Full year 2022 Adjusted Gross Profit grew to
$53.3 million, 14% higher compared to 2021. The Company expects to
achieve positive Adjusted EBITDA for Q4 2023.
Rubicon Technologies, Inc. (“Rubicon” or the “Company”) (NYSE:
RBT), a leading digital marketplace for waste and recycling and
provider of innovative software-based products for businesses and
governments worldwide, today reported financial and operational
results for the fourth quarter and full year of 2022.
Fourth Quarter 2022 Financial Highlights
- Revenue was $166.0 million, 2% higher compared to $163.3
million in the fourth quarter of 2021.
- Gross Profit was $6.8 million, 17% higher compared $5.8 million
in the fourth quarter of 2021.
- Adjusted Gross Profit was $13.4 million, which is roughly flat
to the fourth quarter of 2021.
- Net loss was $18.0 million versus a loss of $30.3 million in
the fourth quarter of 2021.
- Adjusted EBITDA was negative $17.6 million versus negative
$19.5 million in the fourth quarter of 2021.
Full Year 2022 Financial Highlights
- Revenue was $675.4 million, which was 16% higher compared to
$583.1 million the full year 2021.
- Gross Profit was $25.0 million for the full year 2022, an
increase of 17% compared to $21.4 million generated in 2021.
- Adjusted Gross Profit was $53.3 million in 2022, an increase of
14% compared to the $46.9 million generated in 2021.
- Net loss for the full year 2022 was $281.8 million versus a
loss of $73.2 million for the full year 2021.
- Adjusted EBITDA for the full year 2022 was a negative $74.3
million, compared to negative $57.7 million in 2021.
Operational and Business Highlights
- Rubicon made substantial progress on the ‘Bridge to
Profitability’ plan during the quarter. This plan seeks to increase
financial flexibility, curtail lower-ROI investments, achieve cost
reductions, and increase profitability. The Company expects to
generate positive Adjusted EBITDA for the fourth quarter 2023.
- Rubicon raised over $39 million of net funded capital and
successfully extended certain debt maturities, with the earliest
maturities now due at the end of this year. The Company also
upsized its revolving credit facility.
- In the fourth quarter, Rubicon signed a two-year extension and
expansion of its contract with Walmart, which has been a flagship
customer since 2013.
- Also in Q4 2022, Rubicon secured a three-year extension with
Sweetgreen, the mission-driven restaurant brand which seeks to
serve healthy food at scale. The partnership is enabling Rubicon to
continue to expand Sweetgreen’s waste diversion efforts and provide
enhanced account management as its lead partner for waste,
recycling, and composting services.
- In February, Rubicon established a multi-year channel sales
partnership with Bartec, for the license of Rubicon’s products
across the UK, furthering progress in the Company’s global
expansion.
- In March, Rubicon announced significant growth within its
RUBICONSmartCity business, adding 11 new customers in Q4 2022
including the cities of Rochester, NY; Manchester, NH: Surprise,
AZ; and Rockville, MD. These cities chose RUBICONSmartCity to help
them save money and run more efficient and effective solid waste
collection operations.
“We are very proud of our achievements to date and are excited
to begin our journey as a publicly traded company. It is a
testament to the dedication and diligence of our team that we have
already demonstrated significant progress against the goals we set
out during our Q3 2022 earnings call,” said Phil Rodoni, CEO of
Rubicon. “We believe we have built the definitive platform for
eliminating waste which enables us to provide a differentiated
service offering to our customers. Our core business is strong, and
we are focused on accelerating the Company’s progress to
profitability while driving Rubicon’s next phase of growth.”
Fourth-Quarter Review
In the fourth quarter, Revenue totaled $166.0 million, an
increase of $2.7 million or 2% from $163.3 million in the fourth
quarter of 2021. This growth was driven primarily by increased
service with both new and existing customers across business
lines.
Gross Profit in the fourth quarter was $6.8 million, 17% higher
compared $5.8 million in the fourth quarter of 2021. The growth in
Gross Profit was driven primarily by increased service with both
new and existing customers across business lines.
In the fourth quarter, Adjusted Gross Profit was $13.4 million,
a decrease of $0.1 million or 1% compared to $13.5 million
generated in the fourth quarter 2021. This decline was driven by
one-time customer expenses but was largely offset by stronger
performance in the SaaS product lines.
Net loss was $18.0 million in the fourth quarter, an improvement
of $12.3 million compared to $30.3 million in the fourth quarter of
2021. Impacts from increased revenue and decrease in general and
administrative expenses as a result of a $10.4 million gain on the
settlement of certain management bonuses contributed to the result
in the fourth quarter of 2022.
In the fourth quarter, Adjusted EBITDA was negative $17.6
million compared to negative $19.5 million in the fourth quarter of
2021. Impacts from the Company’s merger with Founder SPAC (the
“Mergers”) and strategic shift contributed to the result in the
fourth quarter of 2022.
Full-Year 2022 Review
Revenue for the full year 2022 totaled $675.4 million, which was
$92.3 million or 16% higher compared to the full year 2021. This
revenue growth was driven by volume growth in the Company’s core
business.
Gross Profit in 2022 totaled $25.0 million, which was $3.6
million or 17% higher compared to $21.4 million in 2021. The growth
in Gross Profit was driven primarily by continued expansion within
the Company’s existing customer base, as well as the addition of
new customers.
In 2022, Adjusted Gross Profit totaled $53.3 million, an
increase $6.4 million or 14% compared to $46.9 million generated in
2021. This growth was driven primarily by continued expansion
within the Company’s existing customer base, as well as the
addition of new customers.
Net losses totaled $281.8 million in 2022, compared to net
losses of $73.2 million in 2021. Impacts from nonrecurring expenses
in connection with the Mergers, including management bonus payments
and equity compensation costs, contributed to the annual result in
2022.
Adjusted EBITDA totaled a negative $74.3 million compared to
negative $57.7 in 2021. Impacts from the Mergers and strategic
shift as well as a software expense increase related to our license
and strategic partnership agreement with Palantir contributed to
the lower result in 2022.
Strategic Progress
To address cash needs and increase working capital, the Company
is currently in discussions with financing sources to potentially
raise new equity and recapitalize debt prior to its maturity. In
parallel, management is implementing additional measures to further
reduce spending and extend cash availability. Though there is no
guarantee the Company will be able to successfully implement any or
all of its current plans, these initiatives are intended to
increase financial flexibility and push out debt maturities with
the ultimate goal of realizing greater shareholder value by
improving Rubicon’s financial position and future liquidity.
Rubicon is aiming to accelerate its progress to profitability,
investing in its leading digital marketplace and suite of products,
and further developing the strategic vision and execution plan for
Rubicon’s next phase of growth. Rubicon has increased focus on
operational efficiencies and working to accelerate cost reduction
measures across the organization, with a goal of thoughtfully and
diligently optimizing margins across the portfolio. The Company
will share additional information on its “bridge to profitability”
plan in the coming quarters as we continue to develop our
plans.
Management Announcement
On February 21, 2023, Rubicon announced that the Company’s
President, Kevin Schubert, had been appointed Chief Financial
Officer. Schubert had served as Rubicon’s Chief Development Officer
since August 2022, until the time of his appointment as President
in October 2022. Schubert now oversees Rubicon’s end-to-end
financial operations and is working to further develop the
financial infrastructure, teams, and processes to enable the
Company to meet its strategic goals, including the acceleration of
the Company’s progress to profitability. In addition, Schubert also
oversees Rubicon’s legal function. Schubert brings a wealth of
finance, legal, and corporate development experience to his roles
as President and Chief Financial Officer. Prior to Rubicon,
Schubert held senior executive and advisory roles with multiple
public companies, including Red Rock Resorts Inc., the Las Vegas
Sands Corp, and he recently held the role of Chief Financial
Officer for Ocean Park Group, an early stage company focused on
experiential hospitality.
Webcast Information
The Rubicon Technologies management team will host a conference
call to discuss its fourth quarter and full year 2022 financial
results this afternoon, Wednesday, March 8, 2023, at 5pm ET. The
call can also be accessed live via telephone by dialing (888)
660-6863 or for international callers (929) 203-2112, and
referencing Rubicon Technologies. Please log in to the webcast or
dial in to the call at least 10 minutes prior to the start of the
event. The live webcast of the conference will also be available at
https://investors.rubicon.com/events-presentations/default.aspx, on
the Events and Presentations page on the Investor Relations section
of Rubicon’s website..
About Rubicon
Rubicon Technologies, Inc. (NYSE: RBT) is a digital marketplace
for waste and recycling, and provider of innovative software-based
products for businesses and governments worldwide. Striving to
create a new industry standard by using technology to drive
environmental innovation, the Company helps turn businesses into
more sustainable enterprises, and neighborhoods into greener and
smarter places to live and work. Rubicon’s mission is to end waste.
It helps its partners find economic value in their waste streams
and confidently execute on their sustainability goals. To learn
more, visit www.Rubicon.com.
Non-GAAP Financial Measures
This earnings 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 earnings release. The
non-GAAP financial measures in this earnings 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 and its
management, are inherently uncertain; factors that may cause actual
results to differ materially from current expectations include, but
are not limited to: 1) the outcome of any legal proceedings that
may be instituted against Rubicon or others following the closing
of the Mergers; 2) Rubicon’s ability to meet the NYSE’s listing
standards following the consummation of the Mergers; 3) the risk
that the Mergers disrupt current plans and operations of Rubicon as
a result of consummation of the Mergers; 4) the ability to
recognize the anticipated benefits of the Mergers, which may be
affected by, among other things, the ability of the combined
company to grow and manage growth profitably, maintain
relationships with customers and suppliers and retain its
management and key employees; 5) costs related to the Mergers; 6)
changes in applicable laws or regulations; 7) the possibility that
Rubicon may be adversely affected by other economic, business
and/or competitive factors, including the impacts of the COVID-19
pandemic, geopolitical conflicts, such as the conflict between
Russia and Ukraine, the effects of inflation and potential
recessionary conditions; 8) Rubicon’s execution of anticipated
operational efficiency initiatives and cost reduction measures; and
9) other risks and uncertainties set forth in the sections entitled
“Risk Factors” and “Cautionary Note Regarding Forward-Looking
Statements” in the Company’s Registration Statement on Form S-1, as
amended, filed with the SEC, and other documents Rubicon has filed,
with the SEC. Although Rubicon believes the expectations reflected
in the forward-looking statements are reasonable, nothing in this
press release should be regarded as a representation by any person
that the forward-looking statements set forth herein will be
achieved or that any of the contemplated results of such forward
looking statements will be achieved. There may be additional risks
that Rubicon presently does not know of or that Rubicon currently
believes are immaterial that could also cause actual results to
differ from those contained in the forward-looking statements, many
of which are beyond Rubicon’s control. You should not place undue
reliance on forward-looking statements, which speak only as of the
date they are made. Rubicon does not undertake, and expressly
disclaims, any duty to update these forward-looking statements,
except as otherwise required by applicable law.
RUBICON TECHNOLOGIES, INC AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS (UNAUDITED)
(in thousands, except per share
data)
Three Months Ended
Year Ended
December 31,
December 31,
2022
2021
2022
2021
Revenue:
Service
$
152,054
$
135,400
$
589,810
$
500,911
Recyclable commodity
13,938
27,887
85,578
82,139
Total revenue
165,992
163,287
675,388
583,050
Costs and Expenses:
Cost of revenue (exclusive of amortization
and depreciation):
Service
146,378
130,354
569,750
481,642
Recyclable commodity
12,227
25,931
78,083
77,030
Total cost of revenue (exclusive of
amortization and depreciation)
158,595
156,285
647,833
558,672
Sales and marketing
2,841
3,853
16,177
14,457
Product development
9,114
9,135
37,450
22,485
General and administrative
8,973
17,947
221,493
52,915
Amortization and depreciation
1,392
2,170
5,723
7,128
Total Costs and Expenses
180,915
189,390
928,676
655,657
Loss from Operations
(14,923
)
(26,103
)
(253,288
)
(72,607
)
Other Income (Expense):
Interest earned
1
-
2
2
Gain on forgiveness of debt
-
-
-
10,900
Loss on change in fair value of warrant
liabilities
(1,340
)
(606
)
(1,777
)
(606
)
Gain on change in fair value of earn-out
liabilities
1,400
-
68,500
-
Loss on change in fair value of
derivatives
4,279
-
(72,641
)
-
Excess fair value over the consideration
received for SAFE
-
-
(800
)
-
Excess fair value over the consideration
received for pre-funded warrant
(14,000
)
-
(14,000
)
-
Gain on services fee settlements in
connection with the Mergers
12,126
-
12,126
-
Other expense
(960
)
(325
)
(2,954
)
(1,055
)
Interest expense
(4,600
)
(3,994
)
(16,863
)
(11,455
)
Total Other Income (Expense)
(3,094
)
(4,925
)
(28,407
)
(2,214
Loss Before Income Taxes
(18,017
)
(31,028
)
(281,695
)
(74,821
)
Income tax expense (benefit)
16
(709
)
76
(1,670
)
Net Loss
(18,033
)
(30,319
)
(281,771
)
(73,151
)
Net loss attributable to Holdings LLC
unitholders prior to the Mergers
-
(30,319
)
(228,997
)
(73,151
)
Net loss attributable to noncontrolling
interests
(5,688
)
-
(22,621
)
-
Net Loss Attributable to Class A Common
Stockholders
$
(12,345
)
$
-
$
(30,153
)
$
-
Loss per share - for the
period from August 15, 2022 through December 31, 2022:
Net loss per Class A Common share – basic
and diluted
$
(0.60
)
Weighted average shares outstanding, basic
and diluted
49,885,394
Loss per share - for the three
months ended December 31, 2022:
Net loss per Class A Common share – basic
and diluted
$
(0.24
)
Weighted average shares outstanding, basic
and diluted
50,494,877
As a result of the Mergers with Founder SPAC consummated on
August 15, 2022 (the “Closing Date”), the capital structure has
changed and loss per share information is only presented for the
period after the Closing Date of the Mergers.
RUBICON TECHNOLOGIES, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS (UNAUDITED)
(in thousands)
2022
2021
ASSETS
Current Assets:
Cash and cash equivalents
$
10,079
$
10,617
Accounts receivable, net
65,923
42,660
Contract assets
55,184
56,984
Prepaid expenses
10,466
6,227
Other current assets
2,109
1,769
Related-party notes receivable
7,020
-
Total Current Assets
150,781
118,257
Property and equipment, net
2,644
2,611
Operating right-of-use assets
2,827
3,920
Other noncurrent assets
4,764
4,558
Goodwill
32,132
32,132
Intangible assets, net
10,881
14,163
Total Assets
$
204,029
$
175,641
LIABILITIES AND STOCKHOLDERS’ (DEFICIT)
EQUITY / MEMBERS’ (DEFICIT) EQUITY
Current Liabilities:
Accounts payable
$
75,113
$
47,531
Line of credit
51,823
29,916
Accrued expenses
108,002
65,538
Deferred compensation
-
8,321
Contract liabilities
5,888
4,603
Operating lease liabilities, current
1,880
1,675
Warrant liabilities
20,890
1,380
Debt obligations, net of debt issuance
costs
23,415
22,666
Total Current Liabilities
287,011
181,630
Long-Term Liabilities:
Deferred income taxes
217
178
Operating lease liabilities,
noncurrent
1,826
3,770
Debt obligations, net of debt issuance
costs
49,814
51,000
Related-party debt obligations, net of
debt issuance costs
10,597
-
Derivative liabilities
826
-
Earn-out liabilities
5,600
-
Other long-term liabilities
2,590
367
Total Long-Term Liabilities
71,470
55,315
Total Liabilities
358,481
236,945
Commitments and Contingencies
Stockholders’ (Deficit) Equity/Members’
(Deficit) Equity:
Common stock – Class A, par value of
$0.0001 per share, 690,000,000 shares authorized, 55,886,692 shares
issued and outstanding as of December 31, 2022
6
-
Common stock – Class V, par value of
$0.0001 per share, 275,000,000 shares authorized, 115,463,646
shares issued and outstanding as of December 31, 2022
12
-
Preferred stock – par value of $0.0001 per
share, 10,000,000 shares authorized, 0 issued and outstanding as of
December 31, 2022
-
-
Additional paid-in capital
34,658
-
Members’ deficit
-
(61,304
)
Accumulated deficit
(337,875
)
-
Total stockholders’ deficit attributable
to Rubicon Technologies, Inc.
(303,199
)
-
Noncontrolling interests
148,747
-
Total Stockholders’ Deficit /Members’
Deficit
(154,452
)
(61,304
)
Total Liabilities and Stockholders’
(Deficit) Equity/ Members’ (Deficit) Equity
$
204,029
$
175,641
RUBICON TECHNOLOGIES, INC AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS (UNAUDITED)
(in thousands)
2022
2021
Cash flows from operating
activities:
Net loss
$
(281,771
)
$
(73,151
)
Adjustments to reconcile net loss to net
cash flows from operating activities:
Loss on disposal of property and
equipment
44
-
Amortization and depreciation
5,723
7,128
Amortization of debt issuance costs
3,490
1,563
Paid-in-kind interest capitalized to
principal of related-party debt obligations
30
-
Bad debt reserve
(2,631
)
4,926
Loss on change in fair value of warrant
liabilities
1,777
606
Loss on change in fair value of
derivatives
72,641
-
Gain on change in fair value of earn-out
liabilities
(68,500
)
-
Excess fair value over the consideration
received for SAFE
800
-
Excess fair value over the consideration
received for pre-funded warrant
14,000
-
Loss on SEPA commitment fee settled in
Class A Common Stock
892
-
Equity-based compensation
94,204
543
Phantom unit expense
6,783
7,242
Gain on forgiveness of debt
-
(10,900
)
Gain on service fee settlement in
connection with the Mergers
(12,126
)
-
Deferred income tax benefit
39
(1,720
)
Change in operating assets and
liabilities:
Accounts receivable
(20,632
)
(2,567
)
Contract assets
1,800
(13,627
)
Prepaid expenses
(4,421
)
(2,470
)
Other current assets
(472
)
117
Operating right-of-use assets
1,093
(36
)
Other noncurrent assets
(180
)
(89
)
Accounts payable
27,582
5,616
Accrued expenses
29,030
16,670
Contract liabilities
1,285
610
Operating lease liabilities
(1,739
)
(522
)
Other liabilities
223
200
Net cash flows from operating
activities
(131,036
)
(59,861
)
Cash flows from investing
activities:
Property and equipment purchases
(1,406
)
(1,971
)
Forward purchase option derivative
purchase
(68,715
)
-
Settlement of forward purchase option
derivative
(6,000
)
-
Intangible asset purchases
-
(2,031
)
Net cash flows from investing
activities
(76,121
)
(4,002
)
Cash flows from financing
activities:
Net borrowings on line of credit
21,907
543
Proceeds from debt obligations
7,000
42,254
Repayments of debt obligations
(6,000
)
(3,000
)
Proceeds from related party debt
obligations
3,510
-
Financing costs paid
(4,021
)
(2,771
)
Proceeds from warrant exercise
-
32,490
Proceeds from SAFE
8,000
-
Proceeds from pre-funded warrant
6,000
-
Payments for loan commitment asset
(1,447
)
-
Payments of deferred offering costs
-
(1,057
)
Proceeds from the Mergers
196,778
-
Equity issuance costs
(25,108
)
-
Net cash flows from financing
activities
206,619
68,459
Net change in cash and cash
equivalents
(538
)
4,596
Cash, beginning of year
10,617
6,021
Cash, end of year
$
10,079
$
10,617
Supplemental disclosure of cash flow
information:
Cash paid for interest
$
12,234
$
8,366
Supplemental disclosures of non-cash
investing and financing activities:
Exchange of warrant liability for Class A
and Class V Common Stock
$
3,311
$
-
Conversion of SAFE for Class B Units
$
8,800
$
-
Establishment of earn-out liabilities
$
74,100
$
-
Equity issuance costs accrued but not
paid
$
13,433
$
-
Equity issuance costs settled with Class A
Common Stock
$
17,000
$
-
Fair value of warrants issued as debt
discount
$
-
$
773
Fair value of warrants issued for debt
issuance cost
$
430
$
-
Fair value of warrants issued for loan
commitment asset
$
615
$
-
Cost accrued for settlement of forward
purchase option derivative but not paid
$
2,000
$
-
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 U.S.
Securities and Exchange Commission (the “SEC”) because they
exclude, respectively, certain amounts included in Gross Profit and
Gross Profit Margin calculated in accordance with GAAP.
Specifically, the Company calculates Adjusted Gross Profit by
adding back amortization and depreciation for revenue generating
activities and platform support costs to GAAP Gross Profit, the
most comparable GAAP measure. Adjusted Gross Profit Margin is
calculated as Adjusted Gross Profit divided by total GAAP revenue.
Rubicon believes presenting Adjusted Gross Profit and Adjusted
Gross Profit Margin is useful to investors because they show the
progress in scaling Rubicon’s digital platform by quantifying the
markup and margin Rubicon charges its customers that are
incremental to its marketplace vendor costs. These measures
demonstrate this progress because changes in these measures are
driven primarily by Rubicon’s ability to optimize services for its
customers, improve its hauling and recycling partners’ efficiency
and achieve economies of scale on both sides of the marketplace.
Rubicon’s management team uses these non-GAAP measures as one of
the means to evaluate the profitability of Rubicon’s customer
accounts, exclusive of certain costs that are generally fixed in
nature, and to assess how successful Rubicon is in achieving its
pricing strategies. However, it is important to note that other
companies, including companies in our industry, may calculate and
use these measures differently or not at all, which may reduce
their usefulness as a comparative measure. Further, these measures
should not be read in isolation from or without reference to our
results prepared in accordance with GAAP.
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, equity-based compensation,
phantom unit expense, 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
forward purchase option derivative, excess fair value over the
consideration received for SAFE, 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 Rubicon operates
and capital investments. Adjusted EBITDA is also often used by
analysts, investors and other interested parties in evaluating and
comparing Rubicon’s results to other companies within the industry.
Accordingly, the Company believes that Adjusted EBITDA provides
useful information to investors and others in understanding and
evaluating its operating results in the same manner as Rubicon’s
management team and board of directors.
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
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
December 31,
Year Ended December
31,
2022
2021
2022
2021
(in thousands, except
percentages)
Total revenue
$
165,992
$
163,287
$
675,388
$
583,050
Less: total cost of revenue (exclusive of
amortization and depreciation)
158,595
156,285
647,833
558,672
Less: amortization and depreciation for
revenue generating activities
631
1,193
2,520
2,947
Gross profit
$
6,766
$
5,809
$
25,035
$
21,431
Gross profit margin
4.1
%
3.6
%
3.7
%
3.7
%
Gross profit
$
6,766
$
5,809
$
25,035
$
21,431
Add: amortization and depreciation for
revenue generating activities
631
1,193
2,520
2,947
Add: platform support costs
6,005
6,528
25,766
22,556
Adjusted gross profit
$
13,402
$
13,530
$
53,321
$
46,934
Adjusted gross profit margin
8.1
%
8.3
%
7.9
%
8.0
%
Amortization and depreciation for revenue
generating activities
$
631
$
1,193
$
2,520
$
2,947
Amortization and depreciation for sales,
marketing, general and administrative activities
761
977
3,203
4,181
Total amortization and depreciation
$
1,392
$
2,170
$
5,723
$
7,128
Platform support costs(1)
$
6,005
$
6,528
$
25,766
$
22,556
Marketplace vendor costs(2)
152,590
149,757
622,067
536,116
Total cost of revenue (exclusive of
amortization and depreciation)
$
158,595
$
156,285
$
647,833
$
558,672
(1)
Platform support costs are defined as
costs to operate the Company’s revenue generating platforms that do
not directly correlate with volume of sales transactions procured
through Rubicon’s digital marketplace. Such costs include employee
costs, data costs, platform hosting costs and other overhead
costs.
(2)
Marketplace vendor costs are defined as
direct costs charged by the Company’s hauling and recycling
partners for services procured through Rubicon’s 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
December 31,
Year Ended December
31,
2022
2021
2022
2021
(in thousands)
Net loss
$
(18,033
)
$
(30,319
)
$
(281,771
)
$
(73,151
)
Adjustments:
Interest expense
4,600
3,994
16,863
11,455
Interest earned
(1
)
-
(2
)
(2
)
Income tax expense (benefit)
16
(709
)
76
(1,670
)
Amortization and depreciation
1,392
2,170
5,723
7,128
Equity-based compensation
5,659
57
94,204
543
Phantom unit expense
-
4,335
6,783
7,242
Deferred compensation expense
(1,250
)
-
-
-
(Gain) Loss on change in fair value of
warrant liabilities
1,340
606
1,777
606
Gain on change in fair value of earn-out
liabilities
(1,400
)
-
(68,500
)
-
Loss on change in fair value of
derivatives
(4,279
)
-
72,641
-
Executive severance charges
1,952
-
1,952
-
Gain on settlement of Management Rollover
Bonuses
(10,415
)
-
(10,415
)
Excess fair value over the consideration
received for SAFE
-
-
800
-
Excess fair value over the consideration
received for pre-funded warrant
14,000
-
14,000
-
Gain on service fee settlements in
connection with the Mergers
(12,126
)
-
(12,126
)
-
Nonrecurring merger transaction
expenses(3)
-
-
80,712
-
Other expenses(4)
960
325
2,954
1,055
Gain on forgiveness of debt
-
-
-
(10,900
)
Adjusted EBITDA
$
(17,585
)
$
(19,541
)
$
(74,329
)
$
(57,694
)
(3)
Nonrecurring merger transaction expenses
primarily consist of management bonus payments and related accruals
in connection with the Mergers.
(4)
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/20230308005734/en/
Investor Contact: Sioban Hickie, ICR, Inc.
rubiconIR@icrinc.com Media Contact: Dan Sampson Chief
Marketing & Corporate Communications Officer
dan.sampson@rubicon.com RubiconPR@icrinc.com
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