RideNow (RDNW) Q3 2026 earnings review
RideNow extends its debt to 2031, but vehicle sales drop
RideNow, the largest US powersports dealership chain, solved its debt deadline while its showroom sales fell sharply. Sales at stores open a year ago dropped 8%, ending four quarters of gains, and profit before interest, taxes, depreciation and one-offs fell by more than half to $5.3 million. Chief executive Michael Quartieri blamed the August rollout of an upfront pricing policy called Clear Price, which cost RideNow sales against rival dealers still advertising prices without fees.
| Sales at stores open a year ago | -7.9% +3.0% last quarter |
|---|---|
| Total revenue | $244.3M -13.1% from a year ago |
| Profit before interest, taxes, D&A and one-offs | $5.3M $12.3M a year ago |
| Q4 operating cash profit outlook | Above $5.3M $9.7M in Q4 last year |
⚖️ Verdict: 🔴 Bearish
The story got worse because a five-quarter profit turnaround broke just as unsold inventory climbed to $329 million, up 24% from a year ago by our math. Even though Quartieri expects fourth-quarter operating cash profit to beat the third quarter, that floor still sits far below last year's $9.7 million. The good news: closing a new $220 million term loan due in 2031 removes the November 2026 refinancing deadline.
The question now is whether the third-quarter sales drop was a brief adjustment to upfront pricing or a broader pullback by powersports buyers that will force winter discounting. If shoppers accept the new pricing, vehicle sales will recover without hurting margins; if demand stays weak, clearing the $329 million inventory pile will squeeze profit per vehicle. Fourth-quarter unit sales and year-end inventory will tell.
🐂 Bull Case
New Term Loan Removes the 2027 Maturity Wall
RideNow's biggest near-term risk was a November 2026 deadline to refinance its term loan before a September 2027 maturity. The powersports dealer settled that risk by closing a new $220 million senior secured term loan due in September 2031.
The company also "entered into advanced discussions for a new $50.0 million senior secured asset-based revolving credit facility" to add cash cushion, and availability on its vehicle financing lines rose to $101.8 million. With the debt deadline cleared, chief executive Michael Quartieri restarted dealership purchases and "completed an accretive tuck-in acquisition of a dealership in Tallahassee, Florida" for $4.1 million in cash.
What to watch: the interest rate on the new $220 million loan in the quarterly filing. A lower rate than the old 11.7% loan will cut the $9.0 million quarterly interest bill and help return the business to profit.
Per-Vehicle Profit Rose as Repair Work Held Up
For two quarters, profit per vehicle sold at stores open at least a year had been shrinking because buyers spent less on financing and repairs. This quarter that trend reversed: total gross profit per retail vehicle at those stores rose 2.5% from a year ago to $5,401.
Repair and parts work carried the improvement. While vehicle unit sales at existing stores fell 10.9%, gross profit from parts, service and accessories dipped only 0.4% to $22.9 million. By our math, parts and service gross profit per retail vehicle jumped 11.7% from a year ago, and finance and insurance profit per vehicle edged up 1.5%.
What to watch: gross profit per retail vehicle in the fourth quarter. Holding above $5,000 as vehicle volume recovers would show that the new pricing model does not hurt repair or financing attachment.
🐻 Bear Case
Upfront Pricing Drove a Sharp Drop in Vehicle Sales
"While the August rollout impacted our retail volume against non-compliant competitors during the quarter, we believe it is the right move to build long-term customer trust," chief executive Michael Quartieri said. Clear Price is RideNow's new upfront pricing policy, which it "proactively introduced to align with recent Federal Trade Commission ("FTC") guidance and enforcement priorities regarding vehicle pricing and fee transparency".
- Total revenue: $244.3 million, down 13.1% from a year ago
- Sales at stores open a year ago: $241.4 million, down 7.9% after four quarters of growth
- New vehicle units at existing stores: 8,127, down 11.3% from a year ago
- Pre-owned vehicle units at existing stores: 4,055, down 10.0% from a year ago
Early in the third quarter, before the August price change, sales at existing stores were down only slightly. Ending the quarter down 7.9% means volume fell much harder once RideNow advertised all-in prices while rival dealers kept advertising lower prices without fees. Quartieri said fourth-quarter sales are rebounding as shoppers learn the new pricing, but competitors face no hard deadline to match it.
What to watch: fourth-quarter unit sales at stores open a year ago. A smaller drop than 10.9% would back up Quartieri's claim that shoppers are accepting the upfront prices.
Unsold Vehicles Keep Piling Up on the Lots
Powersports dealers normally sell down their showroom stock in the late summer after building it up for spring. In the third quarter of last year, RideNow cut its vehicle and parts inventory by $8.9 million from the second quarter.
This quarter, as retail unit sales dropped 16.6%, unsold stock went the wrong way. Inventory rose by $20.9 million from June to $329.2 million, up 23.8% from a year ago by our math. Part of the increase came from the Tallahassee dealership purchase, but stock has now climbed $71.8 million since December while nine-month revenue fell 2.9%. Carrying bloated stock into winter forces dealers to discount new vehicles, and new-vehicle gross margin at existing stores already slipped 0.6 percentage points from a year ago to 13.1% by our math.
What to watch: year-end inventory and new-vehicle gross margin in the fourth quarter. A failure to bring stock down toward last December's $257.4 million level would point to deeper discounting in 2027.
Overhead Cuts Did Not Match the Drop in Sales
Tight cost control was the centerpiece of RideNow's turnaround over the past five quarters, as overhead fell steadily as a share of gross profit. This quarter the drop in showroom traffic overwhelmed those savings.
Selling, general and administrative expenses — store payroll, rent and corporate overhead — fell $4.8 million from a year ago to $59.6 million. Because revenue fell much faster, overhead rose by 1.5 percentage points of revenue to 24.4% by our math. Excluding one-offs, overhead took 88.1% of gross profit, up from 80.9% a year ago and 74.1% last quarter. Operating profit before interest, taxes, depreciation and one-offs (Adjusted EBITDA) fell 56.9% to $5.3 million.
What to watch: overhead excluding one-offs as a share of gross profit in the fourth quarter. A reading back below 84.5% (last year's fourth quarter) will show whether the new cost cuts can restore profit margins on lower winter sales.
Risks this quarter didn't answer
Three standing governance and supplier risks are not detailed in the earnings release and await the quarterly filing.
- Related-party leases and loans: the release shows a $0.2 million lease adjustment, while the filing will confirm whether the company finished winding down its director-linked vehicle credit line and high-interest director loans.
- Supplier concentration: the quarterly filing will show whether the top three vehicle makers still account for over 60% of sales and how much promotional support they provided.
- Former chief executive lawsuit: RideNow spent $1.6 million on non-operating legal and other costs this quarter; the filing's legal footnote will update the $57.5 million termination claim.
👓 Other Themes
Cost-Cutting Target Extended Through 2027
Alongside weak consumer discretionary spending across the powersports industry, chief executive Michael Quartieri expanded his internal cost-cutting plan. RideNow cut annualized expenses by $4.6 million during the third quarter and expects to "yield an incremental $10 million of run-rate cost savings as we exit 2027".
💲 Other KPIs
Up 16.8% from $174.4 million in the second quarter by our math, and up 7.6% since December. Non-vehicle net debt is total long-term debt principal minus unrestricted cash. The balance rose because unrestricted cash dropped by $17.5 million during the quarter while the refinancing added $11.8 million to debt principal.
Cash used in operations worsened by $14.0 million in the third quarter by our math, bringing the nine-month outflow to $41.7 million against a $15.5 million inflow a year ago. Even under RideNow's custom cash measure — which adds back $58.4 million of vehicle financing — third-quarter cash flow was negative $6.6 million by our math.
Swung from a $6.5 million profit in the second quarter and widened from a $4.1 million loss a year ago. The third-quarter loss includes a $5.7 million loss on paying off the old term loan and $5.8 million of refinancing transaction fees; excluding both, the net loss was $2.4 million by our math.
🔮 Guidance
Cut. Chief executive Michael Quartieri said the company continues to "expect Q4 Adjusted EBITDA to outpace Q3, bucking our typical seasonal trend". While that points to a sequential step-up from the third quarter's depressed $5.3 million, it steps down from earlier commentary for strong second-half earnings: clearing $5.3 million still leaves fourth-quarter profit well below last year's $9.7 million.
❓ Key Questions
What is the interest rate on the new term loan?
The release announces the $220 million loan maturing in 2031 but omits the interest rate. The old loan cost 11.7%, and every percentage point saved is worth $2.2 million a year in pre-tax cash.
How much did existing-store sales rebound in October?
Management said fourth-quarter sales are rebounding as shoppers get used to Clear Price. Investors need the October unit and revenue growth rates at existing stores to judge whether the August drop was a one-time shock.
How much third-quarter inventory came from the Tallahassee buyout?
Total inventory rose $20.9 million during a quarter when it usually falls. Separating the acquired Tallahassee stock from existing-store stock will show whether unsold vehicles are backing up on dealer lots.
Were the director-owned loans paid off in the refinancing?
Directors previously lent $10 million in 13% payment-in-kind notes to help pay down the old term loan. The quarterly filing must clarify whether the new $220 million facility retired those costly related-party notes.