Dive Brief:
- Rubicon Technologies is laying off 55 employees, an estimated 11% of its staff, in an effort to cut costs, according to a Monday quarterly filing with the Securities and Exchange Commission. The company projects this could result in $5.5 million worth of annualized savings.
- The move is part of a broader effort to stabilize the company’s balance sheet as it exited the third quarter with $4.46 million in cash on hand and $21.2 million available on a line of credit. According to a Nov. 14 filing, the company was facing the potential of $102.6 million worth of debt maturing in December.
- Rubicon averted that outcome by negotiating multiple updates to its debt agreements on Nov. 18, with terms extended to various dates in 2023. The company also reported a Nov. 14 commitment from certain existing investors for $30 million in financing.
Dive Insight:
The waste broker and technology company has experienced turbulence since going public in August, including the exit of its founding CEO, leading executives to say during a recent earnings call they would be very focused on “progress to profitability” in the months ahead.
During the company’s Nov. 9 call, new CEO Phil Rodoni said Rubicon would be focused on cutting “redundancies” and looking for ways to reduce operating expenses “substantially during the next year.” Rubicon also announced a new president, Kevin Schubert, with a focus on cost reduction. Chief Financial Officer Jevan Anderson reported at the time that Rubicon was “short on the cash front,” leading the company to take these subsequent steps.
The company’s quarterly filing attributes the elevated costs to several things, one being greater investment in product development. Rubicon’s product development-related costs increased by $5 million in the third quarter, up 103.1% on a year-over-year basis, “mainly driven by higher software subscription costs to support our product development team” as well as associated payroll costs.
Those costs, which are connected to a 2021 subscription agreement with Palantir Technologies to provide “advanced data analytics capabilities to enhance the data security, visibility, models, and algorithms of our digital platform,” are expected to remain high for at least the next year. Rubicon will owe Palantir $15.5 million by the end of September 2023, out of a broader $34.3 million it owes the company through October 2024. Palantir previously purchased $35 million worth of shares in Rubicon.
As of Nov. 14, Rubicon said it was behind on submitting its quarterly SEC filing due to “ongoing negotiations of potentially material transactions with financing sources to refinance the maturing debt, improve [the] Company’s financial position and for the Company to be able to continue as a going concern for at least the next twelve months.”
The company’s board of directors approved the layoffs on Nov. 15, with plans for an estimated $500,000 in total severance payments and $100,000 in one-time costs. Rubicon has downsized at least once before, laying off 44 people in 2018 as part of a restructuring after the company completed three broker acquisitions.
Pending the results from this latest round of cost-cutting, Rubicon hopes to become a profitable company in future quarters. For the third quarter, it reported a net loss of $211 million “due primarily to one-time transaction related expenses.” Revenue was $185 million, up 24% year over year.
