Vroom (VRM) risk factors, FY2024 10-K

Risks Related to Our Emergence from Bankruptcy

1. 01relationships, and subject us to risks and uncertainties
2. 02On January 14, 2025, the conditions to the effectiveness of the Plan were satisfied or waived and the Plan became effective. We emerged from the Prepackaged Chapter 11 Case on January 14, 2025
3. 03third parties may not be willing to do business with us at all or on acceptable terms
4. 04As a result of the Prepackaged Chapter 11 Case, our historical financial information will not be indicative of our future performance
5. 05adverse effect on our business and results of operations, and we may experience increased levels of employee attrition
6. 06adversely affect the conduct of our business, and, as a result, our financial condition and results of operations

Risks Related to Our Financial Condition, Results of Operations, Liquidity and Indebtedness

1. 07There are risks associated with the discontinuance of our ecommerce operations and wind-down of our used vehicle dealership business
2. 08unintended negative consequences from changes to our business
3. 09As of December 31, 2024, we had cash and cash equivalents of $29.3 million and restricted cash of $49.0 million and continue to meet our obligations to customers, vendors, counterparties and employees in the ordinary course of business
4. 10We have a history of losses and we may not achieve or maintain profitability in the future
5. 11Our indebtedness and liabilities could limit the cash flow available for our operations, expose us to risks that could adversely affect our business, financial condition and results of operations and impair our ability to satisfy our debt obligations
6. 12placing us at a possible competitive disadvantage with competitors that are less leveraged than us or have better access to capital
7. 13We recognized an impairment charge related to long-lived assets. If our amortizable intangible assets or remaining long-lived assets become impaired in the future, we would incur additional impairment charges, which would negatively affect our operating results
8. 14We may experience seasonal and other fluctuations in our quarterly results of operations, which may not fully reflect the underlying performance of our business
9. 15litigation or other claims against us and increased legal and regulatory expenses

Risks Related to Our Operations

1. 16The geographic concentration of UACC’s borrowers or dealerships creates an exposure to local and regional downturns or severe weather or catastrophic occurrences that may materially and adversely affect our business, financial condition and results of operations
2. 17We depend on key personnel to operate our business, and if we are unable to retain, integrate, adequately compensate, and attract qualified personnel, our ability to develop and successfully grow our business could be harmed
3. 18We are, and may in the future be, subject to legal proceedings in the ordinary course of our business. If the outcomes of these proceedings are adverse to us, it could have a material adverse effect on our business, financial condition and results of operations

Risks Related to the UACC Business

1. 19UACC may be unable to sell automotive finance receivables and generate gains on sales of those finance receivables, which could harm our business, results of operations, and financial condition
2. 20UACC's securitizations may expose it to financing and other risks, and there can be no assurance that it will be able to access the securitization market in the future, which may require it to seek more costly financing
3. 21If UACC’s dealers do not submit a sufficient number of suitable automobile contracts to UACC for purchase, its results of operations may be impaired
4. 22If UACC loses servicing rights on its automobile contracts, our results of operations would be impaired
5. 23Risk retention rules may limit UACC’s liquidity and increase UACC’s capital requirements
6. 24UACC may be unable to continue to access or renew funding sources and obtain capital needed to maintain and grow its business

Risks Related to Cybersecurity and Privacy

1. 25An actual or perceived failure to maintain the security of personal information and other customer data that we collect, store, process, and use could harm our business, financial condition and results of operations
2. 26If we or our third-party providers sustain cyber-attacks or other privacy or data security incidents that result in security breaches, we could suffer a loss of sales and increased costs, exposure to significant liability, reputational harm and other negative consequences

Risks Related to Our Industry and General Economic Conditions

1. 27Our businesses participate in highly competitive industries, and pressure from existing and new companies may adversely affect our business and results of operations
2. 28General business and economic conditions, and risks related to the larger automotive ecosystem, including consumer demand, could reduce our sales and profitability, which could have a material adverse effect on our business, financial condition and results of operations

Risks Related to Laws and Regulations

1. 29We operate in a highly regulated industry and are subject to a wide range of federal, state and local laws and regulations and executive orders. Failure to comply with these laws, regulations and executive orders could have a material adverse effect on our business, financial condition and results of operations
2. 30Government regulation of the internet is evolving, and unfavorable changes or failure by us to comply with these regulations could substantially harm our business, financial condition and results of operations

Risks Related to Our Use of Data and Technology

1. 31Our success in utilizing the CarStory Real Market Price is dependent on our ability to offer accurate and competitive pricing for vehicles
2. 32Our platform utilizes open-source software, and any defects or security vulnerabilities in the open-source software could negatively affect our business
3. 33A significant disruption in service on our platform could damage our reputation and result in a loss of customers, which could harm our brand or our business, financial condition and results of operations
4. 34Any errors, defects, disruptions, or other performance or reliability problems with our platform could interrupt our dealer's access to data that drives our originations, which could harm our business, and financial condition and results of operations
5. 35Any actual or perceived failure to comply with the evolving regulatory frameworks around the development and use of AI could adversely affect our business, results of operations, and financial condition

Risks Related to Intellectual Property

1. 36Failure to adequately protect our intellectual property, technology and confidential information could harm our business, financial condition and results of operations
2. 37We may be subject to claims asserting that our employees, consultants or advisors have wrongfully used or disclosed alleged trade secrets of their current or former employers or claims asserting ownership of what we regard as our own intellectual property

Risks Related to Ownership of Our Common Stock

1. 38Trading in our securities is highly speculative and poses substantial risks, and our securities were subject to dilution following effectiveness of the Plan
2. 39Following our emergence from the Prepackaged Chapter 11 Case, a former holder of our previously issued Notes has the ability to significantly influence all matters submitted to stockholders of the reorganized company for approval
3. 40Our common stock price may be volatile and the value of our common stock has declined since our initial public offering and may continue to decline regardless of our operating performance, and you may not be able to resell your shares at or above the price which you paid for them
4. 41potential volatility in the banking industry; and
5. 42We do not intend to pay dividends on our common stock for the foreseeable future
6. 43We may issue shares of preferred stock in the future, which could make it difficult for another company to acquire us or could otherwise adversely affect holders of our common stock, which could depress the price of our common stock
7. 44The issuance by us of additional shares of common stock or convertible securities would significantly dilute your ownership of us and could adversely affect our stock price
8. 45The issuance or sale of shares of our common stock, or rights to acquire shares of our common stock, could depress the trading price of our common stock, and would significantly dilute existing stockholders
9. 46Future sales, or the perception of future sales, by us or our existing stockholders in the public market could cause the market price for our common stock to decline
10. 47We may be unable to satisfy a Nasdaq listing rule or that of another national securities exchange
11. 48The obligations associated with being a public company require significant resources and management attention
12. 49comply with the Sarbanes-Oxley Act
13. 50We are a “smaller reporting company” and the reduced disclosure requirements applicable to smaller reporting companies may make our common stock less attractive to investors
14. 51If our estimates or judgments relating to our critical accounting policies prove to be incorrect, our operating results could be adversely affected
15. 52The implementation of new accounting requirements or other changes to GAAP could have a material adverse effect on our reported results of operations and financial condition
16. 53the success of our organic growth and acquisitions or dispositions of businesses or operations
17. 54We may need to seek or raise additional debt or equity capital to pursue our business objectives and respond to business opportunities, challenges or unforeseen circumstances. If such capital is not available to us, our business, financial condition and results of operations would be materially and adversely affected
18. 55If we raise additional funds through further issuances of equity or convertible debt securities, our existing stockholders would suffer significant dilution, and any new equity securities we issue could have rights, preferences and privileges superior to those of holders of our commons stock
19. 56Anti-takeover provisions in our governing documents and under Delaware law could make an acquisition of our company more difficult, limit attempts by our stockholders to replace or remove our current management, and depress the market price of our common stock
20. 57the authorization of undesignated or “blank check” preferred stock, the terms of which may be established and shares of which may be issued without further action by our stockholders
21. 58If securities analysts continue not to publish research or reports about our company, or if they issue unfavorable commentary about us or our industry or downgrade our common stock, the price of our common stock could decline

Risks Related to Tax Matters

1. 59We may be limited in our ability to utilize, or may not be able to utilize, net operating loss carryforwards to reduce our future tax liability
2. 60Tax matters could impact our results of operations and financial condition
3. 61Generally, any discharge of our debt obligations as a result of the Prepackaged Chapter 11 Case for an amount less than the debt’s adjusted issue price may give rise to cancellation of indebtedness income, which will reduce our tax attributes
4. 62immediately after the indebtedness forgiven); (vi) passive activity loss and credit carryovers; and (vii) foreign tax credit carryovers. Loss of these tax attributes may have an adverse effect on our prospective cash flow
5. 63Our business is subject to the risk of natural disasters, adverse weather events and other catastrophic events, such as war and terrorism
6. 64We may acquire other companies or technologies, which could divert our management’s attention, result in additional dilution to our stockholders and otherwise disrupt our operations and harm our results of operations
7. 65litigation or other claims in connection with the acquired company, including claims from terminated employees, customers, former stockholders or other third parties
8. 66Our insurance may not provide adequate levels of coverage against claims
9. 67If our operating and financial performance in any given period does not meet the guidance that we provide to the public, the market price of our common stock may decline
10. 68Short sellers of our stock may be manipulative and may drive down the market price of our common stock
11. 69Stockholder activism could disrupt our business, cause us to incur significant expenses, hinder execution of our business strategy, and impact our stock price