RumbleOn, Inc.

Bye. Greetings and welcome to the Rumble On Third Quarter 2020 Earnings Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the call, please press star zero. As a reminder, this call is being recorded. Now I would like to turn the call over to Dylan Solomon, Investor Relations. Mr. Solomon, you may begin.

Thank you, Operator. Good morning, ladies and gentlemen. Thank you for joining us on this conference call to discuss RumbleOn's third quarter 2020 financial results. Joining me on the call today are Marshall Chesron, Chairman and Chief Executive Officer, and Steve Berard, Chief Financial Officer. Full details of our results and additional management commentary are available in our earnings release, which can be found on the investor relations section of the website at investors.rumbleon.com. Please note that this call will be simultaneously webcast on the investor relations section of the company's corporate website. This conference call is the property of RumbleOn, and any taping or other reproduction is expressly prohibited without the prior written consent. Before we start, I would like to remind you that the following discussion contains forward-looking statements, including but not limited to RumbleOn's market opportunities and future financial results that involve risks and uncertainties that may cause actual results to differ materially from those discussed here. Additional information that could cause actual results to differ from forward-looking statements can be found in RumbleOn's periodic SEC filings. The forward-looking statements and risks in this conference call, including responses to your questions, are based on current expectations as of today, and RumbleOn assumes no obligation to update or revise them. whether as a result of new developments or otherwise, except as required by law. Also, the following discussion may contain non-GAAP financial measures. For reconciliation of non-GAAP financial measures, please see our earnings release. Now, I will turn the call over to Marshall. Marshall?

Good morning, everyone. Thank you for joining our call today. Q3 was a record-breaking quarter for RumbleOn. Gross margin reached 14.3%, and gross profit per vehicle sold grew to over 3,400, up 255% year over year. In Q3 of last year, we set the objective of achieving an EBITDA-positive quarter in 2020. And one year later, we generated $4.7 million in adjusted EBITDA. The sharp resurgence in consumer demand combined with limited new vehicles and showrooms continued to cause supply chain imbalances in all pre-owned vehicle segments. We are still below the monthly unit volumes experienced before the COVID pandemic. However, this pricing and demand environment contributed to the acceleration of gross profit improvement. RumbleOn has had an incredible year thus far, operationally and financially, and I'm very pleased to report that given the unique challenges presented to the company, and the economy during 2020, our strategy is working. In 2019, we demonstrated our ability to scale revenue. In 2020, we are demonstrating we can achieve profitability. And we look forward to demonstrating our ability to scale profitably in 2021 and beyond. Another objective outlined in 2019 was to reach adjusted EBITDA profitability on a full year basis in 2021. And we believe we have the right strategy in place to reach that goal. In August, we released the newest generation of Rumble On, Rumble On 3.0, with over 18,000 Power Sports listings available at launch. Since then, we have gained incredible ground. Today, less than three months later, we have more than doubled that, with more than 37,000 total listings available on RumbleOn.com. We believe we have only scratched the surface of opportunity and see a potential of more than 10 times that number at scale. As of today, we work with power sports dealers in over 200 locations across 36 states and have an unlimited market opportunity in front of us. RumbleOn 3.0 is bringing traditional brick-and-mortar power sports dealers across the country online. Many do not have the ability to support 100% online transaction efficiently and certainly not with the technological sophistication and automation that powers RumbleOn. but 3.0 unlocks this opportunity for PowerSports dealers. With 3.0, dealers will receive more high-quality leads and access to more transactional services than ever before. All of this will allow RumbleOn to participate in thousands of online transactions in the future. We are focused on growing our dealer customer base and proving the value of our model. We are just a few months in and are already seeing strong engagement from these dealers and positive reception from the end consumer. As we look ahead, there are several ways we can monetize RumbleOn.com 3.0. Listing fees, acquisition fees, distribution fees, logistics and transportation, backend technology and support, advertising, and much more. We will methodically tap into these opportunities over time, which will provide incremental benefits to our total margin profile in 2021 and beyond. We are in the early innings today and are encouraged by the traction we are seeing. Our 3.0 offering has been enthusiastically received by dealers. Dealers have been especially excited about our new B2B dealer-only weekly online auctions, which we rolled out just three weeks ago. This method of redistribution is more beneficial for both RumbleOn and the dealers and decreases vehicle time to sale. We continue to clearly demonstrate our ability to sell inventory directly to dealers and move it from the source directly to the end seller efficiently and cost-effectively. As we develop a more critical mass of inventory and expand dealer enrollment, we believe we can hold daily online dealer auctions with our proprietary technology in an extremely efficient and cost-effective manner for buyers and sellers alike. Remember that our opportunity isn't limited to power sports. RumbleOn's technology is built to transact on anything with a VIN. And as part of the newest generation of RumbleOn.com, we recently added boats and personal watercraft listings. We already have nearly 500 listings available today and many more in the pipeline as we bring boat-specific dealers on board. We also began testing RV listings in Q3 2018. as a further potential opportunity for expansion in 2021. In July, we announced a pilot program with CarGurus, where CarGurus would exclusively leverage RumbleOn's technology and our transportation and distribution services to test a new inventory acquisition product that enables dealers to source consumers' cars and trucks on the CarGurus platform. The scope of the pilot program has now expanded to include dealer-to-dealer transactions, and more tests are currently underway. We are constantly strategizing with their world-class team and hope to talk about some industry firsts that come of this partnership in the future. We continue to view strategic relationships as a valuable opportunity for RumbleOn. In addition to the CarGurus pilot, we remain in active discussions with many different groups who we believe would benefit from leveraging the RumbleOn technology platform and redistribution capabilities. These are all incremental opportunities that we will use to our advantage over time. Although PowerSports remains our focus as we test and roll out new initiatives, we fully intend to become a major competitor in other segments, whether that be boats, RVs, classic cars, exotic automobiles, and much more. We are also seeing positive indications that our branding initiatives are paying off. One interesting demand opportunity that we're pursuing is lifestyle vehicles. We think of this as the Jeep Wrangler, the Corvette, the Harley, or the boat and RV that you might want, not the Corolla or scooter that you might need. We believe that there is a massive opportunity to not just be a market leader in this space, but we believe we can be the dominant participant in how these types of vehicles are bought, sold, traded, and financed going forward. Due to continued macro uncertainty, we are not providing Q4 guidance at this time, but I do want to provide some additional color on what we're seeing thus far in the fourth quarter. Demand has remained strong and similar to what we experienced in the last couple of quarters. However, inventory in the historically seasonally low volume fourth quarter is tight across the market. Thus, supply remains under significant pressure. We don't believe that the levels of growth margin we saw in Q2 and Q3 are sustainable over the long term. We continue to expect vehicle margins will stabilize as supply and demand dynamics normalize, which we expect will happen in early 2021. However, our long-term total gross profit expectations are all very positive with the addition of multiple incremental growth margin opportunities discussed. In the near term, we expect the growth of our B2B auction platform will unlock meaningful opportunities for monetization and margin expansion. Q4 is a perfect time to ramp inventory for power sports in expectation of the normal spring market that was disrupted in 2020 in a big way by the tornado that struck Nashville on March 3rd and the subsequent shelter-at-home orders due to the spread of the pandemic. Based on the size of our inventory and the supporting data we've accumulated throughout the year, we were set to have a record quarter and although some of that spring market was later realized late in Q2 and beyond, we believe next year will be back to more normal seasonal trend expectations. Seasonality in the auto business has been very predictable and consistent year over year, and while power sports seasonality has been more pronounced, our data advantage has made it more predictable. We will continue to execute on our strategy of taking advantage of acquisition opportunities in Q4 in anticipation of the seasonally strong spring months. I'm impressed by the RumbleOn team's ability to deliver amid the macro uncertainty over the past nine months. Despite this volatile market, our team has worked through solutions quickly and with precise execution to deliver strong results, positioning RumbleOn as a much stronger company. Yes, COVID-19 has caused significant and unprecedented disruption of its own, but it's also created certain tailwinds. We feel these market conditions have allowed us to be laser focused on optimizing our operations and make the adjustments necessary to continue building a world-class brand that delivers the best consumer and dealer experiences and all while making significant strides on our march towards achieving sustainable profitability as we further execute the plan. And with that, I'll turn it over to Steve.