RideNow adjusted EBITDA falls to $5.3 million amid pricing shift

RideNow Group (NASDAQ: RDNW) reported third-quarter consolidated adjusted EBITDA of $5.3 million, down from $12.3 million a year earlier. Revenue and units followed.

• Same-store revenue: $241.4 million, down from $262 million.
• Same-store retail unit sales: 12,182 vehicles, down 10.9%.
• Same-store gross profit: $65.8 million, down 8.6%.

The quarter combined a new vehicle-pricing strategy with weaker discretionary spending. On the earnings call, Chairman, Chief Executive Officer and President Michael Quartieri estimated that August's adoption of RideNow Clear Price accounted for about half of the unit-sales decline and approximately $4 million of the $7 million drop in adjusted EBITDA.

He also cited rising interest rates, high fuel prices and inflation as pressures on consumers. Management said the business had rebounded somewhat in the fourth quarter and expected adjusted EBITDA to exceed the third-quarter result.

How did the Clear Price reset change sales?

Quartieri said RideNow introduced Clear Price across its 46 dealerships in early August to align with Federal Trade Commission guidance and enforcement priorities on pricing transparency. Advertised prices include mandatory fees, but exclude tax, title and license costs.

He said the approach remained a starting point for negotiation, not a no-haggle policy. Some competitors still advertised prices that exclude charges such as freight, setup and documentation fees, making their initial prices appear lower.

Pricing practices varied by region. Most direct competitors in the Phoenix market had adopted compliant pricing, while relatively few dealerships in Texas, Florida and on the East Coast had done so.

Baird analyst Craig Kennison asked whether RideNow had lost sales to competitors or whether customers had deferred purchases. In response, Quartieri said August operating results were materially lower than a year earlier.

July, September and October showed what management viewed as “a more normalized environment,” with year-over-year unit-volume declines in the low- to mid-single digits.

The reset changed how prices appeared, but volume remained uneven.

Why did margins tighten?

Chief Financial Officer Josh Barsetti said RideNow sold 8,127 new retail units in the third quarter, down 11.3% from a year earlier, and 4,055 pre-owned units, down 10%.

New-unit gross margin declined to 13.1% from 13.8%, while pre-owned margin slipped to 15.4% from 15.7%. Barsetti attributed the pre-owned decline to a shift toward lower-margin products.

Adjusted selling, general and administrative expenses decreased by $3.8 million to $57.7 million. They nevertheless rose as a share of gross profit to 88.1% from 80.9%, squeezing operating profit.

Quartieri said elevated inventory of 2026 models, promotional activity as dealers made room for 2027 models and competitors' advertised pricing all contributed to margin pressure. Barsetti said new-vehicle inventory stood at a little over five months of supply, partly because of the August sales decline, and he expected it to return to the desired level by the end of the first quarter.

RideNow was comfortable with current used inventory but wanted more ahead of the spring selling season. Barsetti said finding good-quality used vehicles remained difficult across the industry.

Lower vehicle margins and a heavier expense burden squeezed operating profit.

What did cost cutting and refinancing change?

Quartieri said RideNow reduced costs by an annualized $4.6 million during the quarter and was accelerating back-office changes, including expanded use of artificial intelligence tools. The company expects an additional $10 million in permanent run-rate savings as it exits 2027.

At September's end, RideNow had $47.6 million of cash, including restricted cash, and $149.4 million of total available liquidity, including availability under floor-plan credit facilities. Barsetti said non-vehicle net debt stood at $203.7 million.

On September 25, RideNow refinanced its Oaktree term loan with a $220 million facility from Centerbridge affiliates that matures in September 2031. The company recorded a $5.7 million loss on extinguishment of debt.

It was also in advanced discussions with Wells Fargo about an asset-backed lending facility, although Barsetti cautioned that “an agreement was not assured.”

Cost reductions were moving ahead, while the refinancing produced a $5.7 million extinguishment charge.

What does the company sell?

The company overview names RumbleOn, Inc. and describes its principal operation as a U.S. powersports retailer. The business lists two segments: Powersports and Vehicle Transportation Services.

The Powersports segment sells new and pre-owned motorcycles, all-terrain vehicles, utility-terrain or side-by-side vehicles, personal watercraft, snowmobiles and other powersports products. RideNow also offers parts, apparel, accessories, finance and insurance, aftermarket products, repair and maintenance services.

The operating mix centers on vehicle retail and related services.