RumbleOn, Inc.

Greetings and welcome to the Rumble On Second Quarter 2021 Earnings Call. At this time, all lines are in listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I'd now like to turn the conference over to your host, Hilary Sumnich. Thank you. You may begin.

Thank you, Operator. Good morning, ladies and gentlemen. Thank you for joining us on this conference call to discuss RumbleOn's second quarter 2021 financial results. Joining me on the call today are Marshall Chesrong, Chairman and Chief Executive Officer, and Beverly Rath, Interim 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 our 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 prior written consent. Before we start, I'd 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 maturely from those disclosed here. Additional information that could use actual results to differ from forward-looking statements can be found in Rumble On, Periodic, and other SEC filings. Forward-looking statements and risks in this conference call, including responses to your questions, are based on current expectations as of today, and Rumble On 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 these non-GAAP financial measures, please see our earnings release issued earlier this morning. Now, I'll turn the call over to Marshall. Marshall?

Thank you, Hillary, and thank you everyone for joining us this morning. Our entire team at RumbleOn is very excited to share with you the results of a fantastic second quarter and many other updates for both the business and the merger with RightNow. However, before we jump in, I want to speak to something very unfortunate in the quarter. As most of you know, we suffered a tragic loss in June with the unexpected and sudden passing of Steve Berard, our co-founder, CFO, and a dear friend. For those lucky enough to have known Steve, you know he was a larger-than-life figure with a long history in the public markets with the likes of Blockbuster, AutoNation, and many other successful companies. And RumbleOn would not be in the position it is today without his tremendous knowledge, experience, and contributions. Steve was a true leader and made an impression on everyone he met. We suffered a great loss, but I'm so proud of the entire Rumble On team for stepping up and supporting each other and committing to their work each and every day to carry out the vision. Before turning to the progress we made this quarter, I'd like to introduce our interim CFO, Beverly Rapp, and welcome other recent executive appointments. Beverly, our controller, has stepped in as interim CFO to lead us through our pending combination with Ride Now. Beverly is a seasoned financial executive who has been a key part of our finance organization, working alongside Steve for many years. Beverly continues to make tremendous contributions to the organization, and we're excited to have her assist in filling some very big shoes with Steve's passing. We started the search for a new CFO. In the meantime, I'm proud and inspired by the way our team has risen to the challenges. We also announced the appointment of our chief operating officer, Peter Levy, to the board of directors. Peter has a deep understanding of our business and has been instrumental in the evolution of RumbleOn. Peter has been on our executive team since 2017 and is a natural fit to join our board as we enter the next stage of phenomenal growth. Finally, we're excited that our trusted legal advisor, Michael Francis, has joined the RumbleOn team as executive legal counsel. Michael worked with Steve for nearly 25 years, including helping AutoNation build a dominant national brand through dealership acquisitions. His long track record of success and familiarity with Steve's strategy and business style will be an invaluable asset to rumble on as we combine with Ride Now and consolidate the highly fragmented power sports industry. As many of you know, Steve Berard was not just a credits and debits guy. He was a dealmaker first and foremost. Michael knew his strategy and style better than anyone. And we are confident that he will bring incredible expertise to our leadership team. We have a world-class leadership team and we'll continue to add top talent as the company grows and evolve. On Friday, July 30th, 2021, RumbleOn announced that its stockholders approved the proposed business combination with RideNow at the special meeting of stockholders. The business combination is expected to close very soon. subject to the satisfaction of the remaining closing conditions. Not only are we hard at work on the pending business combination with RightNow, but we delivered another stellar quarter for RumbleOn. RumbleOn delivered $168.3 million in total revenue, up 100% year-over-year and 61% quarter-over-quarter. We grew gross profit to $19.5 million, up 131% year-over-year and 74% compared to Q1. Gross margin was 11.6%, representing gross margin expansion of 90 basis points from Q1 and 160 basis points from Q2 last year. We also reported another quarter with positive adjusted EBITDA of $3 million. We also made significant progress across our strategic priorities, We continue to add new dealers to RumbleOn.com and have over 60,000 new, used, and private party listings on our site today. And with over 500 dealers using our B2B inventory redistribution capabilities and more in the pipeline to be onboarded, we are seeing strong demand and remain confident in our strategy to offer virtual inventory distribution, both retail and wholesale, nationwide on our platform. RumbleOn.com enables dealers to reach consumers online, and our B2B inventory redistribution component within the website gives dealers nationwide an inventory advantage and a place to not only acquire inventory but sell unwanted inventory to other dealers, regardless of their manufacturer affiliation. We launched the next generation of RumbleOn.com late last summer to help drive quality leads to participating dealers and enhance the online experience for consumers and dealers. By doing so, we unlocked a massive opportunity for traditional brick and mortar power sports dealers across the country, enabling dealers to leverage technology to stay competitive as consumers demand a digital first customer experience. Since the launch, there has been significant traction among dealers and we continue to see strong adoption. Our dealer count was up over 40% from Q1 and a total available listings as of the end of the quarter were up 10% due to a continued reduction in the average dealer inventory driven primarily by the lack of new vehicle supply. Based on our dealer count, we estimate that we would have in excess of 100,000 listings on the site once stocking levels are normalized, which manufacturers anticipate at best to be months away, and over 200,000 listings on our site long-terms. We believe that the ongoing inventory shortages, lack of selection, and higher prices should be building significant levels of pent-up demand that could take more than a year to normalize once shipments return to normal levels. RumbleOn is benefiting from the supply and demand imbalance in the market. Pre-owned vehicle pricing remains strong as sourcing new inventory continues to be an industry challenge due to the pandemic-related shutdowns and manufacturing delays. These factors combine to create tailwinds for our business. Not only is our ability to source inventory electronically from consumers a strong advantage, but our strategy to enable dealers to thrive in a competitive market is winning. The global pandemic impacted customer behavior and refined modern business. There has been increased demand for online buying and at-home delivery as consumers become comfortable making large purchases online and opting to digitize all steps of the purchase journey. At the same time, consumers crave human interaction. Many still want to walk into a store and connect with a trusted professional face-to-face. Powersports is a lifestyle, and that passion for the sport creates the need for an omnichannel solution. We are combining with Ride Now to give enthusiasts nationwide the freedom to purchase their next experience completely online and have it delivered to their home or in store and drive away on their next adventure. Consumers want to escape their home, their office, their gym, and seek new and exciting experiences, and there is no better escape than power sports. Not only is it a hobby, a passion, and a lot of fun, It promotes the involvement of the whole family, which has become an increasingly significant priority coming out of COVID-19. Our business combination with RideNow couldn't come at a more opportune time in this industry. If you consider our current technology-enabled solution and the expansive opportunities that our pending business combination with RideNow will bring, combined with the powerful macro and secular tailwinds, we are poised to benefit from some of the most durable shifts in consumer behavior. We will become the only omnichannel customer experience available in power sports and offer the best team, best locations, and an unparalleled mix of quality inventory available in the market today. Manufacturers are embracing our vision. We have seen significant support and enthusiasm, and we are already getting inbound interest from many dealers. The transaction is viewed as positive and transformative. Providing the first public capital access to dealers in Powersports is monumental in all regards. We are excited to become a valuable working partner with all manufacturers and to provide incredible support for their initiatives as we jointly make meaningful improvements to the customer experience through the first omnichannel offering in Powersports. RightNow has been a fantastic dealer partner over their 30 plus years. And the addition of RumbleOn will create synergies and opportunities unparalleled in the power sports segment. The opportunity to consolidate a highly fragmented industry is very evident to us. We believe the dealer interest level is high. If a dealer wants to retire, we can tuck them in in our existing infrastructure. Or if a group simply wants to grow faster and more efficiently, like right now, RumbleOn can be a huge win for those dealers who, in many cases, have spent a lifetime building their businesses. Manufacturers will benefit from public company involvement with unparalleled capabilities to enhance their initiatives, move them along quickly and professionally, and support their desire for each of their individual brands to provide unmatched customer experiences. Following our shareholder approval last week, we are in the final inning of completing our proposed business combination with Ridenhouse. We are confident that the integration of RideNow's extensive geographic footprint and strong retail brand combined with RumbleOn's technology platform will make power sports vehicles more accessible to the enthusiast and importantly, to the novice. Bringing new riders to the sport continues to be a mission of most manufacturers. Access to our pre-owned inventory is beneficial to all dealers because we are introducing affordability, which is a key in bringing more buyers into the sport. First-time buyers getting hooked on the adventure of power sport vehicle ownership will have long-term positive effects on new vehicle sales. We will remain focused on leveraging technology to streamline the entire vehicle transaction, in-store or online, and improving access to high-quality pre-owned inventory through our proprietary pre-owned vehicle sourcing. Turning to our outlook, we entered the second half of the year with strong momentum. We exceeded our prior revenue and gross profit expectations for Q2 and delivered adjusted EBITDA in line with our expectations. We have had a solid start to 2021, and we are very optimistic about the trajectory and opportunities in front of us. We are taking a prudent approach towards guidance and are maintaining our prior expectations for the full year 2021. Assuming a combination completed as of January 1, 2021, the company expects full-year 2021 revenue for the combined company in the range of $1.45 billion to $1.55 billion and adjusted EBITDA in a range of $110 million to $115 million. Both represent double-digit growth. We have multiple growth levers to pull and are extremely confident in the present guidance as well as our longer-term goal of $5 billion of revenue and 10% adjusted EBITDA margin. There are many unknowns going forward, primarily in regards to when and to what extent gross margins will begin to normalize, and we believe it would be imprudent to revise guidance at this time. We will provide an update on our results and outlook on our third quarter earnings call, as well as the initiatives surrounding our long-term goals. We believe that the best people managing the best consumer experience, whether online or off, with unmatched selection and a national distribution and service footprint, creates a unique opportunity to absolutely dominate the power sports industry over time. We are excited about the road ahead. We remain confident that the robust growth and continued evolution of our business positions us to deliver long-term, sustainable value for our shareholders. I'll now turn the call over to Beverly to discuss our second quarter financial results.