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Algorhythm Holdings, Inc. (RIME)·Q3 2025 Earnings Summary

Executive Summary

  • Record 1,273% year-over-year revenue growth to $1.74M, driven by SemiCab India; gross margin improved to -20% (from -25%) and operating expenses fell to $1.21M, narrowing net loss from continuing operations to $(1.88)M .
  • Sale of legacy Singing Machine for $4.5M completed; company now fully focused on AI-driven logistics with SemiCab, including launch of “APEX” SaaS targeting 90–95% gross margins and global scalability .
  • Management guided Q4 revenue around ~$2M and an annualized run-rate rising to $15–$20M by end of next year; Apex SaaS expected to begin material recurring revenue in 2026 .
  • Stock narrative catalysts: transformational pivot to asset-light SaaS (APEX), India contract wins and fleet expansion to 450 trucks (implying >$23M capacity), and reduced cash burn post-divestiture .

What Went Well and What Went Wrong

What Went Well

  • “Transformational period”: divestiture of Singing Machine, refocus on high-growth AI logistics; launch of APEX SaaS with high-margin recurring revenue potential and fast global deployment .
  • SemiCab India momentum: YoY revenue up ~1,300% and tracking toward ~$10M annual contractual run-rate; added Fortune 500 clients and multiple pilot-to-contract expansions .
  • Cost discipline: operating expenses down to $1.21M y/y from $1.79M; management expects cash outflows to trend lower post-divestiture .

What Went Wrong

  • Gross loss persists: -$351k and negative gross margin (-20%); management notes ramp costs and underutilized trucks in new territories depress gross profitability near term .
  • India growth gating factor: access to trucks constrains pace; management plans working capital and financing solutions to address the cash-to-cash timing .
  • Capital needs: company expects to raise additional funding (likely equity) to finance SemiCab growth despite some debt and reduced working capital needs post-divestiture .

Financial Results

Trend vs Prior Year and Prior Quarters

MetricQ3 2024Q1 2025Q2 2025Q3 2025
Revenue ($USD Millions)$0.127 $2.000 $2.700 $1.744
Gross Margin %-25% 25% 35% -20%
Net Loss (Continuing Ops) ($USD Millions)$(2.106) n/an/a$(1.882)
Diluted EPS - Continuing Ops ($USD)$(0.21) -4.6587*-0.24*$(0.72)
Total Operating Expenses ($USD Millions)$1.791 $4.803*$3.498*$1.214
Cash and Equivalents ($USD Millions)n/a$3.296 *$1.134 *$2.839

*Values with asterisk retrieved from S&P Global.

Notes:

  • Q2/Q1 include legacy Singing Machine in continuing operations; Q3 is recast to continuing operations only (SemiCab), thus Q/Q comparisons are directionally useful but not strictly apples-to-apples .

Q3 2025 Actual vs SPGI Consensus

MetricActual (Q3 2025)SPGI ConsensusSurprise
Revenue ($USD Millions)$1.744 Unavailable*n/a
Diluted EPS - Continuing Ops ($USD)$(0.72) Unavailable*n/a
EBITDA ($USD Millions)n/aUnavailable*n/a

*Consensus data unavailable via S&P Global for the period.

Segment Breakdown (Q3 2025)

SegmentRevenue ($USD Millions)Notes
SemiCab India – Managed Services$1.7 Primary driver of Q3 revenue; ARR ~$7M established in Q2
SemiCab U.S. – SaaS (APEX)n/aLaunch announced; material recurring SaaS revenue expected beginning 2026

KPIs

KPIQ1 2025Q2 2025Q3 2025
Fleet size (trucks)>500 trucks capacity 450 trucks 450 trucks; capacity implies >$23M annual revenue
Truck utilization (%)n/a~85% ~85%
Annualized revenue run-rate ($USD Millions)n/a~$7 ~$7 (achieved in Q2)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueQ4 2025n/a~$2M New
Annualized Revenue Run-RateEnd of 2026$15–$20M over next 12 months $15–$20M by end of next year Maintained
Gross Margin TrajectoryNext 12 monthsNear-term 5–10% margin expectation for SemiCab; Opex to decline post-divestiture Gross loss to decrease as utilization improves; Opex lower vs historical, partly offset by SemiCab investments Clarified
SaaS (APEX) Revenue2026 rolloutU.S. expansion contemplated Material recurring SaaS revenue expected as broader rollout completes in 2026; 90–95% SaaS gross margin profile Expanded
OpExNear termMajor reduction at outset; gradual increase with SemiCab growth Decreased y/y to $1.21M; expect increases tied to SemiCab investments Maintained trend
OI&E / TaxNear termn/aInterest expense at $(0.293)M in Q3; no specific tax rate guidance —
Dividends—NoneNoneMaintained

Earnings Call Themes & Trends

TopicQ1 2025 (Prior Two Quarters)Q2 2025 (Prior Quarter)Q3 2025 (Current Period)Trend
AI/Technology initiativesExclusive tech provider to India’s NDFE; platform transacting thousands of loads Clarified differentiation vs digital freight brokers; solving empty miles via optimization Launch of APEX SaaS (cloud, API into TMS), targeting 90–95% gross margins Expanding scope and margin profile
Supply chain, tariffs/macroTariffs hurt karaoke; pivot to SemiCab Tariffs not directly impacting SemiCab operations; demand resilient Focus shifts to scaling constraints (trucks vs SaaS scalability) Reduced macro exposure
Product performancePlatform commercially mature; scaling pilots with major MNCs Network effects, lane expansions, strong ramp ~1,300% YoY revenue; ARR ~$7M Improving
Regional trendsIndia-led growth with NDFE; >$20M capacity India expansion and global opportunity pipeline (US, ME, Europe) U.S. GTM verticals for APEX: enterprise shippers, 3PLs (white-label), carriers Geographic expansion
Regulatory/legalNASDAQ compliance regained post-warrant reclassification —Board resignation (no disagreements) Governance normalized
Capital/funding—Expect further capital raises; exploring factoring facility Cost reductions offset by SemiCab investments; ongoing funding likely Ongoing funding need

Management Commentary

  • CEO: “Our third quarter was a transformational period… we transformed Algorhythm Holdings into a high-growth, AI technology company… unveiled our new 'Apex' SaaS platform… move into the $450 billion U.S. full-truckload market” .
  • CEO on APEX: “APEX is the future of Semicab… positioned to generate recurring revenue and transaction fees on each and every load coming through the platform” .
  • CFO: “Revenue increased over 1,200%, from $0.1M to $1.7M… we expect Semicab to generate around $2M during our fourth quarter… run rate increasing to between $15M and $20M by the end of next year” .
  • CFO on margins: “Gross margin percentage decreasing to -20% this quarter from -25% last year… expect gross loss to decrease over the next 12 months as we more fully utilize contracted trucks” .

Q&A Highlights

  • APEX go-to-market: Targeting three verticals—enterprise shippers, 3PL warehouse white-label partners, and large carriers; API-based integration into existing TMS reduces friction and speeds deployment .
  • U.S. vs India growth: U.S. SaaS can scale faster and with higher margins (90–95% GM), while India managed services constrained by truck access; both complementary .
  • Tariffs: SemiCab not directly exposed to import tariffs; core customers are large multinationals with stable domestic demand in India .
  • Capital raising: Expect additional capital (including equity) to fund SemiCab growth; working capital facilities/factoring under way in India to address receivables timing .
  • Differentiation: SemiCab is not a digital freight broker; it’s an AI optimization platform reducing empty miles, improving utilization to ~85% vs industry ~66% .

Estimates Context

  • S&P Global consensus for Q3 2025 revenue, EPS, and EBITDA was unavailable; therefore, no beat/miss determination can be made for this quarter. Coverage may increase as the company transitions to a cleaner continuing-ops profile and grows ARR with APEX [GetEstimates].
  • Near-term estimate revisions likely to reflect: removal of discontinued ops, Q4 ~$2M revenue guide, negative gross margin improving with utilization, and 2026 SaaS contribution with materially higher margins .

Key Takeaways for Investors

  • The business mix has pivoted decisively to AI logistics; continued India growth and upcoming U.S. SaaS (APEX) shift the margin structure meaningfully higher over time .
  • Near-term gross margins remain negative due to ramp underutilization; watch utilization metrics and lane awards as leading indicators of margin inflection over the next 12 months .
  • Revenue visibility improving: Q4 guide at ~$2M and run-rate growth toward $15–$20M by end of next year; monitor contract expansions and fleet access .
  • Funding remains an overhang but diminishing: post-divestiture cash burn lower; factoring/receivables facilities help working capital; equity raises likely modest versus past .
  • APEX is the stock narrative catalyst: asset-light, high-margin recurring revenue potential with rapid scalability and global deployment; watch for early logos and GTM execution in 2026 .
  • Governance/structure normalized post-warrants and divestiture; board changes non-contentious; focus on operational execution and investor communications (IR re-engaged) .
  • Trading implication: headline growth and SaaS launch support multiple expansion narratives; offset near-term by negative gross margin and financing needs; catalysts include Q4 delivery vs guide and APEX customer wins .