Rubicon Reports First Quarter 2024 Financial Results
Rubicon Technologies (NYSE: RBT) reported its Q1 2024 financial results with significant developments. Revenue for the quarter was $166.1 million, down 8.3% from $181.1 million in Q1 2023. However, gross profit increased by 8.2% to $10.1 million. Adjusted EBITDA showed a 20.9% improvement, reducing net losses to $17.2 million from $9.5 million. Rubicon sold its fleet technology unit to Rodina Capital for $94.2 million, enhancing its financial stability. The firm also secured a new contract in the grocery sector, providing waste services to 500+ stores across North America.
- Gross profit increased by 8.2% to $10.1 million.
- Adjusted EBITDA improved by 20.9%, indicating better operational efficiency.
- Gross profit margin rose to 6.1%, up by 93 basis points.
- Secured a new contract in the grocery sector, expanding services to over 500 stores.
- Sale of fleet technology unit to Rodina Capital added $94.2 million, improving liquidity and reducing debt.
- Revenue decreased by 8.3% to $166.1 million.
- Net loss widened to $17.2 million from $9.5 million in Q1 2023.
- Adjusted Gross Profit saw only a modest increase of 5.9%, reflecting operational improvement.
Insights
The financial results of Rubicon Technologies demonstrate mixed outcomes. While revenue decreased by
Short-term, investors might experience volatility due to the transition and restructuring efforts, but long-term prospects could be positive if the company continues to streamline operations and focuses on its core business. The company's transformation strategy, including the sale to Rodina Capital and issuance of convertible preferred stock, should enhance liquidity and potentially accelerate growth.
The sale of the fleet technology business unit is notable as it aligns Rubicon with its core strengths in waste and recycling services. This strategic divestiture to Rodina Capital, along with the issuance of
Additionally, the emphasis on sustainability and reducing environmental impact resonates well with current market trends and consumer preferences. Rubicon's focus on sustainability and zero waste solutions can be a unique selling point that differentiates it from competitors.
While the short-term impact may involve transition challenges, the long-term outlook appears promising as the company leverages newfound financial agility to enhance its competitive edge. Investors should monitor how effectively Rubicon integrates these changes and delivers on its promises of profitability and growth.
First Quarter 2024 Financial Highlights Including Discontinued Operations
-
Revenue was
$166.1 million $15.0 million 8.3% compared to$181.1 million -
Gross Profit was
$10.1 million $0.8 million 8.2% compared to$9.3 million -
Adjusted Gross Profit was
$17.1 million $1.0 million 5.9% compared to$16.1 million -
Gross Profit Margin was
6.1% , an increase of 93 bps compared to5.2% in the first quarter of 2023. -
Adjusted Gross Profit Margin was
10.3% , an increase of 138 bps compared to8.9% in the first quarter of 2023. -
Net Loss was
$(17.2) million $7.7 million 81.5% compared to$(9.5) million -
Adjusted EBITDA was
$(11.0) million $2.9 million 20.9% compared to$(14.0) million
Operational and Business Highlights
-
On May 7, 2024 the Company announced that it had sold its fleet technology business and issued convertible preferred stock in
Rubicon to Rodina Capital, a private investment firm based inFlorida , in a sale with a total transaction value of$94.2 million $61.7 million $12.5 million $20.0 million -
Rubicon participated in a competitive evaluation and won a significant contract with a new customer in the grocery sector at the beginning of the second quarter. Providing waste and recycling services to over 500 stores acrossthe United States andCanada , this is a valuable contract forRubicon , with strong potential for incremental growth opportunities along the way. This customer is already experiencing the full benefits of Rubicon’s platform for scalable waste and recycling services, which supports their efforts to reduce environmental impact while providing exceptional value and service to their own customers. As a leader in sustainability with multiple waste streams, this customer’s needs and values align with whatRubicon does best, reducing costs and increasing diversion rates.Rubicon has achieved both with other grocery customers, and we look forward to driving similar results with this new relationship.
Sale of Fleet Technology Business Unit
On May 7, 2024,
These transactions are transformational for the Company, ensuring Rubicon’s long-term viability, improving its balance sheet by reducing debts and providing additional liquidity to enable the Company to quickly achieve its business objectives, accelerate its journey to profitability, and continue growing its core business. Importantly, it marks a return to Rubicon’s core principles, a business centered on a customer-focused approach that has been instrumental in the Company’s growth from the outset. This strategic move underscores Rubicon’s dedication to the RUBICONConnect™ product, which serves commercial waste generators from small to medium-sized businesses to Fortune 500 companies. Many of the Company’s commercial customers are looking to
“We are pleased to report our results for the first quarter, demonstrating our continued momentum through year-over-year Adjusted EBITDA improvement on our path to profitability. This performance is a testament to the dedication and hard work of our team, as well as the trust and support of our customers,” said Phil Rodoni, Chief Executive Officer of
Webcast Information
The Rubicon Technologies, Inc. management team will host a conference call to discuss its first quarter 2024 financial results this afternoon, Monday, May 20, 2024, at 5:00 p.m. ET. The call can be accessed via telephone by dialing (929) 203-2112, or toll free at (888) 660-6863, and referencing Rubicon Technologies, Inc. A live webcast of the conference will also be available on the Events and Presentations page on the Investor Relations section of Rubicon’s website (https://investors.rubicon.com/events-presentations/default.aspx). Please log in to the webcast or dial in to the call at least 10 minutes prior to the start of the event.
About
Non-GAAP Financial Measures
This press release contains “non-GAAP financial measures,” including Adjusted Gross Profit, Adjusted Gross Profit Margin and Adjusted EBITDA, which are supplemental financial measures that are not calculated or presented in accordance with generally accepted accounting principles (GAAP). Such non-GAAP financial measures should not be considered superior to, as a substitute for or alternative to, and should be considered in conjunction with, the GAAP financial measures presented in this press release. The non-GAAP financial measures in this press release may differ from similarly titled measures used by other companies. Definitions of these non-GAAP financial measures, including explanations of the ways in which Rubicon’s management uses these non-GAAP measures to evaluate its business, the substantive reasons why Rubicon’s management believes that these non-GAAP measures provide useful information to investors and limitations associated with the use of these non-GAAP measures, are included under “Use of Non-GAAP Financial Measures” after the tables below. In addition, reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are included under “Reconciliations of Non-GAAP Financial Measures” after the tables below.
Forward-Looking Statements
This press release includes “forward-looking statements” within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995 and within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of present or historical fact included in this press release, are forward-looking statements. When used in this press release, the words “could,” “should,” “will,” “may,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “project,” the negative of such terms and other similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. Such forward-looking statements are subject to risks, uncertainties, and other factors which could cause actual results to differ materially from those expressed or implied by such forward-looking statements. These forward-looking statements are based upon current expectations, estimates, projections, and assumptions that, while considered reasonable by
RUBICON TECHNOLOGIES, INC. AND SUBSIDIARIES
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Three Months Ended March 31, |
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|
|
2024 |
|
2023 |
||||
Revenue: |
|
|
|
|
|
|
||
Service |
|
$ |
147,252 |
|
|
$ |
164,324 |
|
Recyclable commodity |
|
|
15,810 |
|
|
|
14,733 |
|
Total revenue |
|
|
163,062 |
|
|
|
179,057 |
|
|
|
|
|
|
|
|
||
Costs and Expenses: |
|
|
|
|
|
|
||
Cost of revenue (exclusive of amortization and depreciation): |
|
|
|
|
|
|
||
Service |
|
|
140,347 |
|
|
|
157,514 |
|
Recyclable commodity |
|
|
14,055 |
|
|
|
13,187 |
|
Total cost of revenue (exclusive of amortization and depreciation) |
|
|
154,402 |
|
|
|
170,701 |
|
Sales and marketing |
|
|
1,688 |
|
|
|
2,445 |
|
Product development |
|
|
6,625 |
|
|
|
7,441 |
|
General and administrative |
|
|
13,086 |
|
|
|
18,188 |
|
Gain on settlement of incentive compensation |
|
|
- |
|
|
|
(18,622 |
) |
Amortization and depreciation |
|
|
931 |
|
|
|
1,113 |
|
Total Costs and Expenses |
|
|
176,732 |
|
|
|
181,266 |
|
Loss from Operations |
|
|
(13,670 |
) |
|
|
(2,209 |
) |
|
|
|
|
|
|
|
||
Other Income (Expense): |
|
|
|
|
|
|
||
Interest earned |
|
|
32 |
|
|
|
1 |
|
Gain (loss) on change in fair value of warrant liabilities |
|
|
10,577 |
|
|
|
(55 |
) |
Gain on change in fair value of earnout liabilities |
|
|
111 |
|
|
|
4,820 |
|
Loss on change in fair value of derivatives |
|
|
(1,299 |
) |
|
|
(2,198 |
) |
Gain on service fee settlements in connection with the Mergers |
|
|
- |
|
|
|
632 |
|
Loss on extinguishment of debt obligations |
|
|
- |
|
|
|
(2,103 |
) |
Interest expense |
|
|
(10,750 |
) |
|
|
(7,176 |
) |
Related party interest expense |
|
|
(522 |
) |
|
|
(593 |
) |
Other expense |
|
|
(951 |
) |
|
|
(421 |
) |
Total other income (expense) |
|
|
(2,802 |
) |
|
|
(7,093 |
) |
Loss from continuing operations before income taxes |
|
|
(16,472 |
) |
|
|
(9,302 |
) |
|
|
|
|
|
|
|
||
Income tax expense |
|
|
12 |
|
|
|
16 |
|
Net loss from continuing operations |
|
|
(16,484 |
) |
|
|
(9,318 |
) |
Discontinued operations: |
|
|
|
|
|
|
||
Loss from discontinued operations before income taxes |
|
|
(669 |
) |
|
|
(133 |
) |
Income tax expense |
|
|
- |
|
|
|
- |
|
Net loss from discontinued operations |
|
|
(669 |
) |
|
|
(133 |
) |
Net loss |
|
$ |
(17,153 |
) |
|
$ |
(9,451 |
) |
Net loss from continuing operations attributable to noncontrolling interests |
|
|
(1,437 |
) |
|
|
(6,234 |
) |
Net loss from continuing operations attributable to Class A common stockholders |
|
$ |
(15,047 |
) |
|
$ |
(3,084 |
) |
Net loss from discontinued operations attributable to noncontrolling interests |
|
|
(45 |
) |
|
|
(88 |
) |
Net loss from discontinued operations attributable to Class A common stockholders |
|
$ |
(624 |
) |
|
$ |
(45 |
) |
|
|
|
|
|
|
|
||
Net loss from continuing operations per Class A Common share – basic and diluted |
|
$ |
(0.33 |
) |
|
$ |
(0.41 |
) |
Net loss from discontinued operations per Class A Common share – basic and diluted |
|
$ |
(0.01 |
) |
|
$ |
(0.01 |
) |
Weighted average shares outstanding – basic and diluted |
|
|
46,068,599 |
|
|
|
7,427,116 |
|
Use of Non-GAAP Financial Measures
Adjusted Gross Profit and Adjusted Gross Profit Margin
Adjusted Gross Profit and Adjusted Gross Profit Margin are considered non-GAAP financial measures under the rules of the
Adjusted EBITDA
Adjusted EBITDA is considered a non-GAAP financial measure under the rules of the SEC because it excludes certain amounts included in net loss calculated in accordance with GAAP. Specifically, the Company calculates Adjusted EBITDA by GAAP net loss adjusted to exclude interest expense and income, income tax expense and benefit, amortization and depreciation, gain or loss on extinguishment of debt obligations, equity-based compensation, gain or loss on change in fair value of warrant liabilities, gain or loss on change in fair value of earn-out liabilities, gain or loss on change in fair value of derivatives, executive severance charges, gain or loss on settlement of the management rollover bonuses, gain or loss on service fee settlements in connection with the Mergers, other non-operating income and expenses, and unique non-recurring income and expenses.
The Company has included Adjusted EBITDA because it is a key measure used by Rubicon’s management team to evaluate its operating performance, generate future operating plans, and make strategic decisions, including those relating to operating expenses. Further, the Company believes Adjusted EBITDA is helpful in highlighting trends in Rubicon’s operating results because it allows for more consistent comparisons of financial performance between periods by excluding gains and losses that are non-operational in nature or outside the control of management, as well as items that may differ significantly depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which
Adjusted EBITDA has limitations as an analytical tool, and it should not be considered in isolation or as a substitute for analysis of net loss or other results as reported under GAAP. Some of these limitations are:
- Adjusted EBITDA does not reflect the Company’s cash expenditures, future requirements for capital expenditures, or contractual commitments;
- Adjusted EBITDA does not reflect changes in, or cash requirements for, the Company’s working capital needs;
- Adjusted EBITDA does not reflect the Company’s tax expense or the cash requirements to pay taxes;
- although amortization and depreciation are non-cash charges, the assets being amortized and depreciated will often have to be replaced in the future and Adjusted EBITDA does not reflect any cash requirements for such replacements;
- Adjusted EBITDA should not be construed as an inference that the Company’s future results will be unaffected by unusual or non-recurring items for which the Company may make adjustments in historical periods; and
- other companies in the industry may calculate Adjusted EBITDA differently than the Company does, limiting its usefulness as a comparative measure.
Reconciliations of Non-GAAP Financial Measures
The following reconciliations of the non-GAAP financial measures include both continuing and discontinued operations.
Adjusted Gross Profit and Adjusted Gross Profit Margin
The following table presents reconciliations of Adjusted Gross Profit and Adjusted Gross Margin to the most directly comparable GAAP financial measures for each of the periods indicated.
|
|
Three Months Ended |
||||||
|
|
March 31, |
||||||
|
|
2024 |
|
2023 |
||||
|
|
(in thousands, except percentages) |
||||||
Total revenue |
|
$ |
166,075 |
|
|
$ |
181,098 |
|
Less: total cost of revenue (exclusive of amortization and depreciation) |
|
|
155,402 |
|
|
|
171,188 |
|
Less: amortization and depreciation for revenue generating activities |
|
|
573 |
|
|
|
574 |
|
Gross profit |
|
$ |
10,100 |
|
|
$ |
9,336 |
|
Gross profit margin |
|
|
6.1 |
% |
|
|
5.2 |
% |
|
|
|
|
|
|
|
||
Gross profit |
|
$ |
10,100 |
|
|
$ |
9,336 |
|
Add: amortization and depreciation for revenue generating activities |
|
|
573 |
|
|
|
574 |
|
Add: platform support costs(1) |
|
|
6,430 |
|
|
|
6,236 |
|
Adjusted gross profit |
|
$ |
17,103 |
|
|
$ |
16,146 |
|
Adjusted gross profit margin |
|
|
10.3 |
% |
|
|
8.9 |
% |
|
|
|
|
|
|
|
||
Amortization and depreciation for revenue generating activities |
|
$ |
573 |
|
|
$ |
574 |
|
Amortization and depreciation for sales, marketing, general and administrative activities |
|
|
640 |
|
|
|
787 |
|
Total amortization and depreciation |
|
$ |
1,213 |
|
|
$ |
1,361 |
|
|
|
|
|
|
|
|
||
Platform support costs(1) |
|
$ |
6,430 |
|
|
$ |
6,236 |
|
Marketplace vendor costs(2) |
|
|
148,972 |
|
|
|
164,952 |
|
Total cost of revenue (exclusive of amortization and depreciation) |
|
$ |
155,402 |
|
|
$ |
171,188 |
|
(1) |
We define platform support costs as costs to operate our revenue generating platforms that do not directly correlate with volume of sales transactions procured through our digital marketplace. Such costs include employee costs, data costs, platform hosting costs and other overhead costs. |
(2) |
We define marketplace vendor costs as direct costs charged by our hauling and recycling partners for services procured through our digital marketplace. |
Adjusted EBITDA
The following table presents reconciliations of Adjusted EBITDA to the most directly comparable GAAP financial measure for each of the periods indicated.
|
|
Three Months Ended |
||||||
|
|
March 31, |
||||||
|
|
2024 |
|
2023 |
||||
|
|
(in thousands, except percentages) |
||||||
Total revenue |
|
$ |
166,075 |
|
|
$ |
181,098 |
|
|
|
|
|
|
|
|
||
Net loss |
|
$ |
(17,153 |
) |
|
$ |
(9,451 |
) |
Adjustments: |
|
|
|
|
|
|
||
Interest expense |
|
|
10,750 |
|
|
|
7,176 |
|
Related party interest expense |
|
|
522 |
|
|
|
593 |
|
Interest earned |
|
|
(111 |
) |
|
|
(1 |
) |
Income tax expense |
|
|
12 |
|
|
|
16 |
|
Amortization and depreciation |
|
|
1,213 |
|
|
|
1,361 |
|
Loss on extinguishment of debt obligations |
|
|
- |
|
|
|
2,103 |
|
Equity-based compensation |
|
|
563 |
|
|
|
9,302 |
|
(Gain) loss on change in fair value of warrant liabilities |
|
|
(10,577 |
) |
|
|
55 |
|
Gain on change in fair value of earn-out liabilities |
|
|
(32 |
) |
|
|
(4,820 |
) |
Loss on change in fair value of derivatives |
|
|
1,299 |
|
|
|
2,198 |
|
Executive severance charges |
|
|
1,532 |
|
|
|
4,553 |
|
Gain on settlement of Management Rollover Bonuses |
|
|
- |
|
|
|
(26,826 |
) |
Gain on service fee settlements in connection with the Mergers |
|
|
- |
|
|
|
(632 |
) |
Other expenses(3) |
|
|
951 |
|
|
|
421 |
|
Adjusted EBITDA |
|
$ |
(11,031 |
) |
|
$ |
(13,952 |
) |
Net loss as a percentage of total revenue |
|
|
(10.3 |
)% |
|
|
(5.2 |
)% |
Adjusted EBITDA as a percentage of total revenue |
|
|
(6.6 |
)% |
|
|
(7.7 |
)% |
(3) |
Other expenses primarily consist of foreign currency exchange gains and losses, taxes, penalties, fees for certain financing arrangements and gains and losses on sale of property and equipment. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20240520384814/en/
Investor Contact:
Alexandra Clark
Director of Finance & Investor Relations
alexandra.clark@rubicon.com
Media Contact:
Benjamin Spall
Sr. Manager, Corporate Communications
benjamin.spall@rubicon.com
Source: Rubicon Technologies, Inc.
FAQ
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