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 third quarter of 2022.
Third Quarter 2022 Financial Highlights
- Revenue was $185.0 million, 24.0% higher compared to $149.2 million in the third quarter of 2021.
- Gross Profit was $6.6 million, an increase of 16.7% versus $5.6 million generated in the third quarter of 2021.
- Adjusted Gross Profit was $14.1 million, an increase of 18.9% versus $11.9 million generated in the third quarter of 2021.
- Net loss was $211.1 million versus $18.1 million in the third quarter of 2021, due primarily to one-time transaction related expenses.
- Adjusted EBITDA was negative $21.1 million versus $13.3 million in the third quarter of 2021.
Third Quarter Operational and Business Highlights
- Revenue Net Retention1 in the third quarter was 118.3%, compared to 109.0% in the third quarter of 2021.
- Rubicon captured a 10.5% increase in its landfill diversion rate, going from 30.5% to 33.7% year to date.
- In November, Rubicon signed a two-year extension and expansion of its contract with Walmart, which has been a flagship customer since 2013.
- Rubicon was recently recognized by Amazon Web Services (“AWS”) as having achieved “Smart City Competency”, a designation that recognizes Rubicon as an AWS Partner that helps customers and the partner community build and deploy innovative smart city solutions.
“We are very proud of our achievements to date, and are excited to begin our journey as a publicly traded company,” said Phil Rodoni, CEO of Rubicon Technologies. “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.”
Third Quarter Financial Results
In the third quarter, Revenue totaled $185.0 million, an increase of 24.0% from $149.2 million in the third quarter of 2021 and 12.4% from $164.6 million in the second quarter of 2022. This strong revenue growth reflected continued expansion within the Company’s existing customer base, as well as the addition of new customers.
Gross Profit in the third quarter was $6.6 million, 16.7% higher compared to the $5.6 million in the third quarter of 2021 and 20.7% higher compared to $5.5 million in the second quarter of 2022. This growth in Gross Profit was driven primarily by increased service with both new and existing customers across business lines.
In the third quarter, Adjusted Gross Profit was $14.1 million, an increase 18.9% compared to $11.9 million generated in the third quarter 2021. The result was 11.0% higher compared to $12.7 million in the second quarter of 2022. This growth was driven primarily by increased service with both new and existing customers across business lines.
1 Revenue Net Retention is calculated as a year-over-year comparison that measures the percentage of revenue recognized in the current quarter from customers retained from the corresponding quarter in the prior year. Rubicon believes that its Revenue Net Retention rate is an important metric to measure overall client satisfaction and the general quality of its service offerings as Revenue Net Retention is a composition of revenue expansion or contraction within Rubicon’s customer accounts.
Net loss was $211.1 million in the third quarter compared to $18.1 million in the third quarter of 2021 and $27.8 million in the second quarter of 2022. Impacts from non-recurring expenses incurred in connection with consummation of the Company’s merger (the “Mergers”) with Founder SPAC (“Founder”), a loss on a change in fair value of a forward option within a forward purchase agreement relating to the sale of certain of Founder’s shares prior to the Mergers, an increase in software expenses related to the license and strategic partnership agreement with Palantir and additional operating expenses incurred as the Company prepared to operate as a public company contributed to the result in the third quarter of 2022.
In the third quarter, Adjusted EBITDA was negative $21.1 million compared to negative $13.3 million in the third quarter of 2021, and negative $18.9 million in the second quarter of 2022. Impacts from the increase in software expenses and additional operating expenses described above contributed to the result in the third quarter of 2022.
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.
Rubicon today announced that, effective November 4th 2022, the Company’s Board of Directors has appointed Kevin Schubert as President of the Company. Kevin has served as Rubicon’s Chief Development Officer and Head of Investor Relations since August 2022, and he brings a wealth of finance, legal, and corporate development experience to his new role as President. Prior to Rubicon, Kevin has 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.
The Rubicon Technologies management team will host a conference call to discuss its third quarter 2022 financial results this afternoon, Wednesday, November 9, 2022, 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. 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.
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.
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 business combination; 2) Rubicon’s ability to meet the NYSE’s listing standards following the consummation of the business combination; 3) the risk that the business combination disrupts current plans and operations of Rubicon as a result of consummation of the business combination; 4) the ability to recognize the anticipated benefits of the business combination, 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 business combination; 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 Founder’s Registration Statement on Form S-4, 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.