Online used-vehicle retailer RumbleOn and powersports dealer RideNow have inked an acquisition deal to create an omnichannel dealership platform tapping into a $100 billion market.
The $575.4 million equity purchase agreement — consisting of $400.4 million in cash and $175 million in RumbleOn Class B Common Stock — combines RumbleOn’s technology with RideNow’s footprint to create “the largest publicly traded powersports dealership platform,” with a total addressable domestic market of more than $100 billion, RumbleOn Chief Executive Marshall Chesrown said on the company’s full-year 2020 earnings call today.
RideNow is the nation’s largest powersports retailer, with more than 40 retail locations in 11 states; the acquisition will allow consumers to shop for new and used powersports inventory, access financing options online, and find parts and services, Chesrown said. “RideNow’s significant physical retail platform provides the missing piece of a ‘bricks and clicks’ strategy for RumbleOn, enabling us to reach consumers wherever they want to shop — whether online, offline or both,” he said.
RumbleOn, which sells used automotive and powersports vehicles, had sold a total of 18,024 units at yearend 2020, a decrease from 43,143 units in 2019, according to the earnings report. RumbleOn’s revenue at yearend 2020 fell 50.5% YoY to $416.4 million, factoring $46.7 million in powersports revenue and $337.1 million from automotive. The retailer’s revenue struggled as the COVID-19 pandemic and a March 3 tornado led to inventory shortages that hampered sales and contributed to a 52% drop in revenue in March 2020.
Still, RumbleOn saw improvement in total gross margin on vehicles sold to 9.6%, up from 5.4% year over year. Gross profit per vehicle came in at $2,047, a 100.4% increase YoY, largely due to the company’s launch of its next generation of the RumbleOn website in August 2020, which now lists 50,000 powersports vehicles from more than 300 dealer locations nationally, Chesrown said.
The company did not break out RumbleOn Finance numbers in the yearend report.
RideNow last year sold 45,527 units, including motorcycles, snowmobiles and personal watercraft, and generated more than $899.4 million in revenue, according to the RumbleOn statement. RideNow’s co-founders, Mark Tkach and William Coulter, will join RumbleOn’s executive team and board of directors as part of the agreement.
Tkach noted the deal will expand RideNow’s offerings. “From adding financing options with RumbleOn Finance, to exploring the opportunity to open pre-owned retail stores, RumbleOn’s technology and ecommerce presence will provide us access to a nationwide audience and high demand pre-owned inventory,” he said.
The agreement is expected to close in the second or third quarter of 2021. RumbleOn will not be providing stand-alone guidance for 2021, due to the acquisition, said Chief Financial Officer Steve Berrard.
Since announcing the agreement before market open on Monday, RumbleOn’s stock [Nasdaq: RMBL] surged 47% to $57.50 a share as of market close. RumbleOn has a market capitalization of $128.89 million.
Auto Finance Innovation Summit, the premier event for technology in auto finance, returns March 16-17, 2021, as a virtual experience. The virtual experience will offer the quality networking and education of past events, all through an online platform. To learn more about the 2021 event and register, visit www.AutoFinanceInnovation.com.