Vroom(VRM) - 2025 Q2 - Quarterly Report

Financial Performance - The company reported a net loss from continuing operations of $8.932 million for the three months ended June 30, 2025, compared to a net loss of $19.104 million for the same period in 2024 [330]. - Adjusted net loss for the three months ended June 30, 2025, was $6.729 million, an improvement from an adjusted net loss of $14.973 million in the prior year [330]. - The net loss from continuing operations was $8,932, an improvement of $10,172 or 53.2% compared to a loss of $19,104 in the previous year [356]. - Adjusted net loss decreased by $3.0 million or 35.6% to $(5.3) million for the three months ended June 30, 2025, from $(8.3) million for the same period in 2024 [384]. - Adjusted net loss was $12.1 million for the six months ended June 30, 2025, compared to a loss of $24.8 million for the same period in 2024, reflecting an improvement of $12.7 million or 51.3% [403]. Revenue and Income - Interest income for the three months ended June 30, 2025, was $45,748, a decrease of $6,114 or 11.8% compared to $51,862 in the same period of 2024 [356]. - Total noninterest income for the six months ended June 30, 2025, increased by $12,908 or 180.3% to $20,067 compared to $7,159 in 2024 [358]. - CarStory revenue decreased by $1.1 million or 36.6% to $1.8 million for the three months ended June 30, 2025, from $2.9 million for the same period in 2024, primarily due to the loss of a major customer [386]. - CarStory revenue decreased by $1.2 million or 20.7% to $4.7 million for the six months ended June 30, 2025, from $5.9 million for the same period in 2024 [423]. Expenses and Cost Management - Total expenses decreased significantly by $15,646 or 33.7% to $30,796 for the three months ended June 30, 2025, down from $46,442 in 2024 [356]. - Compensation and benefits decreased by $3.1 million or 15.1% to $17.4 million for the three months ended June 30, 2025, from $20.5 million for the same period in 2024 [378]. - Total expenses decreased by $13.5 million or 19.9% to $54.1 million for the six months ended June 30, 2025, from $67.6 million for the same period in 2024 [403]. - Compensation and benefits expense decreased by $5.8 million or 14.7% to $33.5 million for the six months ended June 30, 2025, from $39.3 million for the same period in 2024 [403]. Debt and Financing - Vroom, Inc. emerged from the Prepackaged Chapter 11 Case on January 14, 2025, with no remaining long-term debt at the company level [300][301]. - As of June 30, 2025, UACC had four Warehouse Credit Facilities with a total borrowing capacity of $400 million, which are crucial for financing operations and receivables [340]. - UACC's ability to access capital is critical, with recent decreases in advance rates on borrowings potentially impacting liquidity [341]. - UACC entered into a $25.0 million delayed draw term loan facility with Mudrick Capital Management, which holds a 76.5% stake in the company [441]. Market Conditions and Strategic Initiatives - The ongoing inflationary environment and rising interest rates have made vehicle financing more costly, affecting consumer demand [346]. - Geopolitical conflicts and trade restrictions could negatively impact the automotive industry, leading to decreased demand for financed motor vehicle contracts [348]. - The company aims to achieve pre-COVID cumulative net losses or lower, grow origination with pre-COVID cumulative net losses or lower, and lower operating costs as part of its long-term strategic plan [321][326]. - UACC aims to optimize its dealer network and expand offerings to a broader credit spectrum, including a pilot program for near-prime consumers [344]. Asset Management and Valuation - The company has a comprehensive used vehicle information database with over 246 million vehicle identification numbers (VINs) and 4 billion vehicle photos, enhancing its analytics capabilities [316]. - The identified intangible assets were valued at $14.2 million, primarily consisting of technology, trade names, trademarks, and customer relationships [477]. - Significant assumptions affecting the fair value of finance receivables included prepayment speed, default rate, and recovery rate, primarily based on historical performance [471]. - The company classified finance receivables in the 2024-1 CFE as Level 3 of the fair value hierarchy due to limited marketability [475]. Cash Flow and Liquidity - Net cash provided by operating activities from continuing operations increased by $155.4 million, from $(126.0) million for the six months ended June 30, 2024, to $29.4 million for the six months ended June 30, 2025 [457]. - UACC's cash and cash equivalents at the end of the period were $67.2 million, compared to $61.4 million at the beginning of the period [456]. - UACC's ability to utilize Warehouse Credit Facilities is conditioned on maintaining certain financial covenants, including minimum tangible net worth and liquidity levels [453].