Rubicon Technologies, Inc. (“Rubicon” or the “Company”) (OTC:
RBTC), a leading provider of technology-based waste and recycling
solutions, today reported financial and operational results for the
second quarter of 2024.
“We’re thrilled with our Q2 performance, where our team’s
relentless focus on customer success and strategic account
management has paid off,” said Osman Ahmed, Interim CEO of Rubicon.
“By signing new customers and unlocking upsell opportunities within
our existing base, we have demonstrated that when our partners win,
we win. We look forward to building on this momentum and achieving
even greater success going forward.”
Second Quarter 2024 Financial Highlights
- Revenue was $163.1 million, a decrease of $8.8 million or 5.1%
compared to $171.9 million in the second quarter of 2023.
- Gross Profit was $4.5 million, a decrease of $5.5 million or
54.6% compared to $10.0 million in the second quarter of 2023.
- Adjusted Gross Profit was $10.6 million, a decrease of $5.6
million or 34.5% compared to $16.2 million in the second quarter of
2023.
- Pro-forma Adjusted Gross Profit excluding operating expenses
attributable to the Fleet Technology Business Unit was $11.6
million, a decrease of $4.6 million or 28.3% compared to $16.2
million in the second quarter of 2023.
- Net Income was $27.3 million, an increase of $50.1 million or
219% compared to the net loss of $(22.8) million in the second
quarter of 2023.
- Adjusted EBITDA was $(12.4) million, a decrease of $2.7 million
or 27.8% compared to $(9.7) million in the second quarter of
2023.
- Pro-forma Adjusted EBITDA excluding operating expenses
attributable to the Fleet Technology Business Unit was $(9.9)
million.
Operational and Business Highlights
- On July 1, 2024, Rubicon announced the appointment of Osman
Ahmed, formerly lead independent director on the Company’s Board of
Directors, as interim CEO. Ahmed is Co-Founder of New Circle
Capital, a structured capital provider to small and mid-cap
companies, and Senior Advisor at 10X Capital, a multi-strategy
technology investment firm.
- Select new customers this quarter included The Army &
Airforce Exchange Service, Fortune Brands, TK Elevators, and the
Veterinary Emergency Group (VEG).
- In Q2, Rubicon renewed one of its largest accounts—a leading
big-box retailer—through 2027. When this account was first
launched, the Company managed just over 100 sites; Rubicon now
oversees more than 1,800 sites across multiple material
streams.
For more information about Rubicon’s second quarter 2024
financial results, please see the Company’s shareholder letter
dated August 21, 2024.
Sale of Fleet Technology Business Unit
On May 7, 2024, Rubicon announced that the Company has sold its
fleet technology business unit and issued convertible preferred
stock in Rubicon to Rodina Capital, a private investment firm based
in Florida, in a sale with a total transaction value of $94.2
million, which includes up-front cash of $61.7 million and an
earnout consideration of $12.5 million that would be payable in
2024, along with a $20 million issuance of convertible preferred
stock.
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 Rubicon
to help them achieve sustainability goals with tailored zero waste
and circular economy solutions, including through the Company’s
Technical Advisory Services (TAS). This sale and the new capital
will be dedicated to improving services and strengthening Rubicon’s
longstanding relationship with more than 8,000 vendor and hauler
partners, 90 percent of which are small, independent
businesses.
About Rubicon
Rubicon builds technology products and provides expert
sustainability solutions to waste generators and material
processors to help them understand, manage, and reduce waste. As a
mission-driven company, Rubicon helps its customers improve
operational efficiency, unlock economic value, and deliver better
environmental outcomes. To learn more, visit rubicon.com.
RUBICON TECHNOLOGIES, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS (UNAUDITED)
(in thousands, except per share
data)
Three Months Ended June
30,
Six Months Ended June
30,
2024
2023
2024
2023
Revenue:
Service
$
146,725
$
158,027
$
293,978
$
322,350
Recyclable commodity
16,422
13,923
32,232
28,656
Total revenue
163,147
171,950
326,210
351,006
Costs and Expenses:
Cost of revenue (exclusive of amortization
and depreciation):
Service
143,575
149,307
283,922
306,821
Recyclable commodity
14,893
11,968
28,947
25,155
Total cost of revenue (exclusive of
amortization and depreciation)
158,468
161,275
312,869
331,976
Sales and marketing
2,332
1,947
4,020
4,391
Product development
5,271
6,568
11,896
14,009
General and administrative
10,667
13,698
23,754
31,886
Gain on settlement of incentive
compensation
-
-
-
(18,622
)
Amortization and depreciation
950
1,074
1,881
2,187
Total Costs and Expenses
177,688
184,562
354,420
365,827
Loss from continuing operations
(14,541
)
(12,612
)
(28,210
)
(14,821
)
Other Income (Expense):
Interest earned
26
5
59
6
Gain (loss) on change in fair value of
warrant liabilities
3,718
(414
)
13,469
(469
)
Gain on change in fair value of earnout
liabilities
22
470
133
5,290
Loss on change in fair value of
derivatives
(721
)
(335
)
(2,020
)
(2,533
)
Gain on service fee settlements in
connection with the Mergers
-
6,364
-
6,996
Loss on extinguishment of debt
obligations
(8,782
)
(6,783
)
(8,782
)
(8,886
)
Interest expense
(8,413
)
(8,119
)
(19,163
)
(15,295
)
Related party interest expense
(540
)
(661
)
(1,062
)
(1,254
)
Other expense, net
(666
)
(482
)
(1,617
)
(903
)
Total Other Expense, Net
(15,356
)
(9,955
)
(18,983
)
(17,048
)
Loss from Continuing Operations Before
Income Taxes
(29,897
)
(22,567
)
(47,193
)
(31,869
)
Income tax expense
102
17
114
33
Net Loss from Continuing Operations, net
of tax
$
(29,999
)
$
(22,584
)
$
(47,307
)
(31,902
)
Discontinued Operations:
Loss from discontinued operations
(456
)
(233
)
(1,125
)
(366
)
Net gain on sale of discontinued
operations
59,674
-
59,674
-
Income tax expense
(1,881
)
-
(1,881
)
-
Net income (loss) from discontinued
operations, net of tax
57,337
(233
)
56,668
(366
)
Net income (loss)
27,338
(22,817
)
9,361
(32,268
)
Net loss from continuing operations
attributable to noncontrolling interests
(479
)
(9,508
)
(1,915
)
(15,742
)
Net loss from continuing operations
attributable to Class A common stockholders
(29,520
)
(13,076
)
(45,392
)
(16,160
)
Net income (loss) from discontinued
operations attributable to noncontrolling interests
960
(107
)
914
(195
)
Net income (loss) from discontinued
operations attributable to Class A common stockholders
$
56,377
$
(126
)
$
55,754
$
(171
)
Net loss from continuing operations per
Class A Common share – basic and diluted
(0.32
)
(0.98
)
(0.65
)
(1.56
)
Net earnings (loss) from discontinued
operations per Class A Common share – basic and diluted
0.61
(0.01
)
0.80
(0.02
)
Net earnings (loss) per Class A Common
share – basic and diluted
0.29
(0.99
)
0.15
(1.58
)
Weighted average shares outstanding –
basic
58,854,594
13,276,407
52,461,596
10,367,920
Weighted average shares outstanding –
diluted
58,854,594
13,276,407
52,461,596
10,367,920
The accompanying notes to the condensed
consolidated financial statements are an integral part of these
statements.
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, gain or loss on
extinguishment of debt obligations, 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
derivatives, executive severance charges, gain or loss on
settlement of the management rollover bonuses, excess fair value
over the consideration received for SAFE, excess fair value over
the consideration received for pre-funded warrant, 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 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 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 June
30,
Six Months Ended June
30,
2024
2023
2024
2023
(in thousands, except
percentages)
Total revenue
$
163,147
$
171,950
$
326,210
$
351,006
Net income (loss)
$
27,338
$
(22,817
)
$
9,361
$
(32,268
)
Adjustments:
Interest expense
8,413
8,119
19,163
15,295
Related party interest expense
540
661
1,062
1,254
Interest earned
(26
)
(5
)
(59
)
(6
)
Income tax expense
102
17
114
33
Amortization and depreciation
950
1,074
1,881
2,187
Loss on extinguishment of debt
obligations
8,782
6,783
8,782
8,886
Equity-based compensation
526
1,804
1,095
11,106
(Gain) Loss on change in fair value of
warrant liabilities
(3,718
)
414
(13,469
)
469
Gain on change in fair value of earn-out
liabilities
(22
)
(470
)
(133
)
(5,290
)
Loss on change in fair value of
derivatives
721
335
2,020
2,533
Executive severance charges
622
-
2,154
4,553
Gain on settlement of Management Rollover
Bonuses
-
-
-
(26,826
)
Gain on service fee settlements in
connection with the Mergers
-
(6,364
)
-
(6,996
)
Other expenses(1)
666
482
1,617
903
Net (income) loss from discontinued
operations
(57,337
)
233
(56,668
)
366
Adjusted EBITDA
$
(12,443
)
$
(9,734
)
$
(23,080
)
$
(23,801
)
Net income (loss) as a percentage of total
revenue
16.8
%
(13.3
)%
2.9
%
(9.2
)%
Adjusted EBITDA as a percentage of total
revenue
(7.6
)%
(5.7
)%
(7.1
)%
(6.8
)%
(1)
Other expenses primarily consist of
foreign currency exchange gains and losses, taxes, penalties and
gains and losses on sale of property and equipment.
Adjusted EBITDA - Proforma
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 June
30,
Six Months Ended June
30,
2024
2023
2024
2023
(in thousands, except
percentages)
Total revenue
$
163,147
$
171,950
$
326,210
$
351,006
Net income (loss): Before Proforma
Adjustment
$
27,338
$
(22,817
)
$
11,861
$
(32,268
)
Adjustments: Fleet Technology Business
Unit
2,500
Net income (loss) $
29,838
$
(22,817
) $
11,861
$
(32,268
)
Interest expense
8,413
8,119
19,163
15,295
Related party interest expense
540
661
1,062
1,254
Interest earned
(26
)
(5
)
(59
)
(6
)
Income tax expense
102
17
114
33
Amortization and depreciation
950
1,074
1,881
2,187
Loss on extinguishment of debt
obligations
8,782
6,783
8,782
8,886
Equity-based compensation
526
1,804
1,095
11,106
(Gain) Loss on change in fair value of
warrant liabilities
(3,718
)
414
(13,469
)
469
Gain on change in fair value of earn-out
liabilities
(22
)
(470
)
(133
)
(5,290
)
Loss on change in fair value of
derivatives
721
335
2,020
2,533
Executive severance charges
622
-
2,154
4,553
Gain on settlement of Management Rollover
Bonuses
-
-
-
(26,826
)
Gain on service fee settlements in
connection with the Mergers
-
(6,364
)
-
(6,996
)
Other expenses(1)
666
482
1,617
903
Net (income) loss from discontinued
operations
(57,337
)
233
(56,668
)
366
Adjusted EBITDA
$
(9,943
)
$
(9,734
)
$
(20,580
)
$
(23,801
)
Net income (loss) as a percentage of total
revenue
18.3
%
(13.3
)%
3.6
%
(9.2
)%
Adjusted EBITDA as a percentage of total
revenue
(6.1
)%
(5.7
)%
(6.3
)%
(6.8
)%
(1)
Other expenses primarily consist of
foreign currency exchange gains and losses, taxes, penalties and
gains and losses on sale of property and equipment.
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 June
30,
Six Months Ended June
30,
2024
2023
2024
2023
(in thousands, except
percentages)
Total revenue
$
163,147
$
171,950
$
326,210
$
351,006
Less: total cost of revenue (exclusive of
amortization and depreciation)
158,468
161,275
312,869
331,976
Less: amortization and depreciation for
revenue generating activities
119
614
698
1,188
Gross profit
$
4,560
$
10,061
$
12,643
$
17,842
Gross profit margin
2.8
%
5.9
%
3.9
%
5.1
%
Gross profit
$
4,560
$
10,061
$
12,643
$
17,842
Add: amortization and depreciation for
revenue generating activities
119
614
698
1,188
Add: platform support costs(1)
5,952
5,541
12,382
11,777
Adjusted gross profit
$
10,631
$
16,216
$
25,723
$
30,807
Adjusted gross profit margin
6.5
%
9.4
%
7.9
%
8.8
%
Amortization and depreciation for revenue
generating activities
$
119
$
614
$
698
$
1,188
Amortization and depreciation for sales,
marketing, general and administrative activities
831
730
1,183
1,517
Total amortization and depreciation
$
950
$
1,344
$
1,881
$
2,705
Platform support costs(1)
$
5,952
$
5,541
$
12,382
$
11,777
Marketplace vendor costs(2)
151,956
156,621
301,927
321,573
Total cost of revenue (exclusive of
amortization and depreciation)
$
158,908
$
162,162
$
314,309
$
333,350
(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 Gross Profit and Adjusted Gross Profit Margin -
Proforma
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 June
30,
Six Months Ended June
30,
2024
2023
2024
2023
(in thousands, except
percentages)
Total revenue
$
163,147
$
171,950
$
326,210
$
351,006
Less: total cost of revenue (exclusive of
amortization and depreciation)
157,468
161,275
311,869
331,976
Less: amortization and depreciation for
revenue generating activities
19
614
598
1,188
Gross profit
$
5,560
$
10,061
$
13,743
$
17,842
Gross profit margin
3.5
%
5.9
%
4.2
%
5.1
%
Gross profit
$
5,560
$
10,061
$
13,743
$
17,842
Add: amortization and depreciation for
revenue generating activities
19
614
598
1,188
Add: platform support costs(1)
5,952
5,541
12,382
11,777
Adjusted gross profit
$
11,631
$
16,216
$
26,723
$
30,807
Adjusted gross profit margin
7.1
%
9.4
%
8.2
%
8.8
%
Amortization and depreciation for revenue
generating activities
$
19
$
614
$
598
$
1,188
Amortization and depreciation for sales,
marketing, general and administrative activities
831
730
1,183
1,517
Total amortization and depreciation
$
850
$
1,344
$
1,781
$
2,705
Platform support costs(1)
$
5,952
$
5,541
$
12,382
$
11,777
Marketplace vendor costs(2)
151,956
156,621
300,927
321,573
Total cost of revenue (exclusive of
amortization and depreciation)
$
157,908
$
162,162
$
313,309
$
333,350
(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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240821677910/en/
Investor Contact: Grant Deans
Interim Chief Financial Officer grant.deans@rubicon.com
Media Contact: Benjamin Spall Director
of Communications benjamin.spall@rubicon.com