RumbleOn Inc

Previous wording

This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is provided as a supplement to, and should be read in conjunction with, our audited consolidated financial statements, the accompanying notes, and the MD&A included in our 2023 Form 10-K, as well as our unaudited condensed consolidated financial statements and the accompanying notes included in Item 1 of this Quarterly Report on Form 10-Q. Terms not defined in this MD&A have the meanings ascribed to them in the condensed consolidated financial statements. Unless otherwise noted, comparisons are of results for the quarter ended September 30, 2024, or third quarter, to the quarter ended September 30, 2023.

Current wording

This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is provided as a supplement to, and should be read in conjunction with, our audited consolidated financial statements and the related notes and the MD&A included in our 2024 10-K, as well as our unaudited condensed consolidated financial statements and the accompanying notes included in Item 1 of this Quarterly Report on Form 10-Q. This discussion may contain forward-looking statements. See “Forward-Looking and Cautionary Statements” for a discussion of the uncertainties and risks associated with these statements. Terms not defined in this MD&A have the meanings ascribed to them in the condensed consolidated financial statements and related footnotes. Unless otherwise noted, comparisons are of results for the quarter ended March 31, 2025, or first quarter, to the quarter ended March 31, 2024.

Previous wording

RumbleOn, Inc. operates primarily through two operating segments: our powersports dealership group and Wholesale Express, LLC (“Express”), a vehicle transportation services provider. We were incorporated in 2013. We have grown primarily through acquisitions, the largest to date being our 2021 acquisition of the RideNow business followed by our 2022 acquisition of the Freedom Powersports business. These acquisitions added 54 powersports dealerships to our Company.

Current wording

RumbleOn, Inc. operates primarily through two operating segments: our powersports dealership group and Wholesale Express, LLC (“Express”), a vehicle transportation services provider. We were incorporated in 2013. We have grown primarily through acquisitions.

Previous wording

Our powersports segment is the largest powersports retail group in the United States (as measured by reported revenue, major unit sales and dealership locations), offering a wide selection of new and pre-owned motorcycles, all-terrain vehicles (“ATV”), utility terrain or side-by-side vehicles (“SXS”), personal watercraft (“PWC”), snowmobiles, and other powersports products. We also offer parts, apparel, accessories, finance & insurance products and services (“F&I”), and aftermarket products from a wide range of manufacturers. Additionally, we offer a full suite of repair and maintenance services. As of September 30, 2024, we operated 56 retail locations consisting of hundreds of powersports franchises (representing various brands of motorcycles, ATVs, SXSs, PWCs, snowmobiles, and other powersports products) in Alabama, Arizona, California, Florida, Georgia, Kansas, Massachusetts, Nevada, North Carolina, Ohio, Oklahoma, South Dakota, Texas, and Washington.

Current wording

We believe our powersports business is the largest powersports retail group in the United States offering a wide selection of new and pre-owned motorcycles, all-terrain vehicles (“ATV”), utility terrain or side-by-side vehicles (“SXS”), personal watercraft (“PWC”), snowmobiles, and other powersports products. We also offer parts, apparel, accessories, finance & insurance products and services (“F&I”), and aftermarket products from a wide range of manufacturers. Additionally, we offer a full suite of repair and maintenance services. As of March 31, 2025, we operated 55 retail dealerships located predominantly in the Sunbelt region. We source high quality pre-owned inventory online via our proprietary Cash Offer technology, which allows us to purchase pre-owned units directly from consumers.

Previous wording

Express provides asset-light transportation brokerage services facilitating automobile transportation primarily between and among dealers.

Current wording

Express provides transportation brokerage services facilitating automobile transportation primarily between and among dealerships and auctions through an asset-light business model.

Previous wording

We regularly review a number of key operating metrics to evaluate our segments, measure our progress, and make operating decisions. Our key operating metrics reflect what we believe will be the primary drivers of our business, including increasing brand awareness, maximizing the opportunity to source vehicles from consumers and dealers, and enhancing the selection and timing of vehicles we make available for sale to our customers.

Current wording

We regularly review a number of key operating metrics such as revenue, volume and gross profit measures, to evaluate our segments, measure our progress, and make operating decisions. Key factors impacting our operating results include increasing brand awareness, maximizing the opportunity to source vehicles from consumers and dealers, and enhancing the selection and timing of vehicles we make available for sale to our customers.

Previous wording

Total powersports revenue for the quarter decreased $44.2 million compared to the same period in 2023 primarily due to lower volume of vehicle units sold. The impact on revenue from the volume was partially offset by a $397 increase in average revenue per new vehicle sold. The lower volume in retail sales of new and pre-owned vehicles contributed to a decline in F&I and PSA revenue for the quarter.

Current wording

Total powersports revenue for the quarter decreased $54.3 million compared to the same period in 2024 primarily due to lower volume of units sold. The impact on revenue from the volume was partially offset by a $234 increase in average revenue per new retail vehicle sold and a $384 increase in average revenue per pre-owned retail vehicle sold. The lower volume in retail sales of new and pre-owned vehicles contributed to a decline in F&I and PSA revenue for the quarter.

Previous wording

Selling, general and administrative expenses (“SG&A”) as a percentage of gross profit improved 370 basis points for the quarter. SG&A decreased primarily due to our cost savings initiatives. Compensation and related costs comprised the majority of the savings. The expense reduction for the quarter was partially offset by higher legal costs included in professional fees for the matters discussed in Note 11. The prior year quarter included certain costs that did not recur in 2024: $0.6 million related to the separation of former executives, $0.4 million related to a proxy contest and reorganization of the board of directors, and a $0.6 million loss associated with the loan receivable portfolio that was sold at the end of 2023.

Current wording

Selling, general and administrative expenses (“SG&A”) were lower compared to the prior year primarily due to our cost savings initiatives. Compensation and related costs comprised the majority of the savings. SG&A in the 2025 period included certain charges and credits that we view as being outside of our normal, ongoing operations. These included a charge of $2.2 million for legal costs for the matters discussed in Note 11, executive termination costs of $1.1 million and a $0.7 million reversal of stock-based compensation expense for the forfeiture of our former CEO’s equity awards. The first quarter of 2024 included $0.9 million of charges for legal costs for the matters discussed in Note 11 and the cost to terminate a contract.

Previous wording

Other interest expense consists primarily of interest and deferred financing costs on the: (i) term loan facility; (ii) convertible senior notes; (iii) finance lease obligation; and in 2023, (iv) the ROF Consumer Finance Facility. Interest expense decreased for the quarter and nine months of 2024 due primarily to lower outstanding principal on the term loan facility and the RumbleOn Finance consumer finance facility being paid off at the beginning of 2024, offset by interest expense on the finance lease obligation that was entered into in September 2023. Other interest expense was also lower due to our adoption of ASU 2020-06, as we are no longer amortizing the debt discount associated with our convertible senior notes. See Note 1, Description of Business and Significant Accounting Policies, for more details on our adoption of the new accounting standard and Note 4, Debt, for more detail on the components of our other interest expense.

Current wording

Other interest expense consists primarily of interest on the term loan facility, finance lease obligation, and the 6.75% convertible senior notes. See Note 3 for interest expense by debt instrument. Other interest expense decreased for the quarter due primarily to the 6.75% convertible senior notes being paid off at the beginning of 2025, as well as lower average borrowings and a lower interest rate on the term loan. Other interest expense included amortization of debt discount and issuance costs of $2.5 million in 2025 and $2.2 million in 2024.

Previous wording

Our future liquidity and capital requirements will depend upon numerous factors, including our results of operations, the timing and magnitude of capital expenditures or strategic initiatives, and other business and risk factors described under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023 as amended and supplemented in subsequent filings. We believe that current cash balances plus cash generated from operations and capital commitments received in November 2024 will be sufficient to meet both the operating and capital requirements of our ordinary business operations through at least the next twelve months; however, there can be no assurance that we will not require additional financing within this time frame.

Current wording

Our future liquidity and capital requirements will depend upon numerous factors, including our results of operations, the timing and magnitude of capital expenditures or strategic initiatives, and other business and risk factors described under “Risk Factors” in our 2024 10-K. We believe that current cash balances plus cash generated from operations will be sufficient to meet both the operating and capital requirements of our ordinary business operations through at least the next twelve months; however, there can be no assurance that we will not require additional financing within this time frame.

Previous wording

Our primary sources of operating cash flows result from the sales of powersports vehicles and ancillary products. Our primary use of cash from operating activities are purchases of inventory, parts and merchandise; marketing costs; interest payments on trade floor plans, long-term debt, and finance lease obligations; rental costs for facilities; and personnel-related expenses. Operating cash flows for the first nine months of 2024 were $87.1 million better than in the comparable period in the prior year, reflecting the Company’s improved operating performance, primarily driven by our efforts to reduce inventory days on hand, the benefit of our cost savings initiatives and the settlement of the sale of the RumbleOn Finance loan portfolio.

Current wording

Our primary sources of operating cash flows result from the sales of powersports vehicles and ancillary products. Our primary use of cash from operating activities are purchases of inventory, parts and merchandise; marketing costs; interest payments on trade floor plans, long-term debt, and finance lease obligations; rental costs for facilities; and personnel-related expenses. Operating cash flows for the three months ended March 31, 2025 were $23.9 million lower than for the comparable period in the prior year. In the first quarter of 2025, we built up our inventory balances in preparation for seasonal demand. In addition, cash flows in the prior year benefited from the settlement of a $15.4 million receivable from the 2023 sale of a loan portfolio that was not repeated in the current year.

Previous wording

Our investing activities support and expand our operations. We acquired a powersports dealership in Massachusetts in 2024 and a powersports dealership in Florida in 2023.

Current wording

Our investing activities support and expand our operations.

Previous wording

Cash flows from financing activities primarily relate to our short and long-term debt activity. In the first nine months of this year, cash used in financing activities was higher in 2024 primarily due to a reduction in non-trade floor plan borrowings. The prior year also included the proceeds from a sale-leaseback transaction.

Current wording

Cash flows from financing activities primarily relate to our short and long-term debt activity. In January 2025, we repaid our 6.75% convertible senior notes at their maturity date.

Previous wording

See Note 1 -Description of Business and Significant Accounting Policies, included in Part I, Item 1, Financial Statements, of this Quarterly Report on Form 10-Q for accounting pronouncements and material changes to our critical accounting policies since December 31, 2023. There have been no other material changes to our critical accounting policies and use of estimates from those described under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our 2023 Form 10-K.

Current wording

See Note 1 -Description of Business and Significant Accounting Policies, included in Part I, Item 1, Financial Statements, of this Quarterly Report on Form 10-Q for accounting pronouncements and material changes to our critical accounting policies since December 31, 2024. There have been no other material changes to our critical accounting policies and use of estimates from those described under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our 2024 10-K.