Algorhythm Holdings (RIME): SemiCab’s AI Platform Tackles Empty Miles in Global Freight

On this episode of On the Horizon, Gary Atkinson, CEO of Algorhythm Holdings (NASDAQ: RIME), joins host Tim Gerdeman and WTR’s James Kisner. The discussion centers on SemiCab, the company’s AI-driven collaborative optimization platform built to reduce empty truck miles and improve freight network efficiency by turning one-off shipments into continuous, multi-stop flows. Atkinson highlights accelerating managed-services traction with major consumer brands in India, the real-world operating benefits the platform has delivered for customers, and the longer-term opportunity to expand into the U.S. through the higher-margin APEX SaaS offering. The conversation also covers growth milestones for 2026, the advantages of the company’s asset-light model, and how management is thinking about scaling the business while funding continued expansion.

Transcript

SPEAKER_00 0:02

Welcome to the WTR on the Horizon podcast. I'm your host, Tim Gerderman, Vice Chair and Co-Founder, and Chief Marketing Officer of Water Tower Research. Today we're joined by Gary Atkinson, CEO and Chairman of Algorithm Holdings NASDAQ Ticker Symbol R-I-M-E. Algorithm Holdings is an AI technology holding company focused on disrupting freight logistics through its semicab platform. Semicab uses AI-driven collaborative optimization to reduce empty truck miles, a huge problem that costs the global trucking industry over$1 trillion annually. The company operates managed freight services in India for major multinational CPG companies and recently launched Apex, a SaaS logistics platform targeting the U.S. and global markets. Also joining is my WTR technology equity research colleague, James Kisner. Good morning, gentlemen, and thank you for joining me.

SPEAKER_01 1:00

Good morning, Tim. Thanks for having me. It's a pleasure to be here.

SPEAKER_00 1:04

So, Gary, to kick things off, uh Algorithm has gone through quite a transformation of late. I know you sold the legacy uh singing machine karaoke business last year and are now fully focused on semicab. For listeners who are new to the story, can you please give us the elevator pitch on what semicab does and why you're so excited about that business line?

SPEAKER_01 1:25

Yeah, no, absolutely. Um I think for the new listeners particularly, it's it's probably helpful to hear the problem first. And once they hear the problem, it'll be much easier to understand sort of what we're doing and why we think we're um disruptive to the traditional um trucking transportation industry. So um just to start with a couple of some numbers, um, the global trucking industry is is massive, right? It's um it's basically the backbone of the world's uh economies. And it's uh it's forecasted to be anywhere roughly about$3 trillion a year in global annual spend. And right now, today, and this might be surprising to a lot of your listeners, right now in 2026, approximately one out of every three miles that a truck drives is being driven empty, which is just it's astounding to us. Um and so another way of thinking about that is out of the three trillion a year annual um spend on global trucking, roughly about a trillion of that is is essentially sort of waste and inefficiency that's systemic to the current system. Um and what does that waste look like? So it looks like um unnecessary fuel spend, right? And particularly with today's uh environment, with oil prices being in all the news, um you know, this this trillion dollars of waste and efficiency, it's it's wasted fuel, it's unnecessary CO2 emission, it's um unnecessary uh labor for the truck drivers themselves, uh, you know, the depreciation of the actual trucking asset itself. Um and then at the end of the day, it's congestion, you know, it's unnecessary truck congestion that's impacting our roads here in America and across the world. So um semicab has uh we've developed technology to essentially solve this empty miles problem. Um and what we do is we have what we call a multi-enterprise um collaborative network that we've developed and built. It's essentially a software platform. Um and what we do is we look for ways to optimize the um trucking trips that these trucks move on. Um and we're sort of thinking about the problem from a completely different perspective than what the traditional freight brokers and what the industry is um is is doing today.

SPEAKER_00 4:03

Great. That's a really interesting uh introduction and business. Uh with that, I'll turn it over to James to ask a few questions, Gary.

SPEAKER_02 4:10

All right. Thanks, James. So um again, you so you just kind of hit on the core problem Semicow is is is solving here. I'm hoping maybe you can double-click a little bit and maybe kind of just walk us through how the platform actually works in practice, you know, maybe drill down a little more on how it is different from a traditional digital freight broker.

SPEAKER_01 4:27

Sure. Yeah, that's that's a great question, James. So if you think about so traditional freight brokerage, it's been around for you know a hundred years. Um, you got the big players like CH Robinson, um, and then sort of recently within the last 10 years, you've seen these new digital freight broker companies that have come out. So these are guys like um like Convoy um recently, Uber Freight would be another large digital freight broker. And you know what these guys all do at the at the end of the day, like the model really hasn't changed in a hundred years. It's essentially a a, you know, looking at freight as a series of one-off transactions. So, an example for you would be let's say I'm a shipper and I have a truckload of goods that need to move from Dallas to Chicago. That load is a one-off load that starts at point A and ends in point B. And nobody today is really thinking about where's that truck going once they've driven once they've dropped off its load up in Chicago. Uh, and so uh when you when you look at freight as just a series of one-off transactions from point A to point B, you start running into problems. And that's where this empty miles problem is really sort of taken root is these one-off transactions, they sort of lead to inefficiencies within a network. They lead to assets that get stranded in areas where supply and demand aren't really in line with each other. And so what we do differently, the way we think about freight, is we don't look at freight as a movement from point A to point B. We're looking at freight from uh sort of the mindset of continual truck movements or so continual flows is sort of the way we think about freight. Um, so what does that what does that really mean? We're not looking to execute a load from point A to point B. What our what our platform is is trained to do is we look for continuous movements that'll bring a truck from point A to B, B to C, and then C right back to A. And that's really the heart, I guess, in a nutshell, of what our AI uh engine is doing. There's a there's sort of three prongs to it. There's the forecasting and planning uh part of it, then there's the optimization part, and then there's the execution part. And um, I think really sort of the the heart of it is the forecasting and the planning. So we're able to see like traditional freight brokers, they're really only planning out a day, maybe two days in advance. We're looking out a week plus in advance when we're building our our continual flows or our trips. And so what we're doing is we're we're we're actually predicting loads before they even exist because we're able to look at history and we're able to say, hey, okay, this distribution center, every Monday, there's there's always historically been a load that has come out of there. So when we're looking and we're building these continual movements, let's go ahead and pencil in that that distribution center is going to have a load ready for pickup come Monday. And so we're it's sort of like a massive you know jigsaw puzzle or a mass massive math problem, um, where the system is is is planning, predicting, building trips around what it sees, and then also having this um sort of these all of these contingency plans that are being built in the background. So if that load that was forecasted to come on a Monday doesn't actually materialize, we've got tens of thousands of backup permutations that the system can then execute on automatically or or autonomously without any human intervention to be able to keep that that truck moving. And and I think that's really the core of what we're doing differently is we're we built a platform from the perspective or from first principles as the as the truck itself. Like we're always worrying about where is that truck going next, as opposed to thinking about freight as just a series of one-off transactions.

SPEAKER_02 8:37

I think you're at that the deep dive, that's really helpful. Um let's talk about recent results. So uh I think you had almost$10 million in the annualized revenue run rate in December, and that was up uh 300% um year over year. And you also disclosed that you've been awarded about 15 million in annual freight contracts. So can you can just talk about your momentum, you know, in early 2006 and perhaps how the national digital freight exchange is is perhaps fueling that acceleration?

SPEAKER_01 9:05

Yeah, so 2026 has been a pretty um pretty interesting year for us so far. I remember um back in January of this year, we went to a trade show and we were sort of we were there to do demos of our semi-CAD platform, and we were talking to industry about our sort of multi-enterprise collaborative model. And, you know, I think what what is important to understand is we were sort of operating for the last few years in pretty sort of pretty general obscurity. There were not a lot of people that knew what we were doing. Um, I would I think that the concept behind our platform, a lot of people in the industry were thinking, well, this is just this is too theoretical, right? This is this is this is never gonna work. You know, that was always the pushback that we would get. Um, and then you kind of fast forward to to now. Um, and we're really starting to see a big shift in the way that industry is talking about and thinking about freight, and particularly what that next step change is going to be in terms of freight technology. And so I'm starting to see now a lot of people that are embracing this concept of a multi-enterprise network model. Um, and and I think that's probably one of the more exciting things that we've been seeing this year so far. You know, obviously for for um many who haven't seen us in the news recently, you know, we kind of had our viral moment last month back in February, um, where we sort of were credited with, um, or maybe discredited would be the better terminology, with causing a$20 billion market wipeout in all of the large trucking and transportation companies. And what the media was portraying is that um it was really as a result of our semi-CAP platform being this sort of AI new disruptive technology. And based on all of the media attention and industry awareness, um, we've really been able to supercharge our um our business development cycle this year. So I'm just I'm really excited about kind of where we are, where I see the technology heading towards. I think we're at the perfect time um where the industry is going to be embracing our multi-enterprise model. Uh so uh, you know, for 2026 and beyond, I think we're in a really good spot.

SPEAKER_02 11:27

That sounds like uh you got a lot of momentum. So um you guys are working some pretty large names. Um, you know, Procher and Gamble, um, you know, Kelanova India, the former Kellogg subsidiary, um, Peter Stan Unilever, Asian Pain's, Apollo Tires. I I think in the last month you also had MTR Foods and have a pile of Coca-Cola India. So um kudos to you. Just how are these land expansion strategies evolving? And what does it tell us about the scalability of the Semiced platform?

SPEAKER_01 11:55

Yeah, so in um our primary growth driver right now is our what we call our managed services business, and that's primarily operating out of India. And you're you're absolutely correct. I mean, we've been um we've been absolutely thrilled with the the the name and the caliber of these sort of Fortune 500 shippers that have been coming onto our network. And what I'll say is that it's a it truly is a network effect business model. And what I mean by that is the more shippers and the more carriers that come onto the network, the better the overall uh cost structure is for everybody. Like essentially all the participants win, right? Because there's more, there's more transactional volume, there's more opportunities for our software to find those types of efficiencies to cut down empty miles. And so we're able to pass along a lot of those cost savings to our customers. And and look, it's been working. Um, so we were able to, we put out a white paper back in back in February where we talked about um some of the results of the kind of real real life production data that's coming out of India. And we talked about how we've been able to cut empty miles by up to 70%, which anybody in industry uh that that's that's huge, the the that type of empty mile reduction. I mean, some lanes were able to get empty miles down below 10%. Um, so really, really, really impressive numbers that are coming out of our um our managed services business in India. Um, and at the same time, what we also sh what we also proved is that we're actually able to quadruple the amount of loads that we can process through our semi-CAP platform without adding any additional headcount whatsoever. Um I think that was something that got picked up last month by the media and really kind of kick-started this AI disruption fear that impacted the rest of the industry. Um so, you know, the expansions with our customers have been going great. You know, these guys, they all typically like to start on pilot contracts, which is generally, you know, they'll award us one lane or maybe two lanes, not a lot of volume. But I can say that we have not seen yet to date any customer that's come onto the platform that has not come back to us with more lanes, more volume, more business. Like it just proves to me how sticky this service is and how much they love it because every single case they're coming back to us and they're looking to do more. So really uh really excited about where the managed services business can go.

SPEAKER_02 14:36

All right, very cool. So um, you know, you recently launched a semicap Apex for the US civil market. So, you know, why is this the right time to push into that$480 billion US full tripod market? And how does the SaaS model you know change your margin profile compared to the managed services uh business?

SPEAKER_01 14:55

So so why why US? So I mean US is obviously it's the biggest trucking market in the world. So it makes complete sense for us to be here. You know, we're we're a publicly traded company here in the US, our corporate office is here in the US. So it's very, very important for us to have a strong presence here in the US. And in terms of sort of why a technology offering, like a SaaS offering, there's a couple of reasons for that. So, number one, we've always from day one wanted to be a technology first company. Um, I think the reason we got into managed services was really because of the fact that we almost needed to prove that the model worked in order to gain acceptance for our SaaS product offering. So we always have wanted to be a technology first company. Um and obviously from a from a sort of corporate financial perspective, SaaS has always been a much more desirable um model for us. You know, the margins are much better. You know, you're typically look typically looking at you know traditional SaaS margins, which are you know upwards of 90% um gross margin. Um and it's it's it's just a very light, highly scalable model that um I think will give any any any partner that we work with having access to this technology will give them a competitive advantage over all of their other competitors. So it's just always made sense. It's kind of to be honest, it's where we've wanted to go from the beginning um in sort of introducing a technology for SaaS product offering. And the US makes just complete sense for us given that we're here and so much of the market is here.

SPEAKER_02 16:38

Yeah, it makes sense. Um one of the scaling strengths you talked about um is truck availability in India in India. Um by late 2025, said Semicab had expanded its fleet to 450 trucks, uh, enough to support more than 23 million annual revenue and fully utilized. So as you work to keep scaling capacity, how are you managing the operational challenges?

SPEAKER_01 17:00

That's a great question. And I've said it, I've said it publicly, and I'll say it again. The I think the biggest constraint for us to grow our managed services business is what you just indicated, which is having access to trucks, right? And that's the core, that's the core difference between the managed services model and our our SaaS um product offering is that within managed services, we're responsible for sourcing and procuring the trucks for our customers. So we operate very much like a virtual carrier. Um, we don't own any trucks, we don't hire any drivers, but we are responsible to source these trucks to pick up the loads on behalf of our customers. And so, like, for instance, lately our acceptance rate in India for managed services has probably been in the low 70% rate. So we're turning down a lot of potential business simply because we just can't get our hands on enough trucks. And so that's been our biggest constraint. That's from an operational perspective, that's where we're spending most of our energy is trying to enhance the supply side of our carrier network so that we have enough capacity to keep up with all of the demand. Um, and again, it's another reason why I am just I'm so excited about the SaaS product offering that we that we've launched last year. Um, because that model has no constraint. There's no constraint. Uh we don't need to source trucks. It's really up to the partners that we work with to be able to supply their own um their own infrastructure, their own dedicated fleet. And um uh and and so that's why I think you know we're we're going all in on that on SaaS. That that's we really want to be a technology first company.

SPEAKER_02 18:47

Makes sense. Um one other kind of initial constraint for folks is is financing. Um, you got a supply chain finance facility for Bank of America, and then uh, you know, um you said you're fully funded through 2026 after additional draws on on a broader financing facility. Just how much should we think about your capital needs and funding sources from here?

SPEAKER_01 19:07

Yeah, so great question. I mean, uh I think most business owners will know that that financing working capital can be challenging. You know, you've got situations, particularly in India with managed services, we're doing business with some of the largest, you know, Fortune 500 enterprise companies in the world. They typically pay their suppliers anywhere from 45 to 60 days out. Um, and then on the other side of the coin, we've got small to mid-size carriers where we have to pay our bills in 30 days. So there's clearly sort of a cash-to-cash timing breakdown that we need to fund. And so we've we've um we've got sort of two primary levers that we play with from a non-dilutive um financing perspective. We've got uh a Bank of America uh financing facility, it's supply, it's a supply chain uh financing that we do with Procter and Gamble. And um, and it's a very, very low cost of capital. I think it's um treasury plus 1% to essentially finance the PG receivables. Um, so that's one lever that we love. We we we absolutely love that Bank of America facility. The other piece we have to fund work and capital is we we utilize a service called C2FO, very similar to sort of like a quick pay or prompt pay discount program that a lot of our customers participate in. Um so we leverage that in India as much as we possibly can. Um and then at the end of the day, you know, we're a business that is not yet profitable. Uh, right. So there's there's always going to be a gap that we need to fill. Um, and that's primarily done through through equity, right? So that's the um that's the the capital market side of the business. Now we did announce, uh I believe it was last month, that we have sufficient working capital to fund the business all the way throughout the rest of 2026. Um, and I stand by that. Um so we're well, we're we're fully funded. We've got um many, many quarters of runway to continue to run the business. But you know, because we do, you know, we're not yet at the point where the managed services business with the SaaS business is generating free cash flow. You know, it's important for the for the the listeners and the viewers to understand that we do need to continue to raise capital um primarily from you know equity from the capital markets.

SPEAKER_02 21:38

Very Opult um perspective. So just one last thing as we wrap up. Um so you projected semicabs annual revenue run rate to reach 15 to 20 million by the end of 26. And so just for investors, as you look ahead, like what are the two or three key milestones milestones that they should look for um you know as they track your progress in this year?

SPEAKER_01 21:57

Yeah, so we're we're still very much an early. Stage business. So I think for us right now, the key milestone that I'm tracking every single week is obviously top line growth, right? We need to grow and expand as a network-based model. It's very, very important that we're continually bringing new customers, new carriers onto the network because that's where we know we're going to we're going to have that economy of scale, where eventually the model will prove out that we'll be able to generate positive net income from the managed services business once we reach that that that economy of scale where now every participant on the network is winning. And the way we drive value, the way we drive margin, is when all of our customers are seeing those empty mile reductions. So we're, we're, we're proving it out. We're not there yet, at least from a volume perspective. So I would say the number one thing investors should be looking for is just growth. And that's that's what we're tracking here internally. Um the other big milestone that we're also looking for this year is that first big uh US SaaS customer, right? And that's under our semicab apex product. And that's going to really, I think, be a sort of found out foundational game changer for the business. It's it's what will impact the bottom line financials the most, um given that the margin structure is so different, right? You're talking about 90% gross margins as opposed to um, you know, much smaller margins that are coming from the managed services business. Um and that ultimately that's where we want to be. We want to expand that SaaS product, not just here in the US, but we think around the world, because this empty miles problem, this is not a, you know, it's not localized to the US or India. This is a global problem. This is something that we can fix um all around the world. And and so I think we believe we have a product that can suit uh all the different geographies around the world.

SPEAKER_02 24:03

Okay, thanks so much, you're really appreciate all those thoughtful answers. I'll I'll hand it back to Tim.

SPEAKER_00 24:08

Well, great. Thanks so much for joining me today, Gary and uh James, for very, very interesting talking about algorithm holdings and the significant problem that you solved for. So thanks for your time.

SPEAKER_01 24:19

Great. Thank you guys. Appreciate being here today. Thanks for all the great questions, James.

SPEAKER_00 24:23

Thank you for listening, and do not forget to subscribe as well as visiting www.watertowerresearch.com to stay up to speed on the WTR on the horizon written research reports podcasts, fireside chats, industry specific symposiums, and conference schedules. We will see you next time for another edition of WTR on the horizon podcast. Finally, a special thanks to the producer and editor of the podcast, Krista Fitzpatrick.