RumbleOn sales, revenue fall in wake of pandemic

O nline used - vehicle retailer RumbleOn is feeling the effects of the coronavirus pandemic. The company , which sells both automotive and powersports vehicles, lost $81 million in revenue year over year, spurred by a 52% drop in revenue in March 2020, when COVID-19 reached the U.S., according to the company’s earnings report. Automotive sales, which include used cars and trucks, dropped 47.7% YoY to 4,603 units in the first quarter of 2020, while RumbleOn’s powersports sales declined 14.6% to 2,817 units compared with the prior year, resulting in revenue losses of $77 million for auto and $4 million for powersports. The company increased its average automotive selling price by 13.9% YoY to $24,687 and the powersports vehicle price by $49 to $8,214 per unit, largely due to the pandemic and a desire to increase profit. Despite a decrease in revenue, as of June 26 RumbleOn had about $9.7 million in cash, with $5.5 million restricted, and $19.9 million available on its NextGear floorplan line of credit to potentially restock used-vehicle inventory. The company also has $1.2 million available out of $1.5 million on its credit facility for its captive, RumbleOn Finance. RumbleOn Finance had $41 ,755 in finance receivables as of March 31, a 71.8% decline compared with the quarter ending Dec ember 2019 . The company did not break out its origination volume. T he drop in sales is a result of chang ing consumer spending habits amid the COVID-19 pandemic , including with pre - owned vehicles, RumbleOn Chief Executive Officer Marshall Chesrown said on the earnings call. “We had a strong start to the year with January and February tracking consistently, consistent with our initiatives as our strategy of opportunistically building inventory in Q4 for the anticipated acceleration in sales in 2020, and it began to pay off,” Chesrown said. “Beginning in March, the industry and our business experienced imbalances in both supply and demand.” On top of vehicle production facilities closing nationwide in March and April, RumbleOn was dealt another blow when a tornado tore through Nashville on March 3, damaging inventory and buildings. Company leaders have filed insurance claims. A mid those challenges , total unit sales in April were down 66% compared to January sales figures . RumbleOn is using January as a baseline for pre-pandemic sales. “We experienced what we believe was the bottom of the downturn in mid-April, with the largest unit sales decline and our lowest level of inventory acquisition during the quarter,” the report states. Still, company leaders anticipate improvement in the months to come. May total unit sales increas ed by 22% from April 2020 , a trend expected to continue in June. “Though we are still below the monthly unit volumes experienced in January and February, our preliminary results for the month of June show our highest gross margin on units sold in our history and significant operating income improvement from prior periods,” the report states. RumbleOn is beginning to see demand return and the company is planning to launch an improved website in the next few months, Chesrown said. “While we anticipate significant improvements from the low volume experienced industrywide in April and May, we expect continued fluctuations in market trends and will maintain our conservative approach to sales volume while closely monitoring market conditions,” he said. RumbleOn’s online buying and selling model and the decision to lay off 169 associates may help the company weather recent storm s. “Our nimble business model enabled us to make operational changes necessary to withstand the deepest demand slowdown the vehicle market has probably ever seen, and we believe that the actions we took during this time will enable us to emerge in as strong a position as ever,” Chesrown said. RumbleOn [Nasdaq : RMBL] was trading at $9. 10 per share as of market close , down 3.91 % since market open. The company has a market capitalization of $20. 29 million. Auto Finance Summit, the premier industry event, returns October 20-22, 2020, as a virtual experience. The virtual experience will offer the same quality networking and education as past events, all through an online platform. To learn more about the 2020 event and register, visit www.AutoFinanceSummit.com .

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