RideNow Group Q3 2026 Earnings Call Transcript

RideNow Group (NASDAQ:RDNW) reported third-quarter financial results on Tuesday. The transcript from the company’s third-quarter earnings call has been provided below.

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Summary

RideNow Group Inc. experienced a decline in top-line revenue and adjusted EBITDA in Q3 2026 due to the implementation of the RideNow Clear Price strategy, which aligns with FTC guidelines for transparent pricing.

Same-store retail volume dropped by 10.9%, with adjusted EBITDA falling to $5.3 million from $12.3 million the previous year. The Clear Price strategy was estimated to account for a $4 million decline in EBITDA.

The macroeconomic environment, including rising interest rates and inflation, contributed to reduced consumer discretionary spending.

Cost reduction measures have been implemented, yielding $4.6 million in annualized savings, with further operational efficiencies expected through AI tools.

A tuck-in acquisition for the Tallahassee store was completed, adding Can-Am and Sea-Doo products, and a refinancing of debt was achieved with a new facility from Centerbridge.

RideNow Group expects a rebound in Q4 adjusted EBITDA and is focused on strategic acquisitions and cost savings to position itself advantageously for future market conditions.

Full Transcript

OPERATOR

Good afternoon, ladies and gentlemen, and welcome to the RideNow Group Inc. Third Quarter 2026 Earnings Conference Call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Tuesday, November 10, 2026. I would now like to turn the conference over to Jerine Makia, Vice President of Finance.

Please go ahead.

Jerine Makia (Vice President of Finance)

Thank you, operator. Good afternoon, everyone, and thank you for joining us for RideNow Group’s third quarter 2026 earnings conference call. Joining me on the call today are Michael Quartieri, RideNow Group’s Chairman, Chief Executive Officer and President, and Joshua Barsetti, RideNow Group’s Executive Vice President. Our third quarter results are detailed in the press release issued this afternoon, and supplemental information will be available in our Form 10-Q once filed.

Before we begin, I would like to remind you that comments made by management during this conference call may be and contain forward-looking statements, including but not limited to RideNow Group’s market opportunities, Clear Price, pricing strategy, and future financial results. All forward-looking statements involve risks and uncertainties which could affect RideNow Group’s actual results and cause actual results to differ materially from forward-looking statements made by or on behalf of RideNow Group.

A discussion of material risks and important factors that could affect our actual results can be found in our filings with the SEC, which are available on our investor relations website and at sec.gov. This conference call also contains time-sensitive information that is accurate only as of the date of this live broadcast, Tuesday, November 10, 2026. RideNow Group assumes no obligation to revise or update any forward-looking statements, whether written or oral, to reflect events or circumstances after the date of this conference call, except as required by law.

Also, the following discussion contains non-GAAP financial measures. For a reconciliation of these non-GAAP financial measures to the most direct comparable GAAP measures, please refer to our earnings release furnished today and available on our investor relations website. Now I’ll turn the call over to Michael Quartieri.

Michael Quartieri (Chief Executive Officer)

Good afternoon, everyone, and thank you for joining us for RideNow Group’s third quarter 2026 earnings call. Our top line and adjusted EBITDA contraction this quarter was driven primarily by our August company-wide adoption of our RideNow Clear Price strategy, which we proactively introduced to align with recent FTC guidance and enforcement priorities regarding vehicle pricing and fee transparency. Transparent all-in pricing means the price a customer sees in an advertisement is the price they pay, excluding tax, title, and license, with no hidden or unexpected fees tacked on later.

Dealerships that continue to exclude mandatory fees from advertised prices may advertise artificially deflated prices and then add ancillary fees once the consumer is in the door. They may include disclaimers such as “prices exclude freight, prep, setup, and doc fees,” and for used inventory, “prices exclude a reconditioning fee or doc fee.” As the industry’s leading powersports dealership group, we chose to be proactive and were among the first to adopt fully compliant transparent pricing starting in early August across our 46 rooftops.

While the widespread adoption in the industry has been slow to date, as regulatory enforcement across powersports retailers broadens, we expect these impacts to normalize as transparent pricing practices become more widespread across the industry. Certain dealerships that we compete with have made the change in recent weeks, while others have chosen to run the risk and maintain their historical pricing practices. While certainly painful in Q3, importantly, we believe that this was the right move for the company as it provides us the opportunity to improve customer trust and transparency, lowering friction during the buying process, which will ultimately improve our position as the dealership group of choice in our core markets. Another contributing factor which affected our Q3 results is the general macro environment. Rising interest rates, high fuel prices, and inflationary pressures are weighing on consumer confidence and sentiment, thus driving a noticeable pullback in consumer discretionary spending over the last quarter.

These sustained macro headwinds have forced buyers to approach big-ticket non-essential purchases with a high level of caution. That being said, we’ve seen our business rebound somewhat here in Q4 as we believe our customers have become more aware of our RideNow Clear Price. At the current time, we expect Q4 adjusted EBITDA to come in ahead of Q3, bucking the typical seasonal trend of our business. Same-store retail volume as reported was down 10.9% compared to last year’s third quarter. We estimate the impact of our Clear Price adoption accounted for approximately half of this decline.

Adjusted EBITDA for the quarter was $5.3 million compared to $12.3 million in Q3 of last year. Of this $7 million decline, we estimate approximately $4 million was attributable to the Clear Price adoption. Regardless of the environment, our philosophy remains simple: control what we can control within our four walls. We acted swiftly during the quarter, accelerating actions to reduce costs throughout our dealerships, which reduced costs by $4.6 million on an annualized basis. We remain diligent in our operational back-office transformation efforts, which are being accelerated with our expanded use of AI tools. We expect these actions to benefit us here in the current quarter and through 2027.

We anticipate these efforts will generate an incremental $10 million of run-rate permanent savings as we exit 2027. As we navigate macro headwinds, we remain focused on accretive acquisitions. To that end, during the quarter we completed an accretive tuck-in acquisition for our newly repositioned Tallahassee store, adding Can-Am and Sea-Doo to the product line. The structural changes we are making today—from Clear Price to the structural cost reductions and to our debt refinancing—we are building a leaner, more resilient business. When discretionary demand rebounds and the broader powersports cycle returns to positive, we stand to benefit from the substantial and growing operating leverage inherent in our dealership model.

I want to thank our entire team across the organization for their dedication and resilience, and with that I’ll turn the call over to Josh for a detailed review of our third quarter results.

Joshua Barsetti (Executive Vice President)

Thanks, Mike, and good afternoon, everyone. I’ll start by reviewing our financial results for the third quarter 2026, followed by an overview of our balance sheet for the quarter. Same-store sales, which excludes the stores permanently closed from September 30, 2025 through September 30, 2026 and any fleet-related units, generated total revenue of $241.4 million compared to $262 million in the prior-year quarter. During the quarter we sold 12,182 new and pre-owned units, down 1,486 units, or 10.9%, from the same quarter last year.

Total new retail unit sales were 8,127, down 1,037 units, or 11.3%, compared to Q3 of last year, and pre-owned retail units totaled 4,055, down 449 units, or 10%. New unit gross margins decreased to 13.1% for the quarter compared to 13.8% for the same quarter last year. Pre-owned gross margins decreased from 15.7% in last year’s third quarter to 15.4% in the third quarter of the current year, driven by shifts in product mix to lower-margin products during the current quarter.

Total same-store gross profit was $65.8 million this year compared to $72 million in the prior year, an 8.6% decrease. On a consolidated basis, adjusted EBITDA decreased to $5.3 million from $12.3 million in the third quarter of 2025, and adjusted SG&A expenses decreased $3.8 million to $57.7 million, or 88.1% of gross profit, compared to $61.5 million, or 80.9% of gross profit, in the third quarter of the prior year. Our fixed operations business, consisting of parts, service, and accessories, delivered $47.1 million in revenue and $22.3 million in gross profit.

Additionally, our finance and insurance teams delivered $21.7 million in gross profit. For the nine months ended September 30th, same-store revenue was up $18.1 million to $791.9 million as compared to $773.8 million in the prior-year period. Gross profit was $220.4 million in the first nine months of the year compared to $217.2 million in the prior-year period. Turning to the balance sheet, we ended the quarter with $47.6 million in total cash inclusive of restricted cash. Additionally, on September 25th we refinanced our Oaktree term loan with a $220 million facility with affiliates of Centerbridge. The new debt matures in September of 2031 and bears interest at Term SOFR with a floor of 3% plus a margin of 8.375%. As part of the refinance, we recognized $5.7 million as a loss on extinguishment of debt in our consolidated financial statements.

This agreement provides us with the runway to execute our strategic initiatives, removes the restricted milestones in our prior credit agreement, and allowed us to refinance our debt without further dilution of our stock. Additionally, we are currently in advanced discussions of closing on an asset-based lending facility with Wells Fargo that will allow for further flexibility as we continue to reshape the business, although there can be no assurance the company will enter into the ABL facility on similar terms or at all.

At the end of the quarter, our availability under short-term revolving floor plan credit facilities totaled approximately $101.8 million, and total available liquidity, defined as total cash plus availability under floor plan credit facilities, totaled $149.4 million at the end of the quarter. Additionally, non-vehicle net debt was $203.7 million. Cash outflows from operating activities were $41.7 million for the nine months ended September 30, 2026, and adjusted free cash flow was $14.2 million compared to $5.2 million for the same period in the prior year.

With that, we’d like to begin the question and answer session. I’ll turn the call back over to the operator now to open the lines.

OPERATOR

Thank you, ladies and gentlemen. We will now begin the question and answer session. Should you have a question, please press the star key followed by the number one on your touchtone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press the star key followed by the number two. One moment please, while we assemble the queue. Your first question comes from Craig Kennison of Baird.

Please go ahead.

Craig Kennison (Analyst)

Hey, good afternoon. Thanks for taking my question. Wanted to ask about Clear Price. Are you sure, or how can you be sure, that you lost share? In other words, consumers just saw the price and went somewhere else versus maybe deferred a purchase and could come back once they discover the price isn’t really different?

Michael Quartieri (Chief Executive Officer)

Good question. I think the way we took an approach of it is we’ve looked at the last four months of sales and looked at those year-over-year changes, and when we adopted in early August, that month’s operating results were materially down from the prior year. When we look at July, September, and October, we’re seeing what we think is a more normalized operating environment, which is somewhere around the mid to low single-digit decline from a unit volume year over year at this point.

Craig Kennison (Analyst)

Got it. And maybe what percentage of your competition today do you think has evolved towards more of a Clear Price model?

Michael Quartieri (Chief Executive Officer)

It’s really functional by region. So here in the Phoenix market, the vast majority of our direct competitors are FTC compliant. And we see that as we price compare across all of the competitors on a daily, if not every other day basis. When you look broader across the industry in the, call it, more Texas area, in the Florida area, maybe back on the East Coast where our two other hubs are, very little amount of those dealerships are actually FTC compliant.

Craig Kennison (Analyst)

Thank you. And maybe one more question. Does Clear Price mean no haggle, or is it still a starting point for a negotiation with the customer?

Michael Quartieri (Chief Executive Officer)

It’s still a starting point. What it doesn’t allow the dealership to do is to put an MSRP out there—that is strictly what the OEM is telling you—and then get you in to then charge you on freight, setup, doc fees, which could be adding a couple of additional thousand dollars to that unit.

Craig Kennison (Analyst)

Yeah, I was going to ask, what would you say the general either percentage impact or dollar impact of moving to Clear Price? When you see it online, how does that price compare

Michael Quartieri (Chief Executive Officer)

Look, I’ll give it to you in these terms. So when we’re looking at our gross profit margins right now, we’re seeing about a 2% overall decline, which is the combination of two factors. And this is where it gets a little bit difficult to bifurcate between just Clear Price and the environment that we’re in because of this macro headwinds and slowdown that you saw in Q3. It happened, unfortunately, right at the time when we’re rolling off a ’26 product into the ’27 product models.

The ’26 product models are no longer MAP protected. You have inventory that’s slightly above—or I should say at elevated levels—which is no longer then MAP protected. So dealerships are moving that inventory to make room for ’27, which is having an unfortunate negative impact on the gross margin. That then, coupled with competitors that are not FTC compliant that are showing these artificially deflated prices, just contributes to that. I think what will happen is over the course of the next, I’m going to say, six months to nine months or so, I think eventually the FTC is going to nail someone.

And we just wanted to make sure that whoever that person was that got nailed wasn’t us as the largest dealership group in North America—or I should say in the U.S. for sure—and as the one publicly traded one. That was a target that we just weren’t going to allow to be on our chest.

Craig Kennison (Analyst)

Yeah, that makes sense. Well, thank you very much.

Michael Quartieri (Chief Executive Officer)

You got it. Thanks for the questions.

OPERATOR

The next question comes from Eric Wold of Texas Capital. Please go ahead.

Eric Wold (Analyst)

Thanks. Good afternoon. A couple questions. I guess first off, maybe give us a sense of the kind of the health of your inventory balance of new vehicles right now, how you feel that’s positioned heading into year end. Kind of what the promotional help environment looks like from OEM right now.

Michael Quartieri (Chief Executive Officer)

Yeah. So currently we are a little elevated on our new—a little bit over five months. And as you can imagine, with the sales volume decline we saw in August, that’s partially the reason for that elevated inventory. The OEMs are increasing their support and promotions associated with that inventory. They want the ’27 product out there just as much as everybody else does. So there is help there. We have taken our own internal steps to make sure that our ordering is in line and that our overall inventory remains where we want it.

Even though it’s elevated a little bit right now, we’re expecting that by the end of Q1 we should be back in line with where we need to be and ready for the selling season that comes after that. On the used side, we’re fine. It’s new where we’re a little bit elevated at this point.

Eric Wold (Analyst)

Perfect. And then the question was kind of around the used. What does the environment look like right now to get your hands on used vehicles, premium vehicles that you want, in terms of competition for those vehicles? And are you— that inventory balance kind of where you want to be right now into next year, or do you still think you need to bulk that up a little bit into the spring selling season?

Michael Quartieri (Chief Executive Officer)

Yeah, I do think we need to bulk it up a little bit as we head into the selling season. So we’re good with where we are now, but we are definitely looking to increase it. I would say that right now it is difficult to find good quality used inventory. And I think that’s the same across the whole industry at this point. So we do have, you know, as you all are aware, our cash offer tool and some other unique ways to source that inventory. And so we’re looking to take advantage of that as we head into this off season here to bulk up where we need to and get good quality used product that we can turn quickly as we enter the selling season.

Eric Wold (Analyst)

Perfect. Thank you.

OPERATOR

There are no further questions at this time. Ladies and gentlemen, that concludes today’s conference call. Thank you for your participation. You may now disconnect.

Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company’s SEC filings and official press releases. Corporate participants’ and analysts’ statements reflect their views as of the date of this call and are subject to change without notice.