Vroom Inc
For the period ended Sep 30, 2024. Filed Nov 12, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 12, 2024
VRM$6.53-2.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-08.
0000950170-24-094039
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-12.
0000950170-24-125412
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 160 previous paragraphs and 202 current paragraphs.
88 unchanged; 51 reworded; 61 added; 18 removed; 3 previous and 2 current paragraphs rearranged.
Tables are not compared: 9 previous and 9 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (61)
Current report
Recapitalization of Balance Sheet Debt: Entry into the RSA and Anticipated Prepackaged Chapter 11 Case
Current report
On November 12, 2024, we entered into a Restructuring Support Agreement (together with all exhibits and schedules thereto, the “RSA”) with creditors holding, in the aggregate, over 80% of the aggregate outstanding principal amount of the Notes (as defined below) and the largest shareholder. The RSA contemplates 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 anticipated 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.
Current report
In connection with the restructuring contemplated by the anticipated filing of the Prepackaged Chapter 11 Case, the ordinary course operations of Vroom, Inc.’s subsidiaries are expected to continue with minimal impact, if any, and trade creditors and all other general unsecured creditors are expected to be unimpaired. If the Plan is consummated, we will emerge without any remaining Notes, but will maintain UACC’s Warehouse Credit Facilities (as defined below), securitization debt, financing of beneficial interest in securitizations, and junior subordinated debentures.
Current report
Vroom, Inc. (in the context of the anticipated Prepackaged Chapter 11 Case, the “Debtor”) is expected to commence a voluntary proceeding (the “Prepackaged Chapter 11 Case”) under Chapter 11 of the United States Bankruptcy Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”). We plan to continue to operate our business as a “debtor-in-possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court. We plan to seek approval of certain “first day” motions containing customary relief intended to assure our ability to continue ordinary course operations. None of Vroom, Inc.’s subsidiaries are expected to commence Chapter 11 proceedings.
Current report
Our pursuit of the Prepackaged Chapter 11 Case is intended to address the impact of the 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. See “Liquidity and Capital Resources” for more information on our Notes and the potential restructuring of our debt obligations as a result of the Prepackaged Chapter 11 Case, and Part II, Item 1A Risk Factors for risks associated with the Prepackaged Chapter 11 Case and our ability to realize its intended benefits.
Current report
Commitments and Representations. Each of the Debtor and the Consenting Stakeholders have made certain customary commitments and representations in the RSA. The Debtor has agreed, among other things, to support and take all commercially reasonable actions necessary and appropriate to facilitate the restructuring and meet milestones set forth in the RSA. The Consenting Stakeholders have committed to the Debtor, among other things, to support and vote for the Plan and use their commercially reasonable efforts to consummate and complete the restructuring.
Current report
Milestones. The RSA contains milestones ("Milestones") relating to the progress of the Prepackaged Chapter 11 Case, which include, among other things, entry of an order by the Bankruptcy Court confirming the Plan and approving the related disclosure statement no later than 60 days following the Petition Date and the occurrence of the date on which the Plan has become effective in accordance with its terms (the “Plan Effective Date”) no later than 75 days following the Petition Date.
Current report
Termination. Each of the parties to the RSA may terminate the agreement (and thereby their support for the Plan) under certain limited circumstances, including, among other things: (i) in the case of the Company and the Consenting Noteholders, the failure to meet the Milestones; (ii) the occurrence of certain breaches of the RSA; (iii) the mutual agreement of the parties; and (iv) in the case of the Company, if the Board, members, or managers, as applicable, of the Company reasonably determines in good faith and based upon advice of outside legal counsel that performance under the RSA would be inconsistent with its applicable fiduciary duties.
Current report
Consummation. Consummation of the restructuring contemplated by the RSA is subject to approval of the Plan by the Bankruptcy Court and other conditions. Accordingly, no assurance can be given that the transactions described therein will be consummated.
Current report
The capital structure of the reorganized Debtor upon the Plan Effective Date will consist of the new common stock to be issued by the reorganized Debtor on the Plan Effective Date (the “New Common Stock”), distributed to (a) the holders of Unsecured Notes Claims; and (b) the holders of Existing Equity Interests, and resulting in pro forma ownership percentages of (x) 92.94% of the New Common Stock held by the holders of Unsecured Notes Claims; and (y) 7.06% of the New Common Stock held by holders of Existing Equity Interests; in each case, subject to dilution by the (i) New Warrants, (ii) the MIP Awards, and (iii) the Post-Effective Date Equity Awards.
Current report
Promptly following the Plan Effective Date, the New Board will approve and implement the Management Incentive Plan (the “MIP”). The RSU Awards and the ESO Grants will be granted subject to approval by the New Board, with the allocation of such grants to be determined in good faith by the New Board in consultation with the reorganized company’s chief executive officer.
Current report
The reorganized company reserves the right to register the New Warrants with the U.S. Securities and Exchange Commission (“SEC”) by filing a Registration Statement on Form S-1 in its discretion if it determines that doing so would be necessary or desirable in connection with the trading of such securities. As contemplated, the New Warrants will have the following key terms:
Current report
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Current report
The Plan is attached as an exhibit to the RSA, which is filed as Exhibit 10.1 hereto. Under the Plan, certain classes of claims will receive upon consummation the following treatment:
Current report
Each holder of Claims under the Unsecured Notes Indenture (the “Unsecured Notes Claims”) will receive, except to the extent that such holder agrees in writing to less favorable treatment, on the Effective Date, its pro rata share of 92.94% of the New Common Stock (subject to dilution by (i) the New Warrants, (ii) the MIP Awards, and (iii) the Post-Effective Date Equity Awards).
Current report
Each holder of any Equity Security or other ownership interest in the Debtor as in existence immediately before the Plan Effective Date, but excluding any Existing Equity Awards (the “Existing Equity Interests”), will receive, except to the extent that such holder agrees in writing to less favorable treatment, on the Effective Date, (i) its pro rata share of 7.06% of the New Common Stock (subject to dilution by (a) the New Warrants, (b) the MIP Awards, and (c) the Post-Effective Date Equity Awards) and (ii) the right to receive New Warrants in an amount equal to its pro rata share of Existing Equity Interests.
Current report
Except to the extent the holder of any options or restricted stock units representing rights to purchase or acquire any Equity Securities of the Debtor as in existence immediately before the Plan Effective Date (the “Existing Equity Awards,” and together with the Existing Equity Interests, the “Equity Interests”) agrees in writing to less favorable treatment, on the Effective Date, all Existing Equity Awards will be converted into new awards (the “Post-Effective Date Equity Awards”) exchangeable into New Common Stock on the same terms and conditions, and for the same number of units, applicable to the Existing Equity Awards in respect of the Existing Equity Interests, as of immediately prior to the Plan Effective Date.
Current report
As described above, the Plan contemplates for the amendment and restatement, effective upon approval by the New Board, of the Company’s 2020 Incentive Award Plan in order to implement the MIP, pursuant to which 10% of the New Common Stock (as defined in the Plan) outstanding on a fully diluted basis as of immediately following emergence may be issued in the form of restricted stock unit awards and 5% of the New Common Stock outstanding on a fully diluted basis as of immediately following emergence may be issued in the form of stock options to certain employees of the Debtor, in each case on the terms set forth in the MIP Term Sheet.
Current report
Going Concern
Current report
As described above, we are contemplating the filing of the Prepackaged Chapter 11 Case. We believe we will be able to emerge from bankruptcy and continue to operate as a viable going concern. However, there is no assurance that: (a) the Plan will become effective, (b) the Plan will ultimately be approved by the requisite voting creditors and interest holders and confirmed by the Bankruptcy Court, (c) the Bankruptcy Court will grant or deny motions in a manner that is not adverse to the Debtor, and (d) the anticipated Prepackaged Chapter 11 Case will not be converted into cases under chapter 7 of the Bankruptcy Code. The transactions contemplated by the RSA and Plan are subject to approval by the Bankruptcy Court, among other conditions. Accordingly, we can provide no assurance that the transactions described therein will be consummated.
Current report
Due to the uncertainties described above, there is substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern is contingent upon our plans, which includes, among other things, our ability to, subject to the approval by the Bankruptcy Court, implement a comprehensive restructuring and successfully emerge from the anticipated Prepackaged Chapter 11 Case. Despite the anticipated Chapter 11 filing, we retain sufficient liquidity, with approximately $51.1 million of unrestricted cash on our Condensed Consolidated Balance Sheet as of September 30, 2024, and we continue to meet our obligations to customers, vendors, counterparties and employees in the ordinary course of business.
Current report
The accompanying unaudited condensed 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. Accordingly, the accompanying unaudited condensed consolidated financial statements do not include any adjustments that may result from the outcome of these uncertainties.
Current report
Long-term Strategic Plan
Current report
Since the announcement of the Value Maximization Plan in January 2024, we have been focused on building a long-term strategic plan leveraging our remaining assets to improve the profitability of the business and achieve three key objectives: achieve pre-COVID Cumulative Net Losses (CNL) or lower, grow origination with pre-COVID CNL or lower, and lower operating cost.
Current report
In order to achieve these objectives, we are focused on four strategic initiatives:
Current report
Build a world class lending program: Focus on using advanced models and analytics to predict losses and drive profitable growth, bringing subprime CNL to pre-COVID levels. Expand the near-prime program to enable UACC to become a more significant partner to dealers.
Current report
Build a world class sales and marketing program: Attract and retain the best dealers and drive deeper dealer engagement to enable growth. Improve the Fast Lane, a portal built to provide the dealer with everything they need from application through contracting.
Current report
Build operational excellence in originations: Enhance systemic capabilities and decisioning for a more efficient process. Integrate Vroom patent-pending AI agent into UACC's funding process to reduce costs, improve accuracy, and reduce fraud. Build a pre-verification automated engine to improve dealer service, improve credit quality and increase capture rates.
Current report
Build operational excellence in servicing: Utilize data science, advanced analytics and technology to enable an improved approach to servicing effectiveness. Utilize the native consumer mobile app, which was launched in September 2024, to improve customer engagement and communication and target more on-time payments.
Current report
Anticipated Prepackaged Chapter 11 Case
Current report
We are subject to risks and uncertainties associated with the anticipated Prepackaged Chapter 11 Case, including the impact on our liquidity, cash balances, and Nasdaq listing status. In addition, the entry into the RSA and the anticipated filing of the Prepackaged Chapter 11 Case has consumed, and is expected to continue to consume, a substantial portion of the time and attention of our management, which may have an adverse effect on our business and results of operations, and we may experience increased levels of employee attrition. Our business could also suffer from a long and protracted restructuring. Furthermore, we may not realize any or all of the intended benefits of the Prepackaged Chapter 11 Case. All of these factors could limit our ability to pursue growth strategies for our business in the near- to mid-term.
Current report
Interest income
Current report
Realized and unrealized losses, net of recoveries, decreased slightly by $0.2 million or 0.7% to $30.1 million for the three months ended September 30, 2024 from $30.3 million for the three months ended September 30, 2023.
Current report
Servicing income
Current report
Warranties and GAP income increased by $0.6 million or 39.5% to $2.1 million for the three months ended September 30, 2024 as compared to $1.5 million for the three months ended September 30, 2023 primarily as a result of a revised estimate of proceeds we expect to recover.
Current report
Software and IT costs decreased $0.5 million or 16.2% to $2.3 million for the three months ended September 30, 2024 from $2.8 million for the three months ended September 30, 2023, primarily as a result of more efficient targeted software use as well as renegotiating and right-sizing our Software and IT contracts.
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Removed paragraphs (18)
Previous report
2024-1 Securitization Transaction
Previous report
Realized and unrealized losses, net of recoveries, decreased $0.8 million or 3.9% to $19.6 million for the three months ended June 30, 2024 from $20.4 million for the three months ended June 30, 2023, driven by slightly lower default rates.
Previous report
Warranties and GAP Income
Previous report
Warranties and GAP income remained relatively consistent at $1.6 million for the three months ended June 30, 2024 as compared to $1.5 million for the three months ended June 30, 2023.
Previous report
Professional fees
Previous report
Adjusted EBITDA decreased $0.3 million or 41.3% to $0.4 million for the three months ended June 30, 2024 as compared to $0.6 million for the three months ended June 30, 2023.
Previous report
Warranties and GAP income, net
Previous report
Six Months Ended June 30, 2024 and 2023
Previous report
Interest expense increased $12.2 million or 71.6% to $29.3 million for the six months ended June 30, 2024 from $17.1 million for the six months ended June 30, 2023, primarily as a result of higher interest expense incurred on the
Previous report
Warranties and GAP Income
Previous report
Warranties and GAP income decreased by $0.4 million or 11.7% to $3.3 million for the six months ended June 30, 2024 from $3.7 million for the six months ended June 30, 2023, primarily due to higher losses incurred on the GAP debt waiver product.
Previous report
Professional fees
Previous report
Warranties and GAP Income, net
Previous report
Gain on debt extinguishment
Previous report
Software and IT costs
Previous report
Software and IT costs decreased $1.3 million or 31.2% to $2.8 million for the six months ended June 30, 2024 from $4.0 million for the six months ended June 30, 2023, primarily related to volume-based fees as a result of reduced headcount and more efficient targeted software use. We are continuing to renegotiate and right-size our Software and IT contracts to account for reduced headcount following the Ecommerce Wind-down and expect these costs to decrease in the future.
Previous report
We anticipate that our existing cash and cash equivalents and UACC's Warehouse Credit Facilities will be sufficient to support the Company for at least the next twelve months from the issuance date of this Quarterly Report on Form 10-Q.
Previous report
Our future liquidity and capital requirements will depend on many factors, including our ability to successfully implement the Value Maximization Plan and realize its benefits, available advance rates on and the amendment and renewal of our Warehouse Credit Facilities, our ability to continue to meet the requirements of Nasdaq for continued listing on the Nasdaq Global Select Market, our ability to complete additional securitization transactions on terms favorable to us, and our future credit losses.
Reworded paragraphs (51)
Previous wording
As a result of the Value Maximization Plan, we estimate that we will incur total cash charges during 2024 of approximately $15.8 million for severance and other personnel-related costs, with $15.6 million incurred during the six months ended June 30, 2024, and approximately $13.7 million in contract and lease termination costs, with $13.5 million settled during the six months ended June 30, 2024. As part of a planned reduction-in-force under the Value Maximization Plan, approximately 800 employees were impacted by the wind-down, resulting in a reduction of approximately 93% of the employees not engaged in UACC’s or CarStory’s ongoing operations.
Current wording
As a result of the Value Maximization Plan, we estimate that we will incur total cash charges during 2024 of approximately $15.9 million for severance and other personnel-related costs, with $15.8 million incurred during the nine months ended September 30, 2024, and approximately $13.9 million in contract and lease termination costs, with the total amount settled during the nine months ended September 30, 2024. As part of a planned reduction-in-force under the Value Maximization Plan, approximately 800 employees were impacted by the wind-down, resulting in a reduction of approximately 93% of the employees not engaged in UACC’s or CarStory’s ongoing operations.
Previous wording
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 new and used 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.
Current wording
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 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.
Previous wording
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 June 30, 2024, UACC serviced a portfolio of approximately 82,000 retail installment sales contracts with an aggregate principal outstanding balance of $1.1 billion.
Current wording
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 September 30, 2024, UACC serviced a portfolio of approximately 80,000 retail installment sales contracts with an aggregate principal outstanding balance of $1.1 billion.
Previous wording
While credit losses are inherent in the automotive finance receivables business, several variables have affected UACC’s recent loss and delinquency rates, including rising interest rates, the current inflationary environment and vehicle depreciation. UACC is currently experiencing higher loss severity and higher losses on its finance receivables, which has negatively impacted the fair value of our finance receivables and the losses recognized for the six months ended June 30, 2024 and are expected to continue to negatively impact our business for the remainder of 2024. 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 our credit program, such as tightening credit, which is starting to return our delinquencies and expected portfolio performance on those vintages to normalized levels. 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 as a result of the increasing credit losses in UACC's portfolio and overall rising interest rates. Any future decreases on available advance rates may have an adverse impact on our liquidity.
Current wording
While credit losses are inherent in the automotive finance receivables business, several variables have affected UACC’s recent loss and delinquency rates, including rising interest rates, the current inflationary environment and vehicle depreciation. UACC is currently experiencing higher loss severity and higher losses on its finance receivables, which has negatively impacted the fair value of our finance receivables and the losses recognized for the nine months ended September 30, 2024 and are expected to continue to negatively impact our business for the remainder of 2024. 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 our credit program, such as tightening credit, which is starting to return our delinquencies and expected portfolio performance on those vintages to normalized levels. 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 as a result of the increasing credit losses in UACC's portfolio and overall rising interest rates. Any future decreases on available advance rates may have an adverse impact on our liquidity.
Previous wording
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 high interest rates, the current inflationary environment and vehicle depreciation in the used automotive industry, UACC is experiencing higher loss severity. Certain advance rates available to UACC on borrowings from UACC’s four senior secured warehouse credit facility agreements (the “Warehouse Credit Facilities”) have decreased as a result of the increasing credit losses in UACC's portfolio and overall rising interest rates. Any future decreases on available advance rates may have an adverse impact on our liquidity. Currently, all four Warehouse Credit Facilities expire in 2025. We have commenced discussions with our lenders to extend the terms beyond the current expiration dates and, consistent with prior periods, expect those facilities to be amended and renewed. See Part II, Item 1A Risk Factors—We may not generate sufficient liquidity to operate our business, and, UACC may be unable to continue to access or renew funding sources and obtain capital needed to maintain and grow its business.
Current wording
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 high interest rates, the current inflationary environment and vehicle depreciation in the used automotive industry, UACC is experiencing higher loss severity. Certain advance rates available to UACC on borrowings from UACC’s four senior secured warehouse credit facility agreements (the “Warehouse Credit Facilities”) have decreased as a result of the increasing credit losses in UACC's portfolio and overall rising interest rates. Any future decreases on available advance rates may have an adverse impact on our liquidity. Currently, all four Warehouse Credit Facilities expire between June and September 2025. We have commenced discussions with our lenders to extend the terms beyond the current expiration dates and, consistent with prior periods, expect those facilities to be amended and renewed. We believe that our ability to eliminate our long-term debt obligations under the Notes in connection with the Prepackaged Chapter 11 Plan may support our position as we engage in these discussions with our Warehouse Credit Facilities lenders. However, there can be no assurance that adequate additional financing will be available to us on acceptable terms, or at all. See Part II, Item 1A Risk Factors—We may not generate sufficient liquidity to operate our business, and, UACC may be unable to continue to access or renew funding sources and obtain capital needed to maintain and grow its business.
Previous wording
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 our Annual Report.
Current wording
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
Previous wording
Both the United States and global economies are experiencing a sustained inflationary environment and the Federal Reserve’s efforts to tame inflation have led to increased interest rates, which affects automotive finance rates and our borrowing rates, reducing discretionary spending and making vehicle financing more costly and less accessible to many consumers. In December 2023, the Federal Reserve announced that it expects to cut interest rates in 2024; however, based on the July 2024 meeting, they announced they are holding the rates steady until inflation retreats. It is too soon to know when and to what degree rates may be cut and the impact it may have on the economy. Moreover, 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. A significant escalation or expansion of economic disruption could continue to impact consumer spending, broaden inflationary costs, and could have a material adverse effect on our results of operations. We will continue to actively monitor and develop responses to these disruptions, but depending on duration and severity, these trends could continue to negatively impact our business for the remainder of 2024.
Current wording
Both the United States and global economies are experiencing a sustained inflationary environment and the Federal Reserve’s efforts to tame inflation have led to increased interest rates, which affects automotive finance rates and our borrowing rates, reducing discretionary spending and making vehicle financing more costly and less accessible to many consumers. In December 2023, the Federal Reserve announced that it expects to cut interest rates in 2024; in September 2024 they enacted the first interest rate cut by reducing benchmark rates by half a percentage point. It is too soon to know when and to what degree rates may be cut further and the impact it may have on the economy. Moreover, 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. A significant escalation or expansion of economic disruption could continue to impact consumer spending, broaden inflationary costs, and could have a material adverse effect on our results of operations. We will continue to actively monitor and develop responses to these disruptions, but depending on duration and severity, these trends could continue to negatively impact our business for the remainder of 2024.
Previous wording
Interest income increased $4.9 million, or 10.2%, to $52.4 million for the three months ended June 30, 2024 from $47.5 million for the three months ended June 30, 2023. This increase was primarily a result of new originations, which increased the loan portfolio to $880.6 million as of June 30, 2024 from $757.7 million as of June 30, 2023. The increase in interest income was partially offset by lower amortization of discount income during the three months ended June 30, 2024 as a result of a lower balance of finances receivables held for investment measured at fair value, with discount being amortized, as compared to finance receivables held for sale with discount deferred until receivables are sold. The outstanding balance of finance receivables held for investment at fair value was $254.5 million as of June 30, 2024, as compared to $467.7 million as of June 30, 2023. The outstanding balance of finance receivables held for sale was $626.1 million as of June 30, 2024, as compared to $290.0 million as of June 30, 2023.
Current wording
Interest income increased $2.7 million, or 5.7%, to $50.8 million for the three months ended September 30, 2024 from $48.1 million for the three months ended September 30, 2023. This increase was primarily a result of new originations, which increased the loan portfolio to $850.6 million as of September 30, 2024 from $800.5 million as of September 30, 2023. The increase in interest income was partially offset by lower amortization of discount income during the three months ended September 30, 2024 as a result of a lower balance of finances receivables held for investment measured at fair value, with discount being amortized, as compared to finance receivables held for sale with discount deferred until receivables are sold. The outstanding balance of finance receivables held for investment at fair value was $210.0 million as of September 30, 2024, as compared to $400.7 million as of September 30, 2023. The outstanding balance of finance receivables held for sale was $640.6 million as of September 30, 2024, as compared to $399.8 million as of September 30, 2023.
Previous wording
Interest expense increased $5.3 million or 55.4% to $15.0 million for the three months ended June 30, 2024 from $9.6 million for the three months ended June 30, 2023, primarily as a result of higher interest expense incurred on the Warehouse Credit Facilities, which increased $3.3 million to $7.0 million for the three months ended June 30, 2024 from $3.7 million for the three months ended June 30, 2023 as well as higher interest expense incurred on securitization debt, which increased $2.0 million to $8.0 million for the three months ended June 30, 2024 from $6.0 million for the three months ended June 30, 2023. The increase of interest expense incurred on the Warehouse Credit Facilities is attributable to a higher outstanding balance of $270.8 million as of June 30, 2024 as compared to $177.9 million as of June 30, 2023, due to financing the larger finance receivable portfolio and an increase in the weighted average interest rates, which increased from 7.00% to 7.19%. The increase of interest expense incurred on securitization debt is attributable to a higher outstanding balance of $472.1 million as of June 30, 2024 as compared to $417.0 million as of June 30, 2023 as well as overall higher interest rates.
Current wording
Interest expense increased $3.7 million or 31.9% to $15.3 million for the three months ended September 30, 2024 from $11.6 million for the three months ended September 30, 2023, primarily as a result of higher interest expense incurred on the Warehouse Credit Facilities, which increased $0.7 million to $6.3 million for the three months ended September 30, 2024 from $5.5 million for the three months ended September 30, 2023 as well as higher interest expense incurred on securitization debt, which increased $3.0 million to $9.1 million for the three months ended September 30, 2024 from $6.1 million for the three months ended September 30, 2023. The increase of interest expense incurred on the Warehouse Credit Facilities is attributable to a higher outstanding balance of $321.8 million as of September 30, 2024 as compared to $294.7 million as of September 30, 2023, due to financing the larger finance receivable portfolio, partially offset by a decrease in the weighted average interest rates, which decreased from 7.23% to 6.97%. The increase of interest expense incurred on securitization debt is attributable to a higher outstanding balance of $410.1 million as of September 30, 2024 as compared to $361.9 million as of September 30, 2023 as well as overall higher interest rates as securitization debt interest rates are fixed.
Previous wording
Servicing income decreased by $1.0 million or 37.8% to $1.6 million for the three months ended June 30, 2024 from $2.6 million for the three months ended June 30, 2023, primarily driven by a lower balance of the 2022-1 securitization, which is accounted for as an off-balance sheet securitization.
Current wording
Servicing income decreased by $0.9 million or 38.5% to $1.5 million for the three months ended September 30, 2024 from $2.4 million for the three months ended September 30, 2023, primarily driven by a lower balance of the 2022-1 securitization, which is accounted for as an off-balance sheet securitization.
Previous wording
Other income increased $1.1 million or 114.7% to $2.1 million for the three months ended June 30, 2024 from $1.0 million for the three months ended June 30, 2023, primarily driven by higher income related to acquisition fees for originations of finance receivables at fair value, which is recognized in the period the finance receivable is originated.
Current wording
Other income increased $1.1 million or 197.9% to $1.7 million for the three months ended September 30, 2024 from $0.6 million for the three months ended September 30, 2023, primarily driven by higher income related to acquisition fees for originations of finance receivables at fair value, which is recognized in the period the finance receivable is originated.
Previous wording
Compensation and benefits increased $4.4 million or 12.6% to $39.3 million for the six months ended June 30, 2024 from $34.9 million for the six months ended June 30, 2023. The increase was primarily a result of the following: retention bonuses granted to retain key employees; allocation of incremental data and technology departments' time to UACC as a result of a shift in focus of the business; severance expense related to the termination of certain UACC employees; and a decrease in deferred acquisition costs as a result of accounting for the origination of all new finance receivables at fair value, with acquisition costs being expensed in the period incurred rather than deferred.
Current wording
Compensation and benefits increased $4.8 million or 32.3% to $19.8 million for the three months ended September 30, 2024 from $15.0 million for the three months ended September 30, 2023. The increase was primarily a result of retention bonuses granted to retain key employees and a decrease in deferred acquisition costs as a result of accounting for the origination of all new finance receivables at fair value, with acquisition costs being expensed in the period incurred rather than deferred.
Previous wording
Adjusted EBITDA decreased $0.3 million or 22.5% to $0.9 million for the six months ended June 30, 2024 as compared to $1.2 million for the six months ended June 30, 2023.
Current wording
Professional fees decreased slightly by $0.1 million or 11.3% to $0.9 million for the three months ended September 30, 2024 from $1.0 million for the three months ended September 30, 2023.
Previous wording
Other expenses increased $1.3 million or 30.9% to $5.6 million for the six months ended June 30, 2024 from $4.3 million for the six months ended June 30, 2023, primarily as a result of a loss on the repurchase of the non-investment grade securities related to the 2022-2 securitization transaction, a decrease in deferred acquisition costs as a result of accounting for the origination of all new finance receivables at fair value, with acquisition costs being expensed in the period incurred rather than deferred, and an increase in dealer equity program expense.
Current wording
Other expenses increased $0.3 million or 19.5% to $2.0 million for the three months ended September 30, 2024 from $1.7 million for the three months ended September 30, 2023, primarily as a result of a decrease in deferred acquisition costs as a result of accounting for the origination of all new finance receivables at fair value, with acquisition costs being expensed in the period incurred rather than deferred, and an increase in dealer equity program expense.
Previous wording
Adjusted EBITDA loss increased $3.1 million to $2.8 million for the three months ended June 30, 2024 from income of $0.3 million for the three months ended June 30, 2023, primarily as a result of the $4.8 million increase in expenses, including compensation and benefits, professional fees, and other expenses, as discussed above.
Current wording
Adjusted EBITDA loss increased $4.3 million to $14.1 million for the three months ended September 30, 2024 from $9.8 million for the three months ended September 30, 2023, primarily as a result of the $2.0 million increase in expenses after EBITDA adjustments, including compensation and benefits, professional fees, and other expenses, as discussed above.
Previous wording
CarStory revenue decreased $0.3 million or 9.6% to $2.9 million for the three months ended June 30, 2024 from $3.2 million for the three months ended June 30, 2023, primarily as a result of a change in the scope of service and data provided to our customers.
Current wording
CarStory revenue decreased $0.1 million or 3.6% to $2.9 million for the three months ended September 30, 2024 from $3.0 million for the three months ended September 30, 2023, primarily as a result of a change in the scope of service and data provided to our customers.
Previous wording
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 are continuing to be renegotiated and right-sized to account for reduced headcount following the Ecommerce Wind-down. We expect these costs to decrease in the future. Adjusted EBITDA loss of $5.1 million for the three months ended June 30, 2024 is comprised of a loss of $2.5 million related to runoff of the legacy Vroom related items and ongoing contracts, and a loss of $2.6 million related to public company expenses.
Current wording
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. Adjusted EBITDA loss of $11.2 million for the three months ended September 30, 2024 is comprised of a loss of $8.5 million related to runoff of the legacy Vroom related items and ongoing contracts, and a loss of $2.7 million related to public company expenses.
Previous wording
Warranties and GAP income, net, decreased $11.4 million to a loss of $11.5 million for the six months ended June 30, 2024 from a loss of $0.1 million for the six months ended June 30, 2023, primarily as a result of a revised estimate of proceeds we expect to recover.
Current wording
Warranties and GAP income increased $3.2 million or 237.4% to income of $1.8 million for the three months ended September 30, 2024 from a loss of $1.3 million for the three months ended September 30, 2023, primarily as a result of a revised estimate of proceeds we expect to recover.
Previous wording
Other income primarily represents interest earned on cash and cash equivalents. Other income decreased $1.1 million or 57.4% to $0.9 million for the three months ended June 30, 2024 from $2.0 million for the three months ended June 30, 2023, primarily driven by lower cash and cash equivalent balances and lower interest rates earned on cash and cash equivalents.
Current wording
Other income primarily represents interest earned on cash and cash equivalents. Other income decreased $0.8 million or 61.2% to $0.5 million for the three months ended September 30, 2024 from $1.3 million for the three months ended September 30, 2023, primarily driven by lower cash and cash equivalent balances and lower interest rates earned on cash and cash equivalents.
Previous wording
Compensation and benefits expense increased $1.6 million or 65.1% to $4.2 million for the three months ended June 30, 2024 from $2.5 million for the three months ended June 30, 2023, primarily as a result of severance expense related to the departure of certain executives and retention bonuses granted to retain key employees subsequent to the Ecommerce Wind-Down.
Current wording
Compensation and benefits expense decreased $0.1 million or 5.0% to $2.4 million for the three months ended September 30, 2024 from $2.5 million for the three months ended September 30, 2023, primarily as a result of severance expense related to the departure of certain executives and retention bonuses granted to retain key employees subsequent to the Ecommerce Wind-Down.
Previous wording
Other expenses decreased $0.7 million or 28.2% to $1.9 million for the three months ended June 30, 2024 from $2.6 million for the three months ended June 30, 2023, primarily related to a decrease in public company related insurance costs as we renegotiated our insurance policies during the third quarter of 2023 as a result of the reduced scale of the business.
Current wording
Other expenses decreased $0.7 million or 35.2% to $1.3 million for the three months ended September 30, 2024 from $2.0 million for the three months ended September 30, 2023, primarily related to a decrease in public company related insurance costs as we renegotiated our insurance policies during the third quarter of 2023 and 2024 as a result of the reduced scale of the business.
Previous wording
Interest income increased $21.1 million, or 25.5%, to $103.9 million for the six months ended June 30, 2024 from $82.8 million for the six months ended June 30, 2023. This increase was primarily a result of new originations and the consolidation of our 2022-2 securitization, which increased the loan portfolio to $880.6 million as of June 30, 2024 from $757.7 million as of June 30, 2023. The increase in interest income was partially offset by lower discount income during the six months ended June 30, 2024 as a result of a smaller balance of finances receivables held for investment measured at fair value, with discount being amortized, as compared to finance receivables held for sale with discount deferred until receivables are sold. The outstanding balance of finance receivables held for investment at fair value was $254.5 million as of June 30, 2024, as compared to $467.7 million as of June 30, 2023. The outstanding balance of finance receivables held for sale was $626.1 million as of June 30, 2024, as compared to $290.0 million as of June 30, 2023.
Current wording
Interest income increased $23.8 million, or 18.2%, to $154.7 million for the nine months ended September 30, 2024 from $130.9 million for the nine months ended September 30, 2023. This increase was primarily a result of new originations and the consolidation of our 2022-2 securitization, which increased the loan portfolio to $850.6 million as of September 30, 2024 from $800.5 million as of September 30, 2023. The increase in interest income was partially offset by lower discount income during the nine months ended September 30, 2024 as a result of a smaller balance of finances receivables held for investment measured at fair value, with discount being amortized, as compared to finance receivables held for sale with discount deferred until receivables are sold. The outstanding balance of finance receivables held for investment at fair value was $210.0 million as of September 30, 2024, as compared to $400.7 million as of September 30,
Previous wording
Warehouse Credit Facilities, which increased $9.7 million to $16.5 million for the six months ended June 30, 2024 from $6.8 million for the six months ended June 30, 2023. The increase is attributable to a higher outstanding balance of $270.8 million as of June 30, 2024 as compared to $177.9 million as of June 30, 2023, due to financing the larger finance receivable portfolio and an increase in the weighted average interest rates, which increased from 7.00% to 7.19%. The increase in interest expense is also partially attributable to higher interest expense incurred on securitization debt, which increased $2.5 million to $12.9 million for the six months ended June 30, 2024 from $10.3 million for the six months ended June 30, 2023, as a result of a higher outstanding balance for securitization debt of $472.1 million as of June 30, 2024 as compared to $417.0 million as of June 30, 2023, as well as overall higher interest rates.
Current wording
Interest expense increased $15.9 million or 55.5% to $44.7 million for the nine months ended September 30, 2024 from $28.7 million for the nine months ended September 30, 2023, primarily as a result of higher interest expense incurred on the Warehouse Credit Facilities, which increased $10.4 million to $22.7 million for the nine months ended September 30, 2024 from $12.3 million for the nine months ended September 30, 2023. The increase is attributable to a higher outstanding balance of $321.8 million as of September 30, 2024 as compared to $294.7 million as of September 30, 2023, due to financing the larger finance receivable portfolio. The increase in interest expense is also partially attributable to higher interest expense incurred on securitization debt, which increased $5.5 million to $22.0 million for the nine months ended September 30, 2024 from $16.4 million for the nine months ended September 30, 2023, as a result of a higher outstanding balance for securitization debt of $410.1 million as of September 30, 2024 as compared to $361.9 million as of September 30, 2023, as well as overall higher interest rates.
Previous wording
Realized and unrealized losses, net of recoveries, increased $14.7 million or 45.0% to $47.3 million for the six months ended June 30, 2024 from $32.7 million for the six months ended June 30, 2023. This increase was primarily driven by an increase in realized and unrealized losses on finance receivables as a result of alarger finance receivable portfolio, due to new originations as well as the consolidation of the 2022-2 securitization, which was previously off- balance sheet, as well as higher credit losses as of June 30, 2024 as compared to June 30, 2023.
Current wording
Realized and unrealized losses, net of recoveries, increased $14.5 million or 23.0% to $77.5 million for the nine months ended September 30, 2024 from $63.0 million for the nine months ended September 30, 2023. This increase was primarily driven by an increase in realized and unrealized losses on finance receivables as a result of alarger finance receivable portfolio, due to new originations as well as the consolidation of the 2022-2 securitization, which was previously off- balance sheet, as well as higher credit losses as of September 30, 2024 as compared to September 30, 2023.
Previous wording
Servicing income decreased by $1.8 million or 33.3% to $3.6 million for the six months ended June 30, 2024 from $5.4 million for the six months ended June 30, 2023, primarily driven by a lower balance of the 2022-1 securitization, which is off-balance sheet.
Current wording
Servicing income decreased by $2.7 million or 34.9% to $5.1 million for the nine months ended September 30, 2024 from $7.8 million for the nine months ended September 30, 2023, primarily driven by a lower balance of the 2022-1 securitization, which is off-balance sheet.
Previous wording
Other income increased $2.5 million or 124.9% to $4.6 million for the six months ended June 30, 2024 from $2.0 million for the six months ended June 30, 2023, primarily driven by higher income related to acquisition fees for originations of finance receivables at fair value, which is recognized in the period the finance receivable is originated.
Current wording
Other income increased $3.7 million or 140.9% to $6.3 million for the nine months ended September 30, 2024 from $2.6 million for the nine months ended September 30, 2023, primarily driven by higher income related to acquisition fees for originations of finance receivables at fair value, which is recognized in the period the finance receivable is originated.
Previous wording
Compensation and benefits increased $4.1 million or 25.3% to $20.5 million for the three months ended June 30, 2024 from $16.4 million for the three months ended June 30, 2023. The increase was primarily a result of the following: retention bonuses granted to retain key employees; allocation of incremental data and technology departments' time to UACC as a result of a shift in focus of the business; severance expense related to the termination of certain UACC employees; and a decrease in deferred acquisition costs as a result of accounting for the origination of all new finance receivables at fair value, with acquisition costs being expensed in the period incurred rather than deferred.
Current wording
Compensation and benefits increased $9.2 million or 18.5% to $59.1 million for the nine months ended September 30, 2024 from $49.9 million for the nine months ended September 30, 2023. The increase was primarily a result of the following: retention bonuses granted to retain key employees; allocation of incremental data and technology departments' time to UACC as a result of a shift in focus of the business; severance expense related to the termination of certain UACC employees; and a decrease in deferred acquisition costs as a result of accounting for the origination of all new finance receivables at fair value, with acquisition costs being expensed in the period incurred rather than deferred.
Previous wording
Professional fees decreased $2.1 million or 59.3% to $1.5 million for the six months ended June 30, 2024 from $3.6 million for the six months ended June 30, 2023, primarily as a result of additional professional fees incurred during the first quarter of 2023 as a result of the completion of the 2023-1 securitization transaction, as the 2023-1 securitization debt is carried at fair value the associated debt issuance costs were expensed as incurred. As the 2024-1 securitization debt is carried at amortized costs, the associated debt issuance costs are capitalized and amortized over the life of the debt.
Current wording
Professional fees decreased $2.2 million or 48.9% to $2.3 million for the nine months ended September 30, 2024 from $4.6 million for the nine months ended September 30, 2023, primarily as a result of additional professional fees incurred during the first quarter of 2023 as a result of the completion of the 2023-1 securitization transaction, as the 2023-1 securitization debt is carried at fair value the associated debt issuance costs were expensed as incurred. As the 2024-1 securitization debt is carried at amortized costs, the associated debt issuance costs are capitalized and amortized over the life of the debt.
Previous wording
Impairment charges increased $2.8 million related to the impairment of capitalized internal-use software that no longer have a planned future use.
Current wording
Impairment charges increased $5.2 million related to impairment of capitalized internal-use software that no longer has a planned future use of $2.7 million as well as lease impairment charges of $2.4 million.
Previous wording
Other expenses increased $1.2 million or 65.9% to $3.1 million for the three months ended June 30, 2024 from $1.8 million for the three months ended June 30, 2023, primarily as a result of a loss on the repurchase of the non-investment grade securities related to the 2022-2 securitization transaction, a decrease in deferred acquisition costs as a result of accounting for the origination of all new finance receivables at fair value, with acquisition costs being expensed in the period incurred rather than deferred, and an increase in dealer equity program expense.
Current wording
Other expenses increased $1.6 million or 27.7% to $7.6 million for the nine months ended September 30, 2024 from $5.9 million for the nine months ended September 30, 2023, primarily as a result of a loss on the repurchase of the non-investment grade securities related to the 2022-2 securitization transaction, a decrease in deferred acquisition costs as a result of accounting for the origination of all new finance receivables at fair value, with acquisition costs being expensed in the period incurred rather than deferred, and an increase in dealer equity program expense.
Previous wording
Adjusted EBITDA loss increased $8.8 million to $13.0 million for the six months ended June 30, 2024 from $4.2 million for the six months ended June 30, 2023, primarily as a result of the $5.8 million decrease in net interest income after losses and recoveries and the $7.3 million increase in expenses, including compensation and benefits, professional fees, impairment charges, and other expenses, as discussed above.
Current wording
Adjusted EBITDA loss increased $13.1 million to $27.1 million for the nine months ended September 30, 2024 from $14.0 million for the nine months ended September 30, 2023, primarily as a result of the $6.6 million decrease in net interest income after losses and recoveries and the $8.0 million increase in expenses after EBITDA adjustments, including compensation and benefits, professional fees, impairment charges, and other expenses, as discussed above.
Previous wording
CarStory revenue decreased $0.5 million or 7.9% to $5.9 million for the six months ended June 30, 2024 from $6.4 million for the six months ended June 30, 2023, primarily as a result of a change in the scope of service and data provided to our customers.
Current wording
CarStory revenue decreased $0.6 million or 6.5% to $8.8 million for the nine months ended September 30, 2024 from $9.4 million for the nine months ended September 30, 2023, primarily as a result of a change in the scope of service and data provided to our customers.
Previous wording
Adjusted EBITDA loss of $27.7 million for the six months ended June 30, 2024 is comprised of a loss of $23.5 million related to runoff of the legacy Vroom related items and ongoing contracts, and a loss of $4.2 million related to public company expenses.
Current wording
Adjusted EBITDA loss of $38.9 million for the nine months ended September 30, 2024 is comprised of a loss of $31.9 million related to runoff of the legacy Vroom related items and ongoing contracts, and a loss of $7.0 million related to public company expenses.
Previous wording
Gain on debt extinguishment represents a gain of $19.6 million for the six months ended June 30, 2023, related to the repurchase of $32.8 million in aggregate principal balance of the Notes, net of deferred issuance costs, for $13.2 million.
Current wording
Gain on debt extinguishment represents a gain of $19.6 million for the nine months ended September 30, 2023, related to the repurchase of $32.8 million in aggregate principal balance of the Notes, net of deferred issuance costs, for $13.2 million.
Previous wording
Other income decreased $2.9 million or 74.7% to $1.0 million for the six months ended June 30, 2024 from $3.9 million for the six months ended June 30, 2023, primarily driven by lower cash and cash equivalent balances and lower interest rates earned on cash and cash equivalents.
Current wording
Other income decreased $3.8 million or 71.3% to $1.5 million for the nine months ended September 30, 2024 from $5.3 million for the nine months ended September 30, 2023, primarily driven by lower cash and cash equivalent balances and lower interest rates earned on cash and cash equivalents.
Previous wording
Compensation and benefits expense increased $2.5 million or 51.3% to $7.3 million for the six months ended June 30, 2024 from $4.8 million for the six months ended June 30, 2023, primarily as a result of severance expense related to the departure of certain executives and retention bonuses granted to retain key employees subsequent to the Ecommerce Wind-Down.
Current wording
Compensation and benefits expense increased $2.3 million or 31.8% to $9.7 million for the nine months ended September 30, 2024 from $7.4 million for the nine months ended September 30, 2023, primarily as a result of severance expense related to the departure of certain executives and retention bonuses granted to retain key employees subsequent to the Ecommerce Wind-Down.
Previous wording
Other expenses decreased $1.5 million or 29.7% to $3.7 million for the six months ended June 30, 2024 from $5.2 million for the six months ended June 30, 2023, primarily related to a decrease in public company related insurance costs as we renegotiated our insurance policies during the third quarter of 2023 as a result of the reduced scale of the business.
Current wording
Other expenses decreased $2.3 million or 31.2% to $5.0 million for the nine months ended September 30, 2024 from $7.2 million for the nine months ended September 30, 2023, primarily related to a decrease in public company related insurance costs as we renegotiated our insurance policies during the third quarter of 2023 and 2024 as a result of the reduced scale of the business.
Previous wording
As of June 30, 2024, we had cash and cash equivalents of $63.4 million and restricted cash of $48.2 million. Restricted cash primarily includes restricted cash required under UACC's securitization transactions and Warehouse Credit Facilities of $47.3 million. Prior to the Ecommerce Wind-Down, our primary source of liquidity was cash generated through financing activities. Additionally, we had excess borrowing capacity of $34.4 million under UACC's Warehouse Credit Facilities as of June 30, 2024.
Current wording
As of September 30, 2024, we had cash and cash equivalents of $51.1 million and restricted cash of $47.1 million. Restricted cash primarily includes restricted cash required under UACC's securitization transactions and Warehouse Credit Facilities of $46.2 million. Prior to the Ecommerce Wind-Down, our primary source of liquidity was cash generated through financing activities. Additionally, we had excess borrowing capacity of $32.9 million under UACC's Warehouse Credit Facilities as of September 30, 2024.
Previous wording
UACC relies on borrowings under senior secured 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 two years and we typically renew those facilities in the ordinary course. UACC currently has four Warehouse Credit Facilities, all of which have terms expiring in 2025. See Note 9, Warehouse Credit Facilities and Consolidated VIEs, to the Condensed Consolidated Financial Statements included elsewhere in this Form 10-Q. We have commenced discussions with our lenders under the Warehouse Credit Facilities regarding amended facilities that would extend the terms beyond the current expiration dates and, consistent with prior periods, expect those facilities to be amended and renewed. Failure to secure warehouse borrowing capacity beyond the expiration of the current facilities in 2025 would have a material adverse effect on our ability to finance UACC’s lending operations and our results of operations and liquidity.
Current wording
UACC relies on borrowings under senior secured 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 two years and we typically renew those facilities in the ordinary course. UACC currently has four Warehouse Credit Facilities, all of which have terms expiring between June and September 2025. See Note 9, Warehouse Credit Facilities and Consolidated VIEs, to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q. We have commenced discussions with our lenders under the Warehouse Credit Facilities regarding amended facilities that would extend the terms beyond the current expiration dates and, consistent with prior periods, expect those facilities to be amended and renewed. However, there can be no assurance that adequate additional financing will be available to us on acceptable terms, or at all. Failure to secure warehouse borrowing capacity beyond the expiration of the current facilities in 2025 would have a material adverse effect on our ability to finance UACC’s lending operations and our results of operations and liquidity.
Previous wording
While we have no significant debt maturities due until July 2026, if we undergo a fundamental change under the terms of our Indenture, holders of the Notes could, subject to certain conditions, require us to immediately repurchase for cash all or any portion of the Notes at a repurchase price equal to 100% of the principal amount of the Notes plus any accrued and unpaid interest. The delisting of the Company’s common stock from the Nasdaq Global Select Market would constitute a fundamental change under the terms of the Indenture.
Current wording
If we undergo a fundamental change under the terms of our Indenture, holders of the Notes could, subject to certain conditions, require us to immediately repurchase for cash all or any portion of the Notes at a repurchase price equal to 100% of the principal amount of the Notes plus any accrued and unpaid interest. The delisting of the Company’s common stock from the Nasdaq Global Select Market would constitute a fundamental change under the terms of an indenture between us and U.S. Bank National Association, as trustee (the "Indenture").
Showing the first 40 of 51 pairs. Open the source sections for the rest.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
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 our Annual Report.
Current report — wording carried from elsewhere
UACC has four 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.
Rearranged previous paragraphs (3)
Previous report — wording carried elsewhere
During the three months ended June 30, 2024, UACC 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. As a result of market conditions, UACC retained the residual interests, which required us to account for the 2024-1 securitization as secured borrowings and remain on balance sheet pending the sale of such retained interests. We also pledged an additional $15.8 million of our retained beneficial interest in the 2024-1 securitization transaction as collateral under the Risk Retention Financing Facility, and received proceeds of $15.6 million, with expected repurchase dates ranging from August 2026 to November 2030 at the initial closing date.
Previous report — wording carried elsewhere
Professional fees decreased $0.5 million or 44.1% to $0.6 million for the three months ended June 30, 2024 from $1.0 million for the three months ended June 30, 2023, primarily as a result of higher professional fees incurred during the first quarter of 2023 as a result of the completion of the 2023-1 securitization transaction, as the 2023-1 securitization debt is carried at fair value the associated debt issuance costs were expensed as incurred. As the 2024-1 securitization debt is carried at amortized costs, the associated debt issuance costs are capitalized and amortized over the life of the debt.
Previous report — wording carried elsewhere
Gain on debt extinguishment represents a gain of $10.9 million for the three months ended June 30, 2023, related to the repurchase of $18.2 million in aggregate principal balance of the Notes, net of deferred issuance costs, for $7.3 million.