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EX-99.2 - COMPANY PRESENTATION - RumbleOn, Inc. | rmbl_ex992.htm |
8-K - CURRENT REPORT - RumbleOn, Inc. | rmbl_8k.htm |
Exhibit
99.1
RumbleOn Reports Third Quarter 2018 Financial Results
Strong Growth Trajectory Continues with Record Revenue and Unit
Sales
Transformative Acquisition of Wholesale Inc. and Wholesale Express
Radically Expands the Company’s Scale and Market
Opportunity
CHARLOTTE, N.C., November 8, 2018 -- RumbleOn, Inc.
(NASDAQ:RMBL),
the only
100-percent-online pre-owned vehicle marketplace, announced
financial results for its third quarter ended September 30, 2018.
RumbleOn posted record revenue of $19.3 million and unit sales of
2,875 for the third quarter, bringing year to date total revenue
and total unit sales to $41.2 million and 5,766,
respectively.
“We are excited to report another quarter of tremendous
growth across the business. We have driven extremely rapid growth
in the core RumbleOn business over the past year. While, at the
same time making technology and product investments to build a
supply chain solution that now spans all pre-owned vehicle
segments, which we believe will position RumbleOn for growth and
profitability in the long-term. We believe our success demonstrates
the strength of our technology platform, the efficiency of the
business model and the appeal of our offering to both consumers and
dealers. We believe these efforts will combine to create tremendous
shareholder value over time,” commented Marshall Chesrown,
Founder, Chairman and CEO.
“We announced the transformative acquisitions of Wholesale
Inc. and Wholesale Express during the fourth quarter. The
acquisitions accelerate our plan to expand into adjacent markets,
giving us immediate access to the huge automobile marketplace with
meaningful size and scale, and without the significant start-up
costs typically associated with new market entries. We are even
more excited now that we have ‘gotten under the hood’
of the companies and begun integrating the businesses. We look
forward to updating you on our progress in the coming quarters as
we overlay our powerful technology and online presence across
Wholesale.”
Summary Financial Results
All third quarter comparisons are over the second quarter of 2018,
unless otherwise noted.
Total vehicle unit sales increased to 2,875, up
from 2,013 representing a 43% increase; year to date, unit sales
reached 5,766, up 17x from the same period in
2017.
Total revenue was $19.3 million, up
from $13.9 million representing a 38% increase for the third
quarter. Year to date, total revenue reached $41.2 million, as
compared to $3.9 million in for the same period in 2017.
The increase in revenue and vehicles
sold was driven by the continued expansion of the business,
highlighted by traffic growth to the RumbleOn website, a
significant increase in requests for cash offers by consumers and
dealers, expanded levels of availability and selection of inventory
for sale, an enhanced and aggressive digital and social media
advertising campaign, increased awareness of the RumbleOn brand,
customer referrals and the launch of the Dealer Direct online
acquisition platform.
1
Total gross profit was $2.0 million up
from $1.3 million, representing a 59% increase. Year to date, total
gross profit was $3.8 million up from $0.2 million as compared to
the same period last year.
Gross margin per unit was 12.0%, up from 11.2% in the second
quarter, an 80-basis point improvement. RumbleOn made the
decision to terminate any cash offer that did not produce $1,000 of
margin in August. This resulted in higher-quality inventory, but
less inventory. Cash offers provide a compelling vehicle
acquisition tool and the Company will continue to tune the cash
offer algorithm with an eye on balancing margin optimization and
unit sales volume. Year to
date, gross margin per unit was 11.1%, up from 6.3% as compared to
the same period last year.
Sales, General and Administrative Expenses were $8.4 million in the third quarter, up from
$5.5 million. The increase was primarily driven by advertising and
marketing expenses as well as a lesser increase in general and
administrative and compensation expenses and a modest uptick in
professional fees primarily attributable to expenses incurred in
connection with the public offering of Class B shares and
acquisition activities during the third
quarter.
Advertising and
marketing expense increased to
$4.1 million, up from $2.2 million. The spend was allocated across
digital, social and search marketing campaigns as the Company
develops its omnichannel marketing strategy targeting both
consumers and dealers, by combining brand building, lead
generation, and content marketing to efficiently source and scale
addressable markets. Paid advertising efforts also include display
advertisements, IP, email and profile retargeting, organic search
and content, video marketing, automation and aggressive event
marketing.
Technology development
expenses were $0.2 million in the
quarter, flat with the second quarter, as the Company
focuses on platform development for new and existing products and
services, technology infrastructure expenses, and a significant
increase in headcount and third-party contractors to meet an
increase level of technology development projects and
initiatives.
General
and Administrative expense was $1.9
million, up from $1.3 million. The increase is a result of the cost and
expenses associated with the continued progress made and growth
experienced in the development of the business, expansion of
our Dallas operations center and meeting the requirements of being
a public company.
2
Compensation and
related costs
were $1.9 million in the third
quarter, up from $1.5 million, driven by increased headcount to
support the Company’s rapid growth
Professional fees
for the three-month period were $0.2
million, up approximately $10,000 from the second quarter. Fees and
expenses were incurred for the public offering of Class B shares
and acquisition activities during the quarter. Without those
charges, professional fees would have been down from the second
quarter.
Operating Loss expanded to $(6.7)
million in the third quarter, up from $(4.5) million. The expansion
was primarily due to an acceleration in advertising and marketing efforts during the
quarter.
Net loss was $(7.0) million, or
(36.4)% of total revenue, compared to a net loss of $(4.7) million
or (34.0)% of total revenue. Year to date, net loss was $(15.4)
million or (37.2)% of total revenue, compared to a net loss of
$(5.1) million or (132.9)% of total revenue as compared to the same
period last year.
Net loss per share was $(0.47) based on
14,920,693 basic and fully diluted Class B shares.
Diluted net loss per share for
the three-month period ended September 30, 2018 did not include
1,278,000 of RSUs and 300,068 of warrants to purchase shares of
Class B Common Stock as their inclusion would be
antidilutive. That compares to net
loss per share of $(0.36) based on 13,006,893 basic and fully
diluted Class B shares in the second quarter of
2018.
Cash and cash equivalents totaled $12.8 million
as of September 30, 2018, compared to $5.5 million at the end of
the second quarter. Subsequent
to the third quarter, RumbleOn announced the closing of a $21.6
million private placement of Class B common shares
and
expanded its existing credit facility
by $5.0 million. RumbleOn used
the proceeds from the private placement and the $5.0 million
expansion of its credit facility to fund the acquisitions of
Wholesale Inc. and Wholesale Express LLC on October 30, 2018 and
will use the remaining balance for working
capital.
Key Operating Metrics
Significant
growth in key operating metrics signal key growth drivers,
including increasing brand awareness, maximizing the opportunity to
source the purchase of low cost pre-owned vehicles from consumers
and dealers while enhancing the selection of vehicles available to
customers.
|
Three-Months
Ended September 30,
|
Nine- Months
Ended September 30,
|
||
|
2018
|
2017
|
2018
|
2017
|
Vehicles
sold(1)
|
2,875
|
313
|
5,766
|
323
|
Vehicle inventory
available on website
|
932
|
588
|
932
|
588
|
Average days to
sale
|
32
|
39
|
32
|
38
|
Average total
vehicle selling price
|
$6,788
|
$11,667
|
$7,274
|
$11,560
|
Total average per
vehicle:
|
|
|
|
|
Gross Sales
Profit
|
$1,076
|
$1,121
|
$1,074
|
$1,098
|
Gross Sales
Margin
|
15.9%
|
9.6%
|
14.8%
|
9.5%
|
Gross
Profit
|
$815
|
$760
|
$804
|
$730
|
Gross
Margin
|
12.0%
|
6.5%
|
11.1%
|
6.3%
|
(1)
Includes 73 and 139
vehicles that were deemed commercially unfit and were sold as
salvage during the three and nine-months periods ended September
30, 2018, respectively.
3
Average Selling Price was $6,788 down from $7,113 in Q2 2018
and 11,667 in the same period last year. The decline was
primarily due to a shift in inventory mix from Harley-Davidson
motorcycles to lower priced other makes of powersports vehicles
which is a better representation of the overall powersport market.
During the quarter, 59% of the pre-owned vehicles sold to consumers
and dealers were Harley-Davidson which were sold at an average
total selling price of $8,517 as compared to an average total
selling price of $4,284 for non-Harley Davidson sales. The average
selling price of pre-owned vehicles sold will also fluctuate from
period to period based on changes in the sales mix to consumers and
dealers in any given period. 88.3% of the preowned vehicles sold
during the quarter were sold to dealers.
Cash offers of more than 51,000 in Q3’18, up from
29,000 in Q2’18. During the third quarter, we
reduced the cash offer made to consumers by 10%, in response to the
seasonality of pricing in the overall resale market during the
quarter. The decision to terminate low value acquisitions was made
to improve inventory quality and margin expansion. Year to date cash offers reached 92,000
as of September 30, 2018, bringing total cash offers since the
program’s inception in June 2017 to
100,000.
Acquisition
of Wholesale Inc. and Wholesale Express LLC
The addition of Wholesale immediately places RumbleOn as a
significant player in the distribution of pre-owned cars and trucks
and creates multiple synergies with its core business. This
transformative transaction is cash flow positive and provides
multiple opportunities to leverage RumbleOn’s technology
suite and marketing spend across the segments. RumbleOn is led by a
deep bench of industry experts whose knowledge and experience in
the automotive industry are unparalleled.
The complementary assets combine to create a compelling value
proposition and provide a clear pathway for growth and
profitability. RumbleOn has a
powerful technology platform and disruptive strategy that creates
compelling unit economics with a massive market opportunity.
Tremendous revenue growth and continued margin expansion are
evidence of the efficacy of the agnostic supply and distribution
strategy and scalability of its capital-light model. Layering
RumbleOn’s technology-powered buying and selling experience
onto Wholesale expands the powerful supply chain solution built
around inventory acquisition across all pre-owned vehicle segments
and unlocks new growth and profitability
channels.
Looking ahead to 2019, RumbleOn is tapping an even larger market
through its acquisition of Wholesale. Integration is underway, and
RumbleOn expects to benefit from the combination of its technology
with the legacy Wholesale business and expects to see acceleration
from the addition of the used car and truck markets.
4
Upcoming Investor Marketing Activities
Senior management is presenting and hosting investor meetings at
the Southwest IDEAS Investor Conference in Dallas on Tuesday, Nov.
14, 2018 at 3:50 p.m. CT, and is hosting individual and small group
meetings at the Craig-Hallum Alpha Select Conference in New York
City, NY on Thursday, Nov. 15, 2018. Please check the Events &
Presentations page on the investor relations website for additional
investor conferences to be announced in the coming
months.
###
About RumbleOn
RumbleOn operates a capital-light disruptive e-commerce platform
facilitating the ability of both consumers and dealers to
Buy-Sell-Trade-Finance pre-owned vehicles in one online location.
RumbleOn’s goal is to transform the way pre-owned vehicles
are bought and sold by providing users with the most efficient,
timely and transparent transaction experience. Serving both
consumers and dealers, through its 100 percent online marketplace
platform, RumbleOn makes cash offers for the purchase of pre-owned
vehicles. In addition, RumbleOn offers a large inventory of
pre-owned vehicles for sale along with third-party financing and
associated products.
Forward-Looking Statements
This
press release may contain “forward-looking statements”
as that term is defined under the Private Securities Litigation
Reform Act of 1995 (PSLRA), which statements may be identified by
words such as “expects,” “projects,”
“will,” “may,” “anticipates,”
“believes,” “should,”
“intends,” “estimates,” and other words of
similar meaning. Readers are cautioned not to place undue
reliance on these forward-looking statements, which are based on
our expectations as of the date of this press release and speak
only as of the date of this press release and are advised to
consider the factors listed under the heading
“Forward-Looking Statements” and “Risk
Factors” in the Company’s Annual Report on Form 10-K,
as may be supplemented or amended by the Company’s Quarterly
Reports on Form 10-Q and other SEC filings. We undertake no
obligation to publicly update or revise any forward-looking
statement, whether as a result of new information, future events or
otherwise, except as required by law.
Investor Relations:
The Blueshirt Group
investors@rumbleon.com
5
RumbleOn, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
|
As of
September 30,
2018
|
As of
December 31,
2017
|
ASSETS
|
|
|
Current
assets:
|
|
|
Cash
|
$11,831,602
|
$9,170,652
|
Restricted
cash
|
350,000
|
-
|
Accounts
receivable, net
|
193,135
|
577,107
|
Inventory
|
5,626,186
|
2,834,666
|
Prepaid
expense
|
132,433
|
308,880
|
Total current
assets
|
18,133,356
|
12,891,305
|
|
|
|
Property and
equipment, net
|
4,145,437
|
3,360,832
|
Goodwill
|
1,850,000
|
1,850,000
|
Other
assets
|
103,235
|
50,693
|
Total
assets
|
$24,232,028
|
$18,152,830
|
|
|
|
LIABILITIES AND
STOCKHOLDERS’
EQUITY
|
|
|
|
|
|
Current
liabilities:
|
|
|
Accounts payable
and other accrued liabilities
|
$1,839,210
|
$1,179,216
|
Accrued interest
payable
|
93,324
|
33,954
|
Current portion of
long-term debt
|
4,349,746
|
1,081,593
|
Total current
liabilities
|
6,282,280
|
2,294,763
|
|
|
|
Long-term
liabilities:
|
|
|
Notes
payable
|
4,653,708
|
1,459,410
|
Accrued interest
payable - related party
|
-
|
32,665
|
Total long-term
liabilities
|
4,653,708
|
1,492,075
|
|
|
|
Total
liabilities
|
10,935,988
|
3,786,838
|
|
|
|
Commitments and
contingencies (Notes 4, 5, 12)
|
|
|
|
|
|
Stockholders’
equity:
|
|
|
Preferred stock,
$0.001 par value, 10,000,000 shares authorized, no shares issued
and outstanding as of September 30, 2018 and December 31,
2017
|
-
|
-
|
Common A stock,
$0.001 par value, 1,000,000 shares authorized, 1,000,000 shares
issued and outstanding as of September 30, 2018 and December 31,
2017
|
1,000
|
1,000
|
Common B stock,
$0.001 par value, 99,000,000 shares authorized, 14,406,291 and
11,928,541 shares issued and outstanding as of September 30, 2018
and December 31, 2017, respectively
|
14,406
|
11,929
|
Additional paid in
capital
|
37,656,377
|
23,372,360
|
Accumulated
deficit
|
(24,375,743)
|
(9,019,297)
|
Total
stockholders’
equity
|
13,296,040
|
14,365,992
|
|
|
|
Total liabilities
and stockholders’
equity
|
$24,232,028
|
$18,152,830
|
See
Notes to the Condensed Consolidated Financial
Statements.
6
RumbleOn, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
|
Three-months
Ended
September
30,
|
Nine-months
Ended
September
30,
|
||
|
2018
|
2017
|
2018
|
2017
|
Revenue:
|
|
|
|
|
Pre-owned vehicle
sales
|
$18,975,968
|
$3,544,372
|
$40,821,764
|
$3,626,312
|
Other sales and
revenue
|
279,054
|
161,770
|
427,997
|
235,241
|
Total
Revenue
|
19,255,022
|
3,706,142
|
41,249,761
|
3,861,553
|
|
|
|
|
|
Cost of
revenue
|
17,248,588
|
3,478,124
|
37,419,594
|
3,627,455
|
|
|
|
|
|
Gross
profit
|
2,006,434
|
228,018
|
3,830,167
|
234,098
|
|
|
|
|
|
Selling, general
and administrative
|
8,431,561
|
2,326,043
|
17,857,561
|
4,690,216
|
|
|
|
|
|
Depreciation and
amortization
|
247,669
|
129,277
|
671,264
|
302,697
|
|
|
|
|
|
Operating
loss
|
(6,672,796)
|
(2,227,302)
|
(14,698,658)
|
(4,758,815)
|
|
|
|
|
|
Interest
expense
|
333,448
|
90,201
|
657,788
|
373,808
|
|
|
|
|
|
Net loss before
provision for income taxes
|
(7,006,244)
|
(2,317,503)
|
(15,356,446)
|
(5,132,623)
|
|
|
|
|
|
Benefit for income
taxes
|
-
|
-
|
-
|
-
|
|
|
|
|
|
Net
loss
|
$(7,006,244)
|
$(2,317,503)
|
$(15,356,446)
|
$(5,132,623)
|
|
|
|
|
|
Weighted average
number of common shares outstanding - basic and fully
diluted
|
14,920,693
|
10,018,541
|
13,626,006
|
9,105,429
|
|
|
|
|
|
Net loss per share
- basic and fully diluted
|
$(0.47)
|
$(0.23)
|
$(1.13)
|
$(0.56)
|
See
Notes to the Condensed Consolidated Financial
Statements.
7
RumbleOn, Inc.
Condensed Consolidated Statement of Stockholders’
Equity
For the Nine-Months Ended September 30, 2018
(unaudited)
|
Preferred
Shares
|
Class
A
Common
Shares
|
Class
B
Common
Shares
|
Additional
Paid
In
|
Accumulated
|
Total
Stockholders’
|
|||
|
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
Capital
|
Deficit
|
Equity
|
Balance, December
31, 2017
|
-
|
-
|
1,000,000
|
$1,000
|
11,928,541
|
$11,929
|
$23,372,360
|
$(9,019,297)
|
$14,365,992
|
Issuance of common
stock
|
-
|
-
|
-
|
-
|
2,328,750
|
2,328
|
13,013,497
|
-
|
13,015,825
|
Issuance of common
stock for restricted stock units exercise
|
-
|
-
|
-
|
-
|
149,000
|
149
|
(149)
|
-
|
-
|
Stock-based
compensation
|
-
|
-
|
-
|
-
|
-
|
-
|
1,093,784
|
-
|
1,093,784
|
Issuance of
warrants in connection with loan agreement
|
-
|
-
|
-
|
-
|
-
|
-
|
176,885
|
-
|
176,885
|
Net
loss
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(15,356,446)
|
(15,356,446)
|
Balance, September
30, 2018
|
-
|
-
|
1,000,000
|
$1,000
|
14,406,291
|
$14,406
|
$37,656,377
|
$(24,375,743)
|
$13,296,040
|
See
Notes to the Condensed Consolidated Financial
Statements.
8
RumbleOn, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
|
Nine-months
Ended September 30,
|
|
|
2018
|
2017
|
CASH FLOWS FROM
OPERATING ACTIVITIES
|
|
|
Net
loss
|
$(15,356,446)
|
$(5,132,623)
|
Adjustments to
reconcile net loss to net cash used in operating
activities:
|
|
|
Depreciation and
amortization
|
671,264
|
302,697
|
Amortization of
debt discount
|
149,906
|
91,877
|
Amortization of
debt issuance costs
|
146,607
|
-
|
Interest expense on
conversion of debt
|
-
|
196,076
|
Share based
compensation expense
|
1,093,784
|
287,550
|
|
|
|
Changes in
operating assets and liabilities:
|
|
|
Decrease (increase)
in prepaid expenses
|
176,447
|
(121,846)
|
Increase in
inventory
|
(2,791,520)
|
(1,244,658)
|
Decrease (increase)
in accounts receivable
|
383,972
|
(320,575)
|
Increase in other
current assets
|
-
|
(174,419)
|
Increase in other
assets
|
(52,542)
|
-
|
Increase in
accounts payable and accrued liabilities
|
659,993
|
1,683,442
|
Increase in accrued
interest payable
|
26,704
|
43,351
|
|
|
|
Net cash used in
operating activities
|
(14,891,831)
|
(4,389,128)
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES
|
|
|
Cash used for
acquisitions
|
-
|
(750,000)
|
Technology
development
|
(1,396,662)
|
(435,097)
|
Purchase of
property and equipment
|
(59,206)
|
(600,175)
|
Net cash used in
investing activities
|
(1,455,868)
|
(1,785,272)
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES
|
|
|
Proceeds from note
payable
|
7,424,417
|
2,167,000
|
Repayments of line
of credit-floor plan
|
(1,081,593)
|
-
|
Proceeds from sale
of common stock
|
13,015,825
|
3,313,040
|
Net cash provided
by financing activities
|
19,358,649
|
5,480,040
|
|
|
|
NET CHANGE IN
CASH
|
3,010,950
|
(694,360)
|
|
|
|
CASH AT BEGINNING
OF PERIOD
|
9,170,652
|
1,350,580
|
|
|
|
CASH AND RESTRICTED
CASH AT END OF PERIOD
|
$12,181,602
|
$656,220
|
See
Notes to the Condensed Consolidated Financial
Statements.
9