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Description of Business and Basis of Presentation
12 Months Ended
Dec. 31, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Description of Business and Basis of Presentation

1. Description of Business and Basis of Presentation

Description of Business and Organization

 

Vroom, Inc., and its wholly owned subsidiaries (collectively, the "Company”), was an end-to-end ecommerce platform to buy and sell used vehicles.

 

In December 2015, the Company acquired Houston-based Left Gate Property Holding, LLC (d/b/a Texas Direct Auto and Vroom). The acquisition included the Company's proprietary vehicle reconditioning center, the Texas Direct Auto ("TDA") dealership, and Sell Us Your Car® centers. Left Gate Property Holding, LLC was renamed Vroom Automotive, LLC in March 2021, and was the primary operating entity for the Company's purchases and sales of used vehicles. In January 2021, the Company acquired Vast Holdings, Inc. (d/b/a CarStory). On February 1, 2022 (the "Acquisition Date"), the Company completed the acquisition of Unitas Holdings Corp. (now known as Vroom Finance Corporation), including its wholly owned subsidiaries United PanAm Financial Corp. (now known as Vroom Automotive Financial Corporation) and United Auto Credit Corporation ("UACC").

 

Starting in 2022, the Company was organized into three reportable segments: Ecommerce, Wholesale and Retail Financing. The Ecommerce reportable segment represented retail sales of used vehicles through the Company’s ecommerce platform, revenue earned on vehicle financing originated by UACC or the Company's third-party financing sources and sales of value-added products associated with those vehicles sales. The Wholesale reportable segment represented sales of used vehicles through wholesale channels. The Retail Financing reportable segment represented UACC’s operations with its network of third-party dealership customers, which primarily consists of the purchases and servicing of vehicle installment contracts, but excludes financing of vehicle sales to Vroom customers. As a result of the Value Maximization Plan and the wind-down of the ecommerce operations, as described below, the Company will discontinue reporting its results through the Ecommerce and Wholesale segments starting in the first quarter of 2024.

 

The Company was incorporated in Delaware on January 31, 2012 under the name BCM Partners III, Corp. On June 25, 2013, the Company changed its name to Auto America, Inc. and on July 9, 2015, the Company changed its name to Vroom, Inc.

 

Value Maximization Plan

On January 19, 2024, the Board of Directors of Vroom approved a value maximization plan, pursuant to which the Company discontinued its ecommerce operations and is winding 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”). The Company has suspended transactions through vroom.com, completed transactions for customers who had previously contracted to purchase or sell a vehicle, halted purchases of additional vehicles, sold all of its used vehicle inventory through wholesale channels and paid off its floorplan financing facility. The Company continues to take other actions to maximize the value of its remaining ecommerce assets, reduce its outstanding commitments and preserve its liquidity, and has been executing a reduction-in-force commensurate with its reduced operations. The Company expects the ecommerce wind down to be substantially complete by the end of the first quarter of 2024, but may incur additional wind-down costs through the end of 2024.

 

The Company also owns and operates UACC, an automotive finance company, and CarStory, an artificial intelligence-powered analytics and digital services platform for automotive retail. The UACC and CarStory businesses will continue to serve their third-party customers, with their operations unaffected by Vroom’s ecommerce wind-down.

 

As a result of the Value Maximization Plan, the Company estimates that it will incur total cash charges of approximately $16.5 million for severance and other personnel-related costs and approximately $15.0 million in other contract and lease termination costs. As part of a planned reduction-in-force under the Value Maximization Plan, the Company anticipates that approximately 800 employees will be impacted upon substantial completion of the wind-down, resulting in a reduction of approximately 93% of the employees not engaged in UACC’s or CarStory’s ongoing operations.

 

The Company determined a triggering event existed as of December 31, 2023, resulting in long–lived asset impairment charges of $47.4 million. The impairment charges consist of $23.9 related to "Property and equipment, net",

$22.2 million related to "Operating lease right-of-use assets", and $1.3 million related to "Other assets" on the Company's consolidated balance sheets. Refer to Note 7 — Property and Equipment, Net and Note 12 — Leases for further details.

 

Reverse Stock Split

On February 13, 2024, the Company effected a 1-for-80 reverse stock split of the Company’s common stock. All shares of the Company’s common stock, stock-based instruments and per-share data included in these consolidated financial statements have been retroactively adjusted as though the stock split has been effected prior to all periods presented.

Basis of Presentation

 

The consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). Certain prior year amounts have been reclassified to conform to the current year presentation.

 

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.