The Company recognized $ 0.1 million of stock-based compensation expense related to RSUs for the period from January 1, 2025 to January 14, 2025. As of December 31, 2025 and 2024 , the Company had $ 13.2 million and $ 1.2 million, respectively, of unrecognized stock-based compensation expense that is expected to be recognized over a weighted-average period of 3.0 and 0.7 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.
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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):
Successor
As of December 31, 2025
Level 1
Level 2
Level 3
Total
Financial Assets
Cash and cash equivalents:
Money market funds
CFE assets:
Finance receivables at fair value
Finance receivables at fair value
Other assets (beneficial interests in securitizations)
Total financial assets
Financial Liabilities
CFE liabilities:
Securitization debt of consolidated VIEs
Total financial liabilities
Predecessor
As of December 31, 2024
Level 1
Level 2
Level 3
Total
Financial Assets
Cash and cash equivalents:
Money market funds
CFE assets:
Finance receivables at fair value
Finance receivables at fair value
Other assets (beneficial interests in securitizations)
Total financial assets
Financial Liabilities
CFE liabilities:
Securitization debt of consolidated VIEs
Total financial liabilities
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, 2023-1, and 2025-1 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. Upon emergence from the Prepackaged Chapter 11 Case, and application of fresh start accounting, the Company made an accounting policy election to apply the
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measurement alternative to the 2024-1 consolidated CFE. 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.
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 and the valuation of residual interests, which is derived from an internal valuation model and calculated in line with the valuation of finance receivables at fair value not related to consolidated CFEs discussed below. 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, lossseverity 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.
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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):
Successor
Finance Receivables of Consolidated CFEs
Finance Receivables at Fair Value
Securitization Debt of Consolidated CFEs
Fair value as of January 15, 2025
Transfer within Level 3 categories
Transfers out of Level 3
Losses included in realized and unrealized losses
Losses included in Warranties and GAP
Issuances, net of discount
Paydowns
Other
Fair value as of December 31, 2025
Predecessor
Finance Receivables of Consolidated CFEs
Finance Receivables at Fair Value
Securitization Debt of Consolidated CFEs
Fair value as of January 1, 2025
Reclassification of finance receivables due to a change in Accounting Policy
Transfer within Level 3 categories
Losses included in realized and unrealized losses
Losses included in Warranties and GAP
Issuances, net of discount
Paydowns
Other
Fair value as of January 14, 2025
Predecessor
Finance Receivables of Consolidated CFEs
Finance Receivables at Fair Value
Securitization Debt of Consolidated CFEs
Fair value as of January 1, 2024
Transfer within Level 3 categories
Transfers into Level 3
Losses included in realized and unrealized losses
Losses included in Warranties and GAP
Issuances, net of discount
Paydowns
Other
Fair value as of December 31, 2024
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, 2025, transfers out of Level 3 liabilities related to 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, 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.
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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):
Successor
Predecessor
Period from January 15 through December 31,
Period from January 1 through January 14,
Year Ended December 31,
Finance receivables at fair value
Finance receivables held for sale, net
Debt of securitized VIEs at fair value
Collection expenses
Recoveries
Other
Total net loss included in "Realized and unrealized losses, net of recoveries"
The following table presents other relevant data related to the finance receivables carried at fair value (in thousands):
As of December 31, 2025 (Successor)
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
Aggregate fair value of finance receivables that are reported at fair value
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)
Aggregate fair value of receivables carried at fair value that are on nonaccrual status (90 days or more past due)
As of December 31, 2024 (Predecessor)
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
Aggregate fair value of finance receivables that are reported at fair value
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)
Aggregate fair value of receivables carried at fair value that are on nonaccrual status (90 days or more past due)
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, 2025 (Successor)
Securitization debt of consolidated VIEs at Fair Value
Aggregate unpaid principal balance of rated notes of securitized VIEs
Aggregate fair value of rated notes of securitized VIEs
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VROOM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
As of December 31, 2024 (Predecessor)
Securitization debt of consolidated VIEs at Fair Value
Aggregate unpaid principal balance of rated notes of securitized VIEs
Aggregate fair value of rated notes of securitized VIEs
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 and related party lines of credit were 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 determined 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. Upon emergence from the Prepackaged Chapter 11 Case, and application of fresh start accounting, the Company made an accounting policy election to elect the fair value option for all finance receivables held for sale, net. As of December 31, 2025, the Company did no t have any finance receivables held for sale, net. As of December 31, 2024, the carrying value and fair value of the finance receivables held for sale, net were $ 114.6 million.
For finance receivables sold in a securitization, the Company determined 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 used 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, 2025, there were no finance receivables held for sale, net that were sold in a securitization. As of December 31, 2024, the carrying value and fair value of the finance receivables held for sale, net that were sold in a securitization were $ 178.8 million and $ 183.3 million, respectively. The significant unobservable inputs utilized in the discounted cashflow model include the following:
Predecessor
Inputs as of December 31,
Unobservable inputs
Cumulative net loss
Recoveries
Discount Rate
In addition, the Company also had finance receivables that were no longer eligible to be sold in a securitization. As of December 31, 2025, there were no finance receivables held for sale, net, that were no longer eligible to be sold in a securitization. As of December 31, 2024, the carrying value and fair value of the finance receivables held for sale, net were no longer eligible to be sold in a securitization were $ 24.8 million. These were finance receivables that became delinquent and no longer meet the expected securitization sales criteria. The Company used a discounted cash flow model to estimate the fair value of future recoveries for 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:
Predecessor
Inputs as of December 31,
Unobservable inputs
Cumulative net loss
Recoveries
Discount Rate
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VROOM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Convertible Senior Notes:
The fair value of the 2030 Notes, which are not carried at fair value on the Company's consolidated balance sheets, approximated their carrying value as of December 31, 2025.
The fair value of the 2026 Notes, which are not carried at fair value on the accompanying consolidated balance sheets, was determined utilizing actual bids and offer prices of the 2026 Notes in markets that are not active and are classified within Level 2 of the fair value hierarchy.
Predecessor
December 31,
(in thousands)
Carrying value
Fair value
Securitization Debt: Upon emergence from the Prepackaged Chapter 11 Case, and application of fresh start accounting, the Company made an accounting policy change to elect the fair value option and apply the measurement alternative to the 2024-1 securitization debt. As of December 31, 2024, the 2024-1 securitization debt was not carried at fair value on the Company's consolidated balance sheet. As of December 31, 2024, the fair value of the debt was determined utilizing non-binding quoted prices provided by broker dealers, as discussed above, and classified as Level 2 of the fair value hierarchy.
Predecessor
December 31,
(in thousands)
Carrying value
Fair value
Financing of beneficial interests in securitizations: The fair value of the financing of beneficial interests in securitizations, which are not carried at fair value on the accompanying consolidated balance sheets, approximated their carrying value as of December 31, 2025 and 2024 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, 2025 and 2024 and are classified within Level 3 of the fair value hierarchy.
Fresh start accounting : In accordance with ASC Topic 852, with the application of fresh start accounting, the Company allocated the reorganization value to its individual assets and liabilities based on their estimated fair values in conformity with ASC Topic 805, Business Combinations. Refer to Note 6 — Fresh Start Accounting for further details.
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. No operating segments have been aggregated to form the reportable segments.
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VROOM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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”). During the period from January 15, 2025, to December 31, 2025, the CODM changed the profitability measure reviewed for the Company's segment from Adjusted EBITDA to Adjusted net income (loss). The CODM reviews Adjusted net income (loss) for each of the reportable segments. Adjusted net income (loss) is defined as net income (loss) from continuing operations adjusted for stock compensation expense, severance expense, bankruptcy costs (which represent professional fees incurred related to the bankruptcy prior to filing of the petition and post-emergence), 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), operating lease right-of-use assets impairment and long-lived asset impairment charges incurred by 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, 2025 and 2024, 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.
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.
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VROOM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Information about the Company’s reportable segments and corporate activities are as follows (in thousands):
Successor
Predecessor
Period from January 15 through December 31,
Period from January 1 through January 14,
UACC
CarStory
Corporate
Total
UACC
CarStory
Corporate
Total
Interest income
Interest expense:
Warehouse credit facility
Securitization debt
Total interest expense
Net interest income
Realized and unrealized losses, net of recoveries
Net interest income (loss) after losses and recoveries
Noninterest (loss) income:
Servicing income
Warranties and GAP income, net
CarStory revenue
Other income
Total noninterest (loss) income
Expenses:
Compensation and benefits
Professional fees
Software and IT costs
Depreciation and amortization
Interest expense on corporate debt
Impairment charges
Other expenses
Total expenses
Provision for income taxes from continuing operations
Adjusted net income (loss)
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VROOM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Predecessor
Year Ended
December 31,
UACC
CarStory
Corporate
Total
Interest income (expense)
Interest expense:
Warehouse credit facility
Securitization debt
Total interest expense
Net interest income (loss)
Realized and unrealized losses, net of recoveries
Net interest income (loss) after losses and recoveries
Noninterest (loss) income:
Servicing income
Warranties and GAP income (loss), net
CarStory revenue
Other income
Total noninterest (loss) income
Expenses:
Compensation and benefits
Professional fees
Software and IT costs
Depreciation and amortization
Interest expense on corporate debt
Impairment charges
Other expenses
Total expenses
Provision for income taxes from continuing operations
Adjusted net loss
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VROOM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The reconciliation between reportable segment Adjusted net income (loss) to net loss from continuing operations before provision for income taxes is as follows (in thousands):
Successor
Predecessor
Period from January 15 through December 31,
Period from January 1 through January 14,
Year Ended
December 31,
Adjusted net income (loss)
UACC
CarStory
Total
Stock compensation expense
Severance expense
Impairment charges
Corporate income (loss) from continuing operations
Reorganization items
Net loss from continuing operations
18. Income Taxes
Income Tax Provision
Domestic and foreign pretax income (loss) from continuing operations are as follows (in thousands):
Successor
Predecessor
Period from January 15 through December 31,
Period from January 1 through January 14,
Year Ended
December 31,
Domestic
Foreign
Total
The components of the provision for income taxes from continuing operations are as follows (in thousands):
Successor
Predecessor
Period from January 15 through December 31,
Period from January 1 through January 14,
Year Ended
December 31,
Current:
Federal
State and local
Foreign
Total current tax expense
Deferred tax (benefit):
Federal
State and local
Foreign
Total deferred tax (benefit)
Provision (benefit) for income taxes
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VROOM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The components of income taxes paid (net of refunds) are as follows (in thousands):
Successor
Period from January 15 through December 31,
Federal
State and local
Foreign
Total
Income taxes paid (net of refunds) exceeded 5 percent of total income taxes paid (net of refunds) in the following jurisdictions (in thousands):
Successor
Period from January 15 through December 31,
State:
Indiana
Massachusetts
Missouri
Mississippi
Oregon
South Carolina
Texas
Foreign:
Serbia
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law. OBBBA includes, among other provisions, changes affecting (i) the deductibility and/or amortization of domestic research or experimental expenditures for taxable years beginning after December 31, 2024, (ii) the timing and availability of certain clean energy tax incentives (including an accelerated phase-out for certain credits for projects beginning after June 30, 2026), and (iii) certain international tax rules impacting foreign income and the calculation of Foreign-Derived Intangible Income (“FDII”), among other cross-border considerations. The Company evaluated the relevant provisions of OBBBA and determined that OBBA did not have a material impact on the Company’s consolidated financial statements.
Tax Rate Reconciliation
The Company’s effective tax rate from continuing operations for the years ended December 31, 2025 and 2024 was ( 0.56 )% and ( 0.52 )%, respectively.
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VROOM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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):
Successor
Predecessor
Period from January 15 through December 31,
Period from January 1 through January 14,
Year Ended
December 31,
Amount
Percentage
Amount
Percentage
Amount
Percentage
U.S. federal statutory tax rate
State and local income taxes, net of federal benefit
Foreign Rate Differential
Serbia
Statutory tax rate difference between Serbia and United States
Effect of Cross-Border Tax Laws
GILTI
Nontaxable or nondeductible
Share-based Compensation
Cancellation of Debt Income Exclusion
Other Permanent differences
Change in valuation allowance
Other adjustments
Provision (benefit) for income taxes
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.
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VROOM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Significant components of the Company’s deferred tax assets and liabilities from continuing operations are as follows (in thousands):
Successor
Predecessor
Period from January 15 through December 31,
Year Ended
December 31,
Deferred tax assets:
Net operating loss carryforwards
Warranty Chargeback reserves
Stock-based compensation
Depreciation
Lease Liability
Unrealized Gains/Losses
Other
Total deferred tax assets
Less: valuation allowance
Net deferred tax assets
Deferred tax liabilities:
Intangible amortization
Unrealized Gains/Losses
Repo Expenses
Right of Use Asset
Net deferred tax liabilities
Net deferred income taxes
As of December 31, 2025, 2024 , and 2023, the consolidated valuation allowance balance for both continuing and discontinued operations was $ 398.2 million, $ 400.2 million and $ 358.7 million, respectively. The consolidated change in valuation allowance for both continuing and discontinued operations included additions of $ 30.3 million and $ 6.4 million for federal and state valuation adjustments, partially offset by Section 108 tax attribute reductions of $ 37.7 million and $ 1.0 million change in deferred assets for the year ended December 31, 2025. The consolidated change in valuation allowance for both continuing and discontinued operations was $ 41.5 million for the year ended December 31, 2024.
Net Operating Losses
As of December 31, 2025 , the Company had total net operating loss carryforwards for U.S. federal income tax purposes of $ 1,618.0 million, of which $ 168.5 million expire from 2028 through 2037 and $ 1,449.5 million do not expire. The Company has net operating loss carryforwards for state income tax purposes of $ 901.7 million, which expire from 2034 through 2043 .
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 2019 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). The Company completed a Section 382 study and determined that the Company has undergone five ownership changes, the most recent of which occurred on the Effective Date. The IRC Section 382 limitations arising as a result of these ownership changes generally limit the use of the net operating losses generated before the applicable ownership change. However, an exception to the IRC Section 382 limitation applies when, among other requirements, so-called “qualified creditors” and shareholders of a corporation in a title 11 Case receive, in respect of their claims and interests, as applicable, at least 50% of the vote and value of the stock of the corporation pursuant to a confirmed chapter 11 plan (the “382(l)(5) Exception”). The Company expects that the 382(l)(5) Exception applied to the ownership change occurring on the
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VROOM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Effective Date and, accordingly, that the Company may not have any limitation on its utilization of federal NOL carryforwards generated prior to emergence from the Prepackaged Chapter 11 Case (other than limitations which existed before the commencement of the Prepackaged Chapter 11 Case). However, the Company may be limited in its utilization of its federal NOL carryforwards generated before the Effective Date if it triggers another ownership change within two years after the Effective Date.
On the Effective Date, the Company consummated its Prepackaged Chapter 11 Case. For US tax purposes the Company would be required to recognize cancellation of debt income (“CODI”) in the amount equal to the excess of the adjusted issue price of the debt discharged over the value of any new debt or equity that was issued. However, IRC Section 108 provides that CODI may be excluded from gross income to the extent that the debt is discharged in a title 11 Case. In lieu of recognizing CODI, IRC Section 108 requires the Company to reduce its tax attributes, including net operating losses, capital losses, tax credits, depreciable assets, investment in subsidiaries and other investments, in the amount of the CODI that is excluded from gross income.
Uncertain Tax Positions
The Company has no t identified any uncertain tax positions as of December 31, 2025 or 2024 . 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.
19. Net Loss Per Share
The following table sets forth the computation of basic and diluted net loss per share attributable to common stockholders:
Successor
Predecessor
Period from January 15 through December 31,
Period from January 1 through January 14,
Year Ended
December 31,
(in thousands, except share and per share amounts)
Net (loss) income from continuing operations
Net income (loss) from discontinued operations
Net (loss) income
Net (loss) income per share attributable to common stockholders, basic:
Continuing operations
Discontinued operations
Basic
Net (loss) income per share attributable to common stockholders, diluted:
Continuing operations
Discontinued operations
Diluted
Weighted-average number of shares outstanding used to compute net (loss) income per share attributable to common stockholders:
Basic
Diluted
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VROOM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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:
Successor
Predecessor
As of December 31,
As of January 14,
As of December 31,
Convertible notes
Stock options
Restricted stock units
Total
The following table sets forth a reconciliation from basic to diluted weighted-average number of shares outstanding used to compute net (loss) income per share attributable to common stockholders:
Predecessor
Period from January 1 through January 14,
Weighted-average number of shares outstanding used to compute net (loss) income per share attributable to common stockholders:
Basic
Convertible 2026 Notes
Diluted
Potentially dilutive common shares assumed conversion of debt using the if-converted method.
20. Related Party Transactions
Related Party Line of Credit
On March 8, 2025, Vroom, Inc., UACC and its indirect subsidiary Darkwater Funding LLC, as co-borrowers, entered into a credit agreement for a $ 25.0 million Delayed Draw Facility with Mudrick Capital Management, L.P. (“Lender”), who is a 76.5 % shareholder of the Company and as of January 14, 2025 became a related party. On October 9, 2025 the maximum facility amount was amended from $ 25.0 million to $ 35.0 million effective as of September 30, 2025. 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. As of December 31, 2025, the Company drew $ 8.0 million against the Delayed Draw Facility.
On November 25, 2025, Vroom, Inc. entered into a Note Purchase Agreement with Robert J. Mylod, Jr., the Independent Executive Chair of the board of directors of the Company. Pursuant to the Note Purchase Agreement, the Company issued the Delayed Draw Notes in a maximum aggregate principal commitment amount of $ 10.5 million. The Delayed Draw Notes bear interest, payable quarterly in arrears, at a per annum rate equal to Term SOFR (three-month tenor) plus 7.50 %, and contain customary covenants, events of default, and conditions for subsequent note issuance. The Delayed Draw Notes are secured by the assets of the Company under the security agreement issued by the Company. The Notes mature on November 25, 2026 ; however, the Notes may be prepaid at any time, in whole or in part, without penalty or premium. As of December 31, 2025, the Company drew $ 10.5 million against the Delayed Draw Notes.
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VROOM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Related Party Convertible Notes due 2030
On August 29, 2025, the Company issued $ 10.0 million aggregate principal amount of 5.00 % unsecured Convertible Notes due 2030 (the “2030 Notes”). The 2030 Notes were issued pursuant to a Note Purchase Agreement with Annox Capital, LLC and Robert J. Mylod, Jr, the Managing Partner of Annox Capital, LLC and the Independent Executive Chair of the board of directors of the Company.
The 2030 Notes bear interest at a rate of 5.0 % per annum, payable quarterly in arrears on January 1, April 1, July 1, and October 1 of each year, commencing on October 1, 2025. The 2030 Notes will mature on October 1, 2030 , unless earlier converted.
Each $ 1,000 principal amount of the 2030 Notes will initially be convertible into 28.5714 shares of the Company’s common stock, which is equivalent to an initial conversion price of approximately $ 35.00 per share, subject to adjustment upon the occurrence of specified events. The 2030 Notes are convertible at the option of the noteholders given the following:
A noteholder may elect to convert at the market price conversion rate (as defined within the Note Purchase Agreement) any time prior to the close of business on the second scheduled trading day immediately preceding the maturity date; provided that the aggregate conversion shares (as defined within the Note Purchase Agreement) issued under any 2030 Notes shall not exceed 20 % of the Company’s outstanding Common Stock as of the issuance date unless shareholder approval is obtained or is not required under the relevant exchange rules for issuance in excess of the 20 % cap;
A noteholder may convert its 2030 Notes at any time from, and including, July 1, 2030 until the close of business on the second scheduled trading day immediately before the maturity date;
The 2030 Notes will be automatically converted if for thirty consecutive trading days, (i) the last reported sale price is above $ 50 per share and (ii) the average daily trading volume per trading day is at least 25,000 shares and (iii) an effective registration statement is available with respect to the shares received upon conversion; or
Upon the occurrence of specific corporate events such as a change in control or certain beneficial distributions to common stockholders (as set forth in the Note Purchase Agreement).
The Company may settle conversions by paying or delivering, as applicable, cash, shares of its common stock or a combination of cash and shares of its common stock, at the Company’s election.
If the Company undergoes a fundamental change (as defined in the Note Purchase Agreement), subject to certain conditions, holders of the 2030 Notes may require the Company to repurchase for cash all or any portion of the 2030 Notes at a repurchase price equal to the principal amount of the 2030 Notes plus any accrued and unpaid interest. In addition, if specific corporate events occur prior to the maturity date or if the Company issues a notice of redemption, the Company will increase the conversion rate by pre-defined amounts for a holder who elects to convert their 2030 Notes in connection with such a corporate event.
The Company accounts for the 2030 Notes as a single liability-classified instrument measured at amortized cost. As of December 31, 2025, the net carrying value was $ 10.0 million.
The 2030 Notes were issued at par value and fees associated with the issuance of these 2030 Notes were immaterial. The interest expense was immaterial for the year ended December 31, 2025. The effective interest rate of the 2030 Notes is 5 %.
21. Subsequent Event
On January 16, 2026, Vroom Automotive, LLC, a Delaware limited liability company and an indirect subsidiary of Vroom, Inc., holding intellectual property licenses and other financial assets, issued to SPE Holdings 2026-1, a Delaware statutory trust (“SPE Holdings”), 15,000 newly issued Series A preferred units and 7,500 newly issued Series B preferred units (collectively, the "Vroom Automotive Preferred Units") for aggregate gross proceeds of $ 22.5 million, pursuant to a Preferred Unit Purchase Agreement by and among the Company, Vroom Automotive, LLC and SPE Holdings. Vroom Automotive's Second Amended and Restated Limited Liability Company Agreement, dated as of January 16, 2026,
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VROOM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
amends and restates the existing LLC agreement and establishes the terms of the Vroom Automotive Preferred Units.
The Vroom Automotive Preferred Units will be entitled to receive a quarterly preferential distribution, equal to the liquidation preference of such Vroom Automotive Preferred Units multiplied by a variable distribution rate, which will reset on each quarterly distribution date in an amount equal to the ninety (90) day average of the Secured Overnight Financing Rate (SOFR) plus a spread of 8.25 % for Series A Preferred Units and 9 % for Series B Preferred Units . The Series B Preferred Units are convertible into common units of Vroom Automotive at the option of the Counterparty at any time. The Series A Preferred Units are not convertible.
On February 5, 2026, UACC completed the 2026-1 securitization transaction, in which it issued approximately $ 225.0 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 $ 224.1 million. The trust is collateralized by finance receivables with an aggregate principal balance of $ 274.9 million as of February 5, 2026. These finance receivables are serviced by UACC and UACC receives an "at market" servicing fee. UACC retained the residual interests, which required us to account for the 2026-1 securitization as secured borrowings and the assets and liabilities of the trust remain on balance sheet.
