Rubicon reports Q3 results, leadership changes

Rubicon Technologies Inc., New York, a provider of software-based products for businesses and governments worldwide, has released financial and operational results for the third quarter of 2022.

“We are very proud of our achievements to date and are excited to begin our journey as a publicly traded company,” Rubicon CEO Phil Rodoni says. “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.”

In the third quarter, revenue totaled $185 million, an increase of 24 percent from $149.2 million in the third quarter of 2021 and 12.4 percent from $164.6 million in the second quarter of 2022. The company says this strong revenue growth reflected continued expansion within the company’s existing customer base and the addition of new customers.

Gross profit in the third quarter was $6.6 million, 16.7 percent higher compared with the $5.6 million in the third quarter of 2021 and 20.7 percent higher compared with $5.5 million in the second quarter of 2022. This growth in gross profit was driven primarily by increased service with new and existing customers across business lines.

In the third quarter, adjusted gross profit was $14.1 million, an increase of 18.9 percent compared with $11.9 million generated in the third quarter of 2021. The result was 11 percent higher compared with $12.7 million in the second quarter of 2022. This growth was driven primarily by increased service with new and existing customers across business lines.

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 with $18.1 million in the third quarter of 2021 and $27.8 million in the second quarter of 2022. Impacts from nonrecurring expenses incurred in connection with the company’s merger with Founder SPAC contributed to the result in the third quarter of 2022. This includes a loss on a change in the fair value of forward options within a forward purchase agreement related to the sale of certain SPAC shares before the mergers. There also was 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.

In the third quarter, adjusted earnings before interest, taxation, depreciation and amortization (EBITDA) were negative $21.1 million compared with 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 before its maturity. In parallel, management is implementing additional measures to reduce spending and extend cash availability. Though there is no guarantee the company will be able to implement any or all of its current plans, these initiatives are intended to increase financial flexibility and push out debt maturities. The goal is to realize better shareholder value by improving Rubicon’s financial position and future liquidity.  

Rubicon says it 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 its focus on operational efficiencies and working to accelerate cost-reduction measures across the organization, to optimize margins across the portfolio. The company will share additional information on its “bridge to profitability” plan in the coming quarters as the company continues to develop plans.

Rubicon also announced that effective Nov. 4, the company’s board of directors has appointed Kevin Schubert as president of the company. Schubert has served as Rubicon’s chief development officer and head of investor relations since August.

The company says Schubert brings a wealth of finance, legal and corporate development experience to his new role as president. Before Rubicon, Kevin held senior executive and advisory roles with multiple public companies, including Red Rock Resorts Inc. and the Las Vegas Sands Corp. He also recently held the role of chief financial officer for Ocean Park Group, an early stage company focused on experiential hospitality.