Vroom, Inc. reported significant financial challenges in its latest 10-Q filing for the quarter ending September 30, 2024. The company’s total revenue for the third quarter was $50.2 million, a slight increase from $47.6 million in the same period last year. However, the net loss from continuing operations rose to $37.7 million, compared to a loss of $34.7 million in Q3 2023. For the nine months ended September 30, 2024, the net loss from continuing operations was $101.5 million, significantly higher than the $57.7 million loss reported for the same period in 2023.

The company’s financial position has deteriorated, with total assets decreasing to $1.1 billion from $1.5 billion at the end of 2023. Cash and cash equivalents fell sharply to $51.1 million from $135.6 million, while long-term debt increased to $729.4 million from $626.6 million. The accumulated deficit also widened to $2.1 billion, up from $2.0 billion at the end of 2023.

Vroom has undertaken a Value Maximization Plan, announced in January 2024, which involved the discontinuation of its ecommerce operations and the winding down of its used vehicle dealership business. This strategic shift aimed to preserve liquidity and maximize stakeholder value. The wind-down was substantially completed by March 29, 2024, resulting in significant severance and lease termination costs, totaling approximately $15.8 million and $13.9 million, respectively.

In a significant development, Vroom entered into a Restructuring Support Agreement (RSA) on November 12, 2024, with creditors holding over 80% of its outstanding Notes. This agreement sets the stage for a Prepackaged Chapter 11 bankruptcy filing, anticipated to occur in the Southern District of Texas. Under the proposed restructuring plan, holders of Unsecured Notes Claims are expected to receive 92.94% of the New Common Stock, while existing equity holders will receive 7.06%. The restructuring aims to address the company's debt obligations and capital structure, with the goal of emerging from bankruptcy without remaining Notes.

The company has faced increased operational costs, with total expenses for the nine months ending September 30, 2024, rising to $139.6 million from $130.0 million in the previous year. Interest income for the nine months increased to $153.2 million, up from $128.9 million, but was offset by a substantial rise in interest expenses, which reached $44.7 million compared to $28.7 million in 2023.

Vroom's current situation reflects substantial uncertainty regarding its ability to continue as a going concern, contingent on the successful execution of its restructuring plan and the approval of the Bankruptcy Court. The anticipated Chapter 11 filing may also lead to delisting from Nasdaq, further complicating the company's financial landscape.