Vroom(VRM) - 2025 Q1 - Quarterly Results

Executive Summary & Q1 2025 Highlights CEO & CFO Commentary Vroom's CEO highlighted a sequential and year-over-year decrease in net loss and Adjusted net loss for Q1 2025, attributed to improved loan portfolio performance at UACC, while UACC's CFO noted successful securitization, extended warehouse capacity, and a new line of credit, strengthening liquidity - Net loss and Adjusted net loss decreased sequentially and year-over-year in Q1 2025, driven by improved loan portfolio performance at UACC[4] - UACC completed its 17th securitization transaction and extended $400 million of warehouse capacity[4] - A new $25 million line of credit backed by residual interests was established, boosting liquidity[4] Key Financial & Operational Highlights Vroom reported $66.9 million in consolidated total available liquidity as of March 31, 2025, including $14.6 million in cash, and completed a recapitalization of unsecured convertible senior notes, eliminating long-term debt at Vroom, Inc., and significantly improving stockholders' equity to $158.6 million Key Financial & Operational Highlights (as of March 31, 2025) | Metric | Value | | :-------------------------------- | :----------------------------- | | Consolidated Total Available Liquidity | $66.9 million | | Cash and Cash Equivalents | $14.6 million | | Liquidity from Warehouse Credit Facilities | $27.3 million | | Liquidity from Line of Credit | $25.0 million | | Stockholders' Equity | $158.6 million | | Tangible Book Value | $144.8 million | - Net income (loss) from continuing operations for the period January 15 - March 31, 2025, was $(6.5) million, while for January 1 - January 15, 2025, it was $45.1 million[5] - Adjusted net income (loss) for the combined three months ended March 31, 2025, was $(6.7) million[5] - Recapitalization of unsecured convertible senior notes completed on January 14, 2025, eliminated long-term debt at Vroom, Inc., and strengthened the balance sheet[5] - UACC closed its 17th securitization transaction on March 12, 2025, issuing $324.0 million of fixed-rate asset-backed notes[5] Basis of Presentation: Fresh Start Accounting & Non-GAAP Measures Fresh Start Accounting Vroom emerged from Chapter 11 on January 14, 2025, triggering fresh-start accounting, which recorded assets and liabilities at fair values, making financial statements after this date (Successor period) not directly comparable to prior periods (Predecessor period) - Vroom emerged from Chapter 11 on January 14, 2025, leading to the application of fresh-start accounting[6] - Assets and liabilities were recorded at estimated fair values, making financial statements after January 14, 2025 (Successor) not comparable to those before (Predecessor)[6] Non-GAAP Financial Measures Vroom uses non-GAAP financial measures like Adjusted net income (loss) and tangible book value to provide additional insights into operating performance, acknowledging their limitations due to fresh-start accounting and reorganization events, which challenge direct comparisons to prior GAAP periods - Adjusted net income (loss) and tangible book value are key non-GAAP measures used to evaluate operating performance and leverage[14] - These non-GAAP measures have limitations and may not be comparable to similarly titled measures from other companies[15] Adjusted Net Income (Loss) Definition Adjusted net income (loss) is calculated as net income (loss) from continuing operations, adjusted for stock compensation, severance, bankruptcy costs, reorganization items, operating lease ROU asset impairment, and long-lived asset impairment charges[18] Tangible Book Value Definition Tangible book value is calculated as stockholders' equity minus intangible assets[16] Non-GAAP Combined Results Explanation The 'Combined' results for Q1 2025 sum the Predecessor period (Jan 1-14, 2025) and Successor period (Jan 15-Mar 31, 2025) to provide a more meaningful comparison to prior periods, despite not being GAAP-compliant[7][17] - Combined operating results do not reflect actual results absent the Chapter 11 emergence and are not necessarily indicative of future results[7][17] First Quarter 2025 Financial Discussion Consolidated Financial Results For the combined three months ended March 31, 2025, Vroom reported a net income of $38.7 million, a significant improvement from a net loss of $(67.6) million in Q1 2024, driven by increased noninterest income and reduced total expenses, despite a decline in net interest income Consolidated Financial Performance (Combined Q1 2025 vs. Q1 2024, in thousands) | Metric | Combined Q1 2025 | Predecessor Q1 2024 | Change ($) | Change (%) | | :------------------------------------------ | :----------------- | :------------------ | :--------- | :--------- | | Interest income | $44,340 | $51,077 | $(6,737) | -13.2% | | Total interest expense | $13,361 | $14,340 | $(979) | -6.8% | | Net interest income | $30,979 | $36,737 | $(5,758) | -15.7% | | Realized & unrealized losses, net of recoveries | $17,892 | $30,819 | $(12,927) | -41.9% | | Net interest income (loss) after losses & recoveries | $13,087 | $5,918 | $7,169 | 121.1% | | Total noninterest income (loss) | $11,250 | $(1,860) | $13,110 | -704.8% | | Total expenses | $36,578 | $48,298 | $(11,720) | -24.3% | | Net income (loss) from continuing operations | $38,640 | $(44,676) | $83,316 | -186.5% | | Net income (loss) | $38,735 | $(67,617) | $106,352 | -157.3% | Adjusted Net Loss Reconciliation (Combined Q1 2025 vs. Q1 2024, in thousands) | Metric | Combined Q1 2025 | Predecessor Q1 2024 | | :------------------------------------------ | :----------------- | :------------------ | | Net income (loss) from continuing operations | $38,640 | $(44,676) | | Stock compensation expense | $635 | $1,324 | | Severance expense | $25 | $0 | | Bankruptcy costs (post-emergence) | $913 | $0 | | Reorganization items, net | $(51,036) | $0 | | Impairment charges | $4,156 | $2,752 | | Adjusted net loss | $(6,667) | $(40,600) | Results by Segment Segment results show UACC's net interest income after losses and recoveries increased by 13.5% year-over-year, CarStory's Adjusted net income significantly improved by 175.1%, and Corporate expenses saw a substantial reduction, contributing to overall financial improvements UACC Segment UACC Financial Performance (Combined Q1 2025 vs. Q1 2024, in thousands) | Metric | Combined Q1 2025 | Predecessor Q1 2024 | Change ($) | Change (%) | | :------------------------------------------ | :----------------- | :------------------ | :--------- | :--------- | | Interest income | $44,411 | $51,541 | $(7,130) | -13.8% | | Total interest expense | $13,361 | $14,340 | $(979) | -6.8% | | Net interest income | $31,050 | $37,201 | $(6,151) | -16.5% | | Realized & unrealized losses, net of recoveries | $20,338 | $27,761 | $(7,423) | -26.7% | | Net interest income (loss) after losses & recoveries | $10,712 | $9,439 | $1,273 | 13.5% | | Total noninterest income | $7,708 | $6,099 | $1,609 | 26.4% | | Total expenses | $29,058 | $34,529 | $(5,471) | -15.8% | | Adjusted net income (loss) | $(6,744) | $(16,506) | $9,762 | 59.1% | - UACC's Net interest income (loss) after losses and recoveries increased by 13.5% year-over-year[11] - Total noninterest income for UACC grew by 26.4%, primarily driven by a 146.0% increase in Warranties and GAP income, net[11] CarStory Segment CarStory Financial Performance (Combined Q1 2025 vs. Q1 2024, in thousands) | Metric | Combined Q1 2025 | Predecessor Q1 2024 | Change ($) | Change (%) | | :------------------------------------------ | :----------------- | :------------------ | :--------- | :--------- | | CarStory revenue | $2,824 | $2,979 | $(155) | -5.2% | | Total noninterest income | $2,899 | $3,152 | $(253) | -8.0% | | Total expenses | $2,195 | $4,226 | $(2,031) | -48.1% | | Adjusted net income (loss) | $686 | $(913) | $1,599 | 175.1% | - CarStory's Adjusted net income (loss) improved significantly, moving from a loss of $(913) thousand in Q1 2024 to a profit of $686 thousand in Q1 2025, a 175.1% increase[12] - Total expenses for CarStory decreased by 48.1% year-over-year, largely due to reductions in compensation and benefits, professional fees, and depreciation and amortization[12] Corporate Segment Corporate Financial Performance (Combined Q1 2025 vs. Q1 2024, in thousands) | Metric | Combined Q1 2025 | Predecessor Q1 2024 | Change ($) | Change (%) | | :------------------------------------------ | :----------------- | :------------------ | :--------- | :--------- | | Net interest income (loss) after losses & recoveries | $2,375 | $(3,521) | $5,896 | 170.0% | | Total noninterest income | $643 | $(11,111) | $11,754 | 105.8% | | Total expenses | $5,325 | $9,544 | $(4,219) | -44.2% | - Corporate segment's total expenses decreased by 44.2% year-over-year, driven by reductions in compensation and benefits, software and IT costs, and other expenses[13] - Net interest income (loss) after losses and recoveries for Corporate improved significantly by 170.0%[13] Financial Outlook Vroom provided its full year 2025 financial outlook, projecting an Adjusted net income (loss) between $(30) million and $(45) million, year-end total available liquidity of $35 million to $50 million, and indirect origination volume between $460 million and $490 million Full Year 2025 Financial Outlook | Metric | Range | | :-------------------------- | :-------------------- | | Adjusted net income (loss) | $(30) - $(45) million | | Year-end total available liquidity | $35 - $50 million | | Indirect origination volume | $460 - $490 million | - The financial estimates are forward-looking statements and subject to substantial uncertainty[22] Company Overview About Vroom Vroom, Inc. operates United Auto Credit Corporation (UACC), a leading indirect automotive lender, and CarStory, which provides AI-powered analytics for automotive retail, having discontinued its e-commerce and used vehicle dealership operations as part of its Value Maximization Plan prior to January 2024 - Vroom owns and operates United Auto Credit Corporation (UACC), an indirect automotive lender[25] - Vroom also operates CarStory, a provider of AI-powered analytics and digital services for automotive retail[25] - Prior to January 2024, Vroom discontinued its e-commerce and used vehicle dealership business as part of its Value Maximization Plan[25] Forward-Looking Statements The press release contains forward-looking statements regarding Vroom's future performance, strategic initiatives, and financial position, which are based on current assumptions and involve known and unknown risks and uncertainties that could cause actual results to differ materially - Statements regarding full year 2025 guidance, restructuring impact, strategic initiatives, cost-savings, UACC's business, liquidity, and future financial results are forward-looking[26] - These statements are subject to known and unknown risks and uncertainties that may cause actual results to differ materially[26] - Vroom undertakes no obligation to update forward-looking statements[26] Consolidated Financial Statements Consolidated Balance Sheets As of March 31, 2025, Vroom's total assets decreased to $989.9 million from $1,066.7 million at December 31, 2024, while stockholders' equity significantly improved from a deficit of $(30.9) million to a positive $158.6 million, primarily due to recapitalization and fresh-start accounting adjustments Consolidated Balance Sheet Highlights (in thousands) | Metric | As of March 31, 2025 | As of December 31, 2024 | | :------------------------------------------ | :------------------- | :---------------------- | | Cash and cash equivalents | $14,565 | $29,343 | | Finance receivables at fair value | $858,200 | $503,848 | | Intangible assets, net | $13,796 | $104,869 | | Total assets | $989,956 | $1,066,696 | | Warehouse credit facilities of consolidated VIEs | $114,187 | $359,912 | | Long-term debt | $655,430 | $381,366 | | Liabilities subject to compromise | $0 | $291,577 | | Total liabilities | $831,329 | $1,097,641 | | Total stockholders' equity (deficit) | $158,627 | $(30,945) | - Total assets decreased by approximately $76.7 million from December 31, 2024, to March 31, 2025[29] - Stockholders' equity improved substantially from a deficit of $(30.9) million to a positive $158.6 million, reflecting the recapitalization and fresh-start accounting[29] Consolidated Statements of Operations The consolidated statements of operations show a net income of $38.7 million for the combined Q1 2025, a significant turnaround from a net loss of $(67.6) million in Q1 2024, driven by a substantial increase in noninterest income and a reduction in total expenses, despite a decrease in net interest income Consolidated Statements of Operations Highlights (in thousands) | Metric | Successor (Jan 15 - Mar 31, 2025) | Predecessor (Jan 1 - Jan 14, 2025) | Predecessor (Q1 2024) | | :------------------------------------------ | :-------------------------------- | :--------------------------------- | :-------------------- | | Interest income | $37,157 | $7,183 | $51,077 | | Net interest income | $25,991 | $4,988 | $36,737 | | Net interest income (loss) after losses & recoveries | $14,891 | $(1,804) | $5,918 | | Total noninterest income (loss) | $10,206 | $1,044 | $(1,860) | | Total expenses | $31,397 | $5,181 | $48,298 | | Net income (loss) from continuing operations | $(6,450) | $45,090 | $(44,676) | | Net income (loss) | $(6,351) | $45,086 | $(67,617) | Net Income (Loss) Per Share (Basic) | Metric | Successor (Jan 15 - Mar 31, 2025) | Predecessor (Jan 1 - Jan 14, 2025) | Predecessor (Q1 2024) | | :------------------------------------------ | :-------------------------------- | :--------------------------------- | :-------------------- | | Continuing operations | $(1.25) | $24.74 | $(24.90) | | Discontinued operations | $0.02 | $(0.00) | $(12.79) | | Basic | $(1.23) | $24.74 | $(37.68) | Consolidated Statements of Cash Flows For the Successor period (Jan 15 - Mar 31, 2025), net cash provided by operating activities was $16.8 million, while investing activities used $47.7 million, and financing activities provided $37.0 million, resulting in an overall increase of $6.1 million in cash, cash equivalents, and restricted cash during this period Consolidated Statements of Cash Flows Highlights (in thousands) | Activity | Successor (Jan 15 - Mar 31, 2025) | Predecessor (Jan 1 - Jan 14, 2025) | Predecessor (Q1 2024) | | :------------------------------------------ | :-------------------------------- | :--------------------------------- | :-------------------- | | Net cash provided by (used in) operating activities | $16,837 | $(6,011) | $23,124 | | Net cash (used in) provided by investing activities | $(47,697) | $2,981 | $41,071 | | Net cash provided by (used in) financing activities | $36,987 | $(13,898) | $(132,508) | | Net increase (decrease) in cash, cash equivalents and restricted cash | $6,127 | $(16,928) | $(68,313) | | Cash, cash equivalents and restricted cash at end of period | $67,568 | $61,441 | $140,506 | - Cash paid for interest in the Successor period was $9.2 million, and for reorganization items, net, was $0[36]