Ladies and gentlemen, thank you for standing by and welcome to the RumbleON Second Quarter 2020 Earnings Call. [Operator Instructions] I would now like to hand the conference over to our speaker today, Whitney Kukulka. Please go ahead.

Thank you, operator. Good morning, ladies and gentlemen. Thank you for joining us on this conference call to discuss RumbleON’s second quarter 2020 financial results. Joining me on the call today are Marshall Chesrown, Chairman and Chief Executive Officer; and Steve Berrard, Chief Financial Officer. Full details of our results and additional management commentary are available in our earnings release, which can be found on the Investor Relations section of the website at investors.rumbleon.com. Please note that this call will be simultaneously webcast on the Investor Relations section of the company’s corporate website. This conference call is the property of RumbleON and any taping or other reproduction is expressly prohibited without prior written consent. Before we start, I would like to remind you that the following discussion contains forward-looking statements, including, but not limited to RumbleON’s market opportunities and future financial results that involve risks and uncertainties that may cause actual results to differ materially from those discussed here. Additional information that could cause actual results to differ from forward-looking statements can be found in RumbleON’s periodic SEC filings. The forward-looking statements and risks in this conference call, include responses to your questions are based on current expectations as of today and RumbleON assumes no obligation to update or revise them, whether as a result of new developments or otherwise, except as required by law. Also the following discussion may contain non-GAAP financial measures. For a reconciliation of these non-GAAP financial measures, please see our periodic SEC filings. And now, I will turn the call over to Marshall. Marshall?

Thanks, Whitney. Good morning, everyone. Thanks for joining our call today. I hope you and your loved ones are staying safe and healthy. We’ve demonstrated solid progress on our march to profitability the past several quarters. And I'm pleased to report that we generated double-digit gross margin for the first time in our history and reported positive net income of $1 million in the quarter despite the challenging macroeconomic backdrop. In 2019, we demonstrated our ability to rapidly scale RumbleON and set our sights on achieving profitability. We have taken prescriptive measures to drive gross margin expansion, gross profit per unit improvements and reduce operating expenses since then. And our second quarter results are more evidence of our ability to rationalize our expense profile and take advantage of market trends cost effectively. It's been about six weeks since our last call and even in just that short time, a lot has changed in our economy. For many customers, selling or buying a vehicle is an important component of their business or personal needs. Our online technology allows dealers and consumers to sell or buy a vehicle without ever coming into physical contact with another person. We believe this is the safest way to transact, and it certainly appears to be the way of the future. Our touchless buying and selling processes allowed dealers and consumers to buy or sell a vehicle from their business or home, complete their transaction on their phone, tablet or computer, and have the vehicle picked up or delivered without coming into physical contact with anyone along the way. There's no doubt that COVID-19 pandemic has created headwinds in the industry, but there are also tailwinds and new opportunities being created. Thus far in the third quarter, we are experiencing the highest online activity, strongest demand,…

Thank you, Marshall. Our Q2 results are detailed in the press release we issued this morning. So I will address some of the key metrics and the progress being made towards achieving our profitability targets. Additional supplemental information is available in our second quarter Form 10-Q, which we filed after the market closes today. While we are experiencing COVID related headwinds, that are consistent with the broader industry, we've been quick to adapt and are using the market trends to our advantage. Long before COVID, we made the decision to take prescriptive steps to accelerate profitability by taking a disciplined approach to vehicle acquisition and sales volume in favor of gross margin. We are beginning to experience meaningful progress towards our goal of achieving sustainable profitability. As a reminder, in Q2 of last year, we reported revenues record unit sales of 13,928 and recorded revenue of $270.2 million, making top line year-over-year comparisons challenging. We believe that by prioritizing our near-term profitability, goals and despite the adverse impact of significantly reduced commercial activity from the COVID-19 pandemic, which resulted in a decrease in unit purchases and sales of vehicles, our results demonstrate the operational improvements we’ve made across the organization. For the three months ended June 30, 2020, we saw 3,694 units and generated revenue of $84.3 million. Out total overall gross margin of 10% included a gross margin on vehicles sold of 8.5% for a profit of $1,752 per vehicle, a 74% increase over the same period of 2019. Both the gross margin and gross profit per unit was the highest in the company's history and were driven by particularly strong gross margin from sales to dealers, reducing our inventory levels early in the pandemic, leveraging our technology and robust database to acquire high margin inventory and supply and…

[Operator Instructions] Our first question comes from the line of Ron Josey with JMP Securities. Go ahead please. Your line is open.

Great. Thanks for taking the question. Hi, Marshall. Hi, Steve. I've got three questions that there's a rifle through them, and we can go one-by-one, but at least provide the topics. So first question, Marshall, can you talk just about the quarterly cadence? Understood the April, May and June commentary, but maybe give us some insight on July and August. That would be helpful, just given your commentary around highest online activity and strongest demand. And then the second question is on Rumble 3.0. You said launching in the next coming days, you just talk about the rollout here, the focus on powersports only, what needs to happen to expand the auto? And then, Steve, you just sort of reiterated one of the benefits was to focus on less margin commitment here. Can you just expand that a little bit more as to why that's the case? And then the last question, hopefully this makes sense. Just on CarGurus, can you provide just some update on the pilot in terms of how CarGurus is helping the -- helping dealers source more customer inventory, specifically, maybe talk about the rollout process, how CarGurus is promoting a product? I think it's just a pilot Massachusetts, but just any feedback and how this could expand would be helpful. So quarterly cadence, Rumble 3.0 and margins, and then CarGurus, that'd be helpful. Thank you guys.

Okay, great. This is Marshall. I'll take -- I'll start there with the beginning. Yes, I think what we described as far as the cadence of April and May and into June is kind of setting the tone for where it's headed. Keep in mind when we had the tornado loss, COVID is one thing, COVID would have for a short period of time slowed down demand. And we would have been still sitting with inventory, but just prior to COVID, we lost about 70% of our automotive capacity due to the tornado. So -- and continue to work through that in a very efficient -- in a very efficient manner. We believe here within the next couple of weeks, we'll have a very, very small percentage of those vehicles left to liquidate. So with that said, I think that you've heard from others, we're experiencing the same thing. Business has been vibrant to say the least. The dealer demand out there because -- I believe because of their lack of new vehicle inventory has been excessive. Typically in the last, say 30 days, we'll see, 3x the amount of dealers inquiring on purchase of our vehicles. And so the inventory turn is also been as vibrant as we have seen it. We developed a lot of software along the way. I think we discussed a couple of quarters ago about a software tool that we developed that can look at masses of inventory and determine individual opportunities, and we utilize that software today in a very, very big way. And it does allow us to acquire inventory sometimes in remote locations that has been extremely profitable and effective. So we're excited about Q3, but there's still a lot of the quarter left. And we are starting to see a…

Ron, just to touch on the margins, I think Marshall approached it a little bit with the tools that we've created, allowing us to go back through those 500,000 cash offers that we received. If we're looking for something that's trending in the market, we're able to go back and solve those offers. Since those people in many respects have not yet sold the vehicle. We've also changed our pay plan. Now we've got the Wholesale link business well integrated and tucked in. We've changed our pay plan that is much more margin driven and the fact that we're not chasing after top line growth necessarily at the expense of margins, I think we've been more disciplined in what we buy when we buy it and how we buy it.

That's great. Thank you, guys. Appreciate it.

I might add, Ron, just one more thing. I might add with regards to gross margin. Obviously, we don't feel we are competitors with the likes of Vroom and Carvana and CarMax, but for whatever reason, because we're in the space, everybody wants to do comparisons. And with regards to gross margin, I'd urge you to look at Q2 results being primarily dealer driven. And again, remember powersports have a -- and they're in our numbers. Powersports have one-third of the ASP that a car does, but yet I think the spread as I saw it in Q2 was Carvana at 27.26, RumbleON at 22.89, Vroom at 6.86. And the only reason I point that out is because if you look at -- you guys have heard me say before, if you look at the SG&A and the expense from infrastructure, people, marketing, name it, to create a dealer sale versus a retail sale, it's world different. And what we've been able to do is turn inventory extremely fast because of this ultra high dealer demand. And again, that's what I mentioned earlier that we think that will normalize, but I would tell you it has not normalized as of yet. So with that, that's -- is there anything else Ron, from you?

I'll just go back in the queue. Thank you. Very helpful.

And with that, ladies and gentlemen, we do conclude today's conference. We thank you for joining. You may now disconnect.