Algorhythm (NASDAQ:RIME) reported a sharp increase in first-quarter revenue as its SemiCab logistics business expanded in India, while management said the company is continuing to invest in growth despite ongoing losses.
Chief Executive Officer Gary Atkinson said the first quarter of 2026 was a “record quarter as a pure-play AI logistics company,” citing more than 70% sequential revenue growth, an improved balance sheet and an expanding customer base. The company is focused on SemiCab, an artificial intelligence-driven logistics platform designed to improve truck utilization by reducing empty miles.
Revenue rises as SemiCab India expands
Chief Financial Officer and General Counsel Alex Andre said net sales for the quarter ended March 31, 2026, rose to $2.4 million from $123,000 in the prior-year period, an increase of 1,850%. The comparison was heavily affected by the company’s May 2025 acquisition of SMCB Solutions Private Limited, SemiCab’s India business, which was not included in the first quarter of 2025 results.
Revenue also increased 71% sequentially from $1.4 million in the fourth quarter of 2025. Andre said the quarter-over-quarter increase was driven by sales generated by SMCB.
The company said SemiCab’s annualized revenue run rate increased to more than $12 million during the first quarter. Andre said management expects that run rate to reach between $15 million and $20 million by the end of 2026, largely from growth in SemiCab India’s managed services business, with some contribution expected from the Apex software-as-a-service business in the U.S. and Europe.
During the first quarter, SemiCab delivered 5,716 loads across 14 customers and increased its dedicated truck fleet by 30% from December through March, according to Atkinson. The company began 2026 working with shippers including Procter & Gamble, Unilever, Kellanova and Asian Paints. During the quarter, it added Coca-Cola India and MTR Foods as managed services customers in India, while also citing Marico and Bajaj Electricals among its customer roster. In January, the company announced an expansion of its master service agreement with Apollo Tyres.
Losses continue during network buildout
Algorhythm reported a gross loss of $680,000 in the first quarter, compared with a gross loss of $6,000 in the prior-year period. Andre said the negative gross margin reflects SemiCab’s managed services model in India, where the company contracts for access to trucks when entering new territories and then builds revenue as customers and routes are added.
“It takes time for SemiCab to acquire customers and expand its routes to fully utilize the trucks that it has under contract,” Andre said. He described the ramp-up period as a necessary investment in long-term scale and profitability.
Andre said the company expects gross loss as a percentage of revenue to decline over the next 12 months as revenue from new and expanded customer contracts grows faster than the cost of sales tied to additional truck access.
Operating expenses increased to $3.7 million from $1.1 million a year earlier. Andre said the increase was primarily due to stock-based compensation and operating expenses associated with the SemiCab business after the SMCB acquisition. He said the company expects operating expenses related to SemiCab’s growth and development to rise over the next 12 months, but total operating expenses are expected to decrease as stock-based compensation and other expenses decline.
Other expenses decreased to $1 million from $6.5 million in the first quarter of 2025. Andre said the decline was mainly due to the absence of a $6.5 million non-cash charge for changes in the fair value of warrant liabilities recorded in the prior-year quarter, partially offset by higher interest expense related to financing transactions.
Net loss from continuing operations narrowed to $5.4 million from $7.5 million a year earlier.
Balance sheet improves; note payment deferred
Algorhythm ended the quarter with $10.9 million in cash, up from $6.1 million at Dec. 31, 2025. Management also said the company had almost $9.4 million in cash on hand in May. Stockholders’ equity improved to $3.2 million from a deficit of $1.9 million at the end of 2025, putting the company above the $2.5 million threshold required under Nasdaq’s continued listing standards, Andre said.
Atkinson said the balance sheet improvement was driven in part by a $9.5 million secured prepaid purchase financing completed in February to support SemiCab’s growth. The company also fully repaid two prior prepaid purchases and most of a third during the quarter.
Atkinson also addressed a missed initial $1.5 million payment on a promissory note issued as part of the May 2025 acquisition of SemiCab India. He said the decision not to make the payment was “not a liquidity issue” and that the company had the financial capacity to repay the note. Instead, management chose to retain working capital for scaling SemiCab’s managed services footprint in India and supporting the Apex SaaS rollout.
The company has received a 45-day forbearance and is in discussions with the note holder to restructure the payment schedule, Atkinson said. He added that Algorhythm does not view the note as a material impediment to the business.
Apex platform targets U.S. and international markets
Atkinson said the company’s Apex SaaS platform is intended to bring SemiCab’s AI-driven collaborative logistics technology to third-party logistics providers and multi-enterprise shippers in the U.S. and other international markets. He described Apex as an asset-light recurring revenue model targeting the U.S. full truckload market, which he said exceeds $450 billion annually.
Atkinson emphasized that Apex is designed to enhance, not replace, customers’ existing transportation management systems, and said it is not intended to operate as a digital freight brokerage service.
He said Algorhythm’s U.S. pipeline is expanding and that the company is in active sales cycles with some large shippers and logistics service providers. However, he cautioned that enterprise sales cycles with Fortune 500 shippers and major logistics providers are lengthy due to internal reviews, procurement processes, technical evaluations and pilot design phases.
“We remain optimistic about our ability to convert our pipeline into signed U.S. pilot contracts,” Atkinson said, adding that the company will announce customer wins through its normal investor relations channels when agreements are reached.
About Algorhythm (NASDAQ:RIME)
Algorhythm Holdings, Inc, together with its subsidiaries, engages in the development, marketing, and sale of consumer karaoke audio equipment, accessories, and musical recordings in North America, Australia, the United Kingdom, Europe, and internationally. It offers karaoke products under the Singing Machine brand; licensed karaoke microphone products under the Carpool Karaoke brand; microphone and accessories, and portable Bluetooth microphones under the Party Machine brand; music entertainment singing machines for children under the brand Singing Machine Kids; connected vehicle karaoke devices; and karaoke music subscription services for the iOS and Android platforms, as well as a web-based download store and integrated streaming services for hardware.
