Restructuring Activities

6 Months Ended

Jun. 30, 2023

Restructuring and Related Activities [Abstract]

17. Restructuring Activities

On May 5, 2022, the Company approved the Realignment Plan, which was designed to position the Company for long-term profitable growth by prioritizing unit economics, reducing operating expenses and maximizing liquidity.

In connection with the Realignment Plan, the Company reduced headcount across the organization and closed its New York City, Detroit, and one of its Houston office locations as well as several Sell Us Your Car® center facilities. Additionally, the Company streamlined TDA's operations and closed its service center. The service center was repurposed to replace the reconditioning facility in Stafford, Texas, which was also closed. The Company also restructured its network of logistics hubs in order to align with reduced unit volume and its regional operating model.

The restructuring activities associated with the Realignment Plan were substantially completed during 2022.

On January 18, 2023, the Company executed a reduction in force as part of the continued focus on reducing variable and fixed costs. The Company reduced Vroom’s headcount by approximately 275 employees based on the assessment of the Company's business needs, key initiatives, and long-term success and profitable growth. For the six months ended June 30, 2023, the Company incurred expenses of approximately $4.1 million, primarily consisting of severance.

On April 26, 2023, as part of the Company’s ongoing reexamination of all facets of the business, the Company implemented an organizational restructuring that included a reduction in force. The Company reduced Vroom’s headcount by approximately 120 employees and incurred total expenses of approximately $2.3 million for the three and six months ended June 30, 2023, primarily consisting of severance costs, as a result of this reduction in force.

The following table summarizes the components of the restructuring and related charges:


	Three months ended June 30,				Six months ended June 30,				Total Charges Incurred to Date
	2023		2022		2023		2022
Charges by activity:
Severance and termination benefits (1)	$	2,277	$	4,946	$	6,381	$	4,946	$	13,739
Impairment of operating lease right-of-use assets (2)		—		3,407		—		3,407		6,491
Other costs (3)		—		1,176		—		1,176		1,176
Total restructuring and related charges	$	2,277	$	9,529	$	6,381	$	9,529	$	21,406

(1) Severance and termination costs consist of severance costs provided to employees who have been terminated as well outplacement costs and COBRA benefits.

(2) Impairment of operating lease right-of-use assets consist of costs associated with planned facility closures that will continue to be incurred under the contract for its remaining term without economic benefit to the Company.

(3) Other costs incurred to date consist of legal expenses incurred in connection with the Realignment Plan and acceleration of depreciation of property and equipment related to the planned facility closures.

Severance and termination benefits and other costs are included in "Selling, general, and administrative expenses" in the condensed consolidated statements of operations for the three and six months ended June 30, 2023 and 2022.

The following table is a reconciliation of the beginning and ending restructuring liability for the six months ended June 30, 2023 and 2022:


Balance as of December 31, 2022	$	810
Accrual and accrual adjustments		6,381
Cash payments		(6,237	)
Balance as of June 30, 2023	$	954


Balance as of December 31, 2021	$	—
Accrual and accrual adjustments		5,529
Cash payments		(2,435	)
Balance as of June 30, 2022	$	3,094

The restructuring liability for severance and termination benefits is reflected in "Accrued Expenses" in the condensed consolidated balance sheet as of June 30, 2023 and December 31, 2022.