RumbleOn(RMBL) - 2025 Q1 - Quarterly Report

PART I - FINANCIAL INFORMATION Financial Statements RumbleOn, Inc. reported a Q1 2025 net loss of $9.7 million, an improvement from the prior year, with total assets decreasing to $738.9 million and negative operating cash flow of $6.9 million Condensed Consolidated Balance Sheets Total assets decreased to $738.9 million by March 31, 2025, primarily due to reduced cash, while total stockholders' equity declined to $26.9 million Condensed Consolidated Balance Sheets (in millions) | | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total current assets | $358.3 | $371.4 | | Total assets | $738.9 | $755.2 | | Total current liabilities | $315.6 | $324.4 | | Total liabilities | $712.0 | $718.5 | | Total stockholders' equity | $26.9 | $36.7 | | Total liabilities and stockholders' equity | $738.9 | $755.2 | Condensed Consolidated Statements of Operations Total revenue decreased by 20.5% to $244.7 million in Q1 2025, yet net loss narrowed to $9.7 million due to reduced operating expenses Q1 2025 vs Q1 2024 Statement of Operations (in millions) | | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Total revenue | $244.7 | $307.8 | | Gross profit | $67.2 | $82.6 | | Operating income (loss) | $3.8 | $5.2 | | Net loss | $(9.7) | $(10.3) | | Net loss per share - basic and diluted | $(0.26) | $(0.29) | Condensed Consolidated Statements of Cash Flows Operating activities used $6.9 million in cash in Q1 2025, a reversal from the prior year, leading to a $40.5 million decrease in total cash and restricted cash Q1 2025 vs Q1 2024 Cash Flows (in millions) | | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $(6.9) | $17.0 | | Net cash used in investing activities | $(0.5) | $(0.7) | | Net cash used in financing activities | $(33.1) | $(29.9) | | Net change in cash and restricted cash | $(40.5) | $(13.6) | | Cash and restricted cash at end of period | $56.2 | $63.4 | Notes to Condensed Consolidated Financial Statements The notes detail business segments, accounting policies, inventory, debt, related-party transactions, and significant legal contingencies including an SEC investigation and a former CEO lawsuit - The company operates through two segments: a powersports dealership group with 55 locations and a vehicle transportation services entity, Wholesale Express, LLC[17][18][19] - Total long-term debt principal decreased from $267.4 million to $229.3 million, primarily due to the repayment of $38.8 million in 6.75% convertible senior notes in January 2025[34][38] - The company is subject to an SEC investigation initiated in June 2024 concerning related-party transactions, former CEO conduct, and disclosures, and is also being sued by the former CEO for $57.5 million in damages[59][61] - The company has significant related-party transactions, including a $16.0 million floor plan facility and 27 property leases with entities controlled by board members William Coulter and Mark Tkach[48][49] Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Revenue declined 20.5% due to lower vehicle sales and transportation service issues, but reduced SG&A expenses helped narrow the net loss, despite decreased liquidity Results of Operations Q1 2025 total revenue decreased to $244.7 million, driven by a 20.5% drop in Powersports vehicle sales and a 61.5% decline in transportation services, partially offset by reduced SG&A expenses Consolidated Results of Operations (in millions) | | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Total Revenue | $244.7 | $307.8 | $(63.1) | | Total Gross Profit | $67.2 | $82.6 | $(15.4) | | SG&A expenses | $61.1 | $73.9 | $(12.8) | | Operating Income (Loss) | $3.8 | $5.2 | $(1.4) | | Net loss | $(9.7) | $(10.3) | $0.6 | - Powersports segment total vehicles sold decreased by 3,399 units (20.5%) year-over-year, driving the segment's revenue decline, though total gross profit per retail vehicle increased to $5,365 from $5,099[76][77] - The Vehicle Transportation Services segment's results were significantly impacted by the departure of several employees, including most brokers, early in 2025, causing vehicles transported to drop from 24,637 to 8,625[79] Liquidity and Capital Resources Total cash and restricted cash decreased by $40.5 million to $56.2 million, and committed liquidity resources fell to $171.4 million, though management believes resources are sufficient for the next year Liquidity Resources (in millions) | | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash | $41.1 | $85.3 | | Restricted cash | $15.1 | $11.4 | | Total cash and restricted cash | $56.2 | $96.7 | | Availability under powersports inventory financing | $115.2 | $146.2 | | Committed liquidity resources available | $171.4 | $242.9 | - Net cash used in operating activities was $6.9 million, a $23.9 million negative swing from the prior year, primarily due to building up inventory for seasonal demand[89][90] - In January 2025, the company repaid its 6.75% convertible senior notes at maturity, which was a primary use of cash in financing activities[93] Quantitative and Qualitative Disclosures About Market Risk This item is not applicable as the company is classified as a smaller reporting company - The company is a smaller reporting company and is therefore not required to provide these disclosures[97] Controls and Procedures Management concluded that the company's disclosure controls and procedures were not effective as of March 31, 2025, due to a material weakness in IT system access and segregation of duties - As of March 31, 2025, the CEO and Interim CFO concluded that the company's disclosure controls and procedures were not effective[99] - The ineffectiveness is due to a material weakness related to user access and segregation of duties in IT systems that support financial reporting processes like revenue, inventory, and purchasing[100] - Management is implementing a remediation plan which includes enhancing processes for reviewing and provisioning access to key financial systems and ensuring appropriate segregation of duties[102][105] PART II - OTHER INFORMATION Legal Proceedings The company faces an SEC subpoena regarding related-party transactions and a lawsuit from its former CEO seeking $57.5 million in damages - On June 28, 2024, the company received a subpoena from the SEC requesting documents related to the former CEO's use of company resources, related-party transactions, and disclosures regarding its RideNow Cash Offer tool[108] - Former CEO Marshall Chesrown filed a lawsuit against the company seeking $7.5 million in termination compensation and $50.0 million in general and reputational damages[110] Risk Factors There have been no material changes to the risk factors previously disclosed in the company's 2024 10-K - There have been no material changes to the risk factors previously disclosed in the company's 2024 10-K[111] Other Information No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the first quarter of 2025 - No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the three months ended March 31, 2025[112] Exhibits This section lists all exhibits filed with the Form 10-Q, including employment and separation agreements for key executives and SOX certifications - The exhibits filed include employment agreements for CEO Michael Quartieri and Cameron Tkach, and separation agreements for Michael Kennedy, Tiffany Kice, and Brandy Treadway[113]