RumbleOn, Inc. (RMBL) Q2 2025 Earnings Call Transcript

RumbleOn (RMBL) reported Q2 2025 earnings with revenue down 11% to $300 million, primarily due to lower new unit sales and a significant decline in its Wholesale Express segment. Despite this, adjusted EBITDA increased 6% year-over-year to $17.2 million, driven by strong cost discipline, reduced SG&A, and improved gross margins on a 10.2% rise in pre-owned powersports unit sales. Strategically, the company is rebranding to RideNow Group Inc. (RDNW) and relocating its headquarters, while also extending its term loan maturity by 13 months to September 2027, paying down $20 million, and reducing annual interest expense by $3.4 million. Management expressed optimism that the market has bottomed out, with recent tax reforms bolstering consumer confidence and stabilizing demand.

Analysis

RumbleOn (RMBL) presented a mixed Q2 2025, characterized by a strategic overhaul and disciplined cost management that successfully offset top-line pressures. Revenue declined 11% year-over-year to approximately $300 million, driven by an 11.5% drop in new powersports unit sales and a near-total collapse of the Wholesale Express transportation segment, where revenue fell 91.4% following the departure of key brokers. Despite this, the company achieved a $1 million year-over-year increase in adjusted EBITDA to $17.2 million. This counterintuitive result was fueled by an 8.3% reduction in adjusted SG&A and a notable shift in sales mix towards more profitable pre-owned vehicles, where unit sales grew 10.2%. Gross margins expanded across the board, with new unit margins rising to 13.2% from 12.3% and pre-owned margins increasing to 18.8% from 17.0%, demonstrating improved pricing power and operational execution. Critically, the company has de-risked its financial profile by extending its term loan maturity by 13 months to September 2027, paying down $20 million in debt, and reducing its interest rate, which will save $3.4 million in annual cash interest. The strategic rebranding to RideNow Group Inc. (RDNW) and management's optimistic outlook, citing a potential market bottom and tailwinds from tax reform, signal a clear focus on a turnaround centered on the core dealership business.

Key Decisions for Investors

• Investors should focus on the performance of the core powersports dealership group, particularly the sustainability of gross margins and the growth in pre-owned unit sales, which are currently insulating profitability from macro headwinds and the collapse of the transportation segment.
• The successful extension of the term loan maturity to September 2027 is a significant de-risking event that provides management with the runway to execute its turnaround; this improved financial stability should be a key consideration in evaluating the investment thesis.
• While management's outlook is optimistic, citing a market bottom and tax reform benefits, it is prudent to monitor leading indicators for consumer discretionary spending and the ongoing impact of tariffs on new vehicle affordability.
• Consider the strategic rebranding and sharpened focus on operational discipline as potential catalysts for a valuation re-rating, but discount any meaningful contribution from the Wholesale Express segment until its pivot to a B2C model demonstrates tangible results.