Rubicon(US:RBT)2023-08-11 20:01Customer Base and Partnerships - Rubicon Technologies serves over 8,000 customers, including major clients like Apple and Walmart, and has over 8,000 hauling and recycling partners across North America[182]. Financial Performance - For the three months ended June 30, 2023, recyclable commodity revenue was $13.9 million, down from $24.3 million in the same period of 2022, reflecting a decline of approximately 42%[192]. - Total revenue increased by $10.0 million, or 6.0%, for the three months ended June 30, 2023, compared to the same period in 2022[211]. - Service revenue increased by $20.4 million, or 14.5%, primarily due to higher prices charged to existing customers[211]. - Revenues from sales of recyclable commodities decreased by $10.4 million, or 42.8%, primarily due to a significant decrease in sales prices[212]. - Net loss for the three months ended June 30, 2023, was $22.8 million, a decrease of 17.9% compared to the same period in 2022[221]. - Total revenue for the six months ended June 30, 2023, increased by $31.3 million, or 9.6%, compared to the same period in 2022[224]. - The revenue net retention rate was 104.9% as of June 30, 2023, compared to 113.4% in the prior year[241]. - The company incurred a net loss of $(32.3) million for the six months ended June 30, 2023, compared to $(52.6) million for the same period in 2022[249]. Cost and Expenses - Total cost of revenue increased by $3.6 million, or 2.3%, for the three months ended June 30, 2023[213]. - Cost of service revenue increased by $14.0 million, or 10.3%, mainly due to increased hauling-related costs[214]. - Sales and marketing expenses decreased by $1.8 million, or 39.6%, compared to the same period in 2022[216]. - Product development expenses decreased by $2.1 million, or 22.4%, primarily due to lower payroll and support costs[217]. - General and administrative expenses increased by $6.2 million, or 24.0%, primarily due to severance pay and increased insurance expenses[234]. - Cost of service revenue increased by $42.3 million, or 15.9%, driven by increased hauling volume and service expansion with existing customers[228]. - Cost of recyclable commodity revenue decreased by $20.5 million, or 44.9%, primarily due to a $23.2 million decrease in sales prices for recyclable commodities[229]. - Sales and marketing expenses decreased by $2.5 million, or 29.1%, attributed to lower costs for workforce and other marketing activities[230]. - Product development expenses decreased by $3.2 million, or 17.4%, mainly due to lower payroll and support costs[231]. Liquidity and Financing - Rubicon entered into a $90 million revolving credit facility and a $75 million term loan in June 2023, enhancing its liquidity position[184]. - The company expects sufficient liquidity to meet known needs for the next 12 months, contingent on successful execution of cost reduction initiatives[255]. - Net cash used in operating activities increased to $(37.3) million for the six months ended June 30, 2023, compared to $(16.3) million for the same period in 2022, driven by a $32.9 million unfavorable impact from changes in operating assets and liabilities[259]. - Net cash provided by financing activities was $51.4 million for the six months ended June 30, 2023, significantly higher than $13.2 million for the same period in 2022, primarily from new third-party debt and common stock issuance[261]. - The company has negative working capital and stockholders' deficit as of June 30, 2023, but plans to settle warrant and derivative liabilities in Class A Common Stock[253]. Product Development and Innovation - The company invested $7.2 million in product development for the three months ended June 30, 2023, compared to $9.3 million in the same period of 2022, indicating a reduction of about 23%[194]. - The company anticipates that product development costs will decrease as a percentage of total revenues in the next 12 months[194]. - The company has been awarded over 60 patents and 15 trademarks, strengthening its intellectual property portfolio[182]. Market Trends and Opportunities - The waste and recycling industry is increasingly focused on reducing emissions, which presents growth opportunities for Rubicon[191]. Other Financial Metrics - Adjusted gross profit for the six months ended June 30, 2023, was $34.1 million, with an adjusted gross profit margin of 9.6%[244]. - Adjusted EBITDA is defined as GAAP net loss adjusted for various non-operational items, providing insights into operating performance[246]. - Adjusted EBITDA for the three months ended June 30, 2023, was $(9.7) million, improving from $(18.9) million in the same period of 2022, with adjusted EBITDA as a percentage of total revenue at (5.6)%[249]. Debt and Obligations - The company settled $7.1 million of transaction fees related to mergers by issuing Class A Common Stock[189]. - The company fully prepaid $48.6 million under the Revolving Credit Facility on June 7, 2023, resulting in a loss of $2.6 million on extinguishment of debt obligations[268]. - The company fully prepaid $40.5 million under the Term Loan on June 7, 2023, incurring a loss of $2.5 million on extinguishment of debt obligations[269]. - The Subordinated Term Loan was amended on June 7, 2023, increasing the interest rate to 15.0%, with 11.0% paid in cash and 4.0% capitalized[270]. - The company entered into a $75.0 million Term Loan agreement with a maturity date of June 7, 2025, which can be extended to June 7, 2026 under certain conditions[279]. - The interest rate on the Term Loan is the prime rate plus a margin of 8.75%, increasing to 18.5% as of June 30, 2023 due to interest capitalization[279]. - The Minimum Liquidity Threshold under the credit agreements was $19.0 million as of June 30, 2023, with potential reductions based on financial conditions[280]. Stock and Equity Transactions - The company issued Class A Common Stock for a total purchase price of $23.7 million under the May 2023 Equity Agreements[285]. - The company received approximately $6.0 million from the issuance of the YA Warrant, exercisable for shares of Class A Common Stock valued at $20.0 million[284]. - The company has not sold any shares under the SEPA agreement, which allows for the sale of up to $200.0 million of Class A Common Stock[283]. - As of June 30, 2023, no June 2023 Term Loan Warrants were exercised[279]. Operational Changes - The company terminated an operating lease for an office facility in Lexington, Kentucky[291].