Commercial asset marketplace RB Global (NYSE:RBA) announced better-than-expected revenue in Q3 CY2025, with sales up 11.3% year on year to $1.09 billion. Its non-GAAP profit of $0.93 per share was 17.3% above analysts’ consensus estimates.
Revenue: $1.09 billion vs analyst estimates of $1.06 billion (11.3% year-on-year growth, 3.4% beat)
Adjusted EPS: $0.93 vs analyst estimates of $0.79 (17.3% beat)
Adjusted EBITDA: $327.7 million vs analyst estimates of $302.8 million (30% margin, 8.2% beat)
EBITDA guidance for the full year is $1.37 billion at the midpoint, in line with analyst expectations
Operating Margin: 14.5%, down from 15.6% in the same quarter last year
Free Cash Flow Margin: 17.3%, down from 23.2% in the same quarter last year
Market Capitalization: $18.12 billion
Born from the 1958 founding of Ritchie Bros. Auctioneers and rebranded in 2023, RB Global (NYSE:RBA) operates global marketplaces that connect buyers and sellers of commercial assets, vehicles, and equipment across multiple industries.
A company’s long-term sales performance is one signal of its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years.
With $4.53 billion in revenue over the past 12 months, RB Global is a mid-sized business services company, which sometimes brings disadvantages compared to larger competitors benefiting from better economies of scale. On the bright side, it can still flex high growth rates because it’s working from a smaller revenue base.
As you can see below, RB Global’s sales grew at an incredible 27.8% compounded annual growth rate over the last five years. This is a great starting point for our analysis because it shows RB Global’s demand was higher than many business services companies.
RB Global Quarterly Revenue
We at StockStory place the most emphasis on long-term growth, but within business services, a half-decade historical view may miss recent innovations or disruptive industry trends. RB Global’s annualized revenue growth of 21.2% over the last two years is below its five-year trend, but we still think the results suggest healthy demand.
RB Global Year-On-Year Revenue Growth
This quarter, RB Global reported year-on-year revenue growth of 11.3%, and its $1.09 billion of revenue exceeded Wall Street’s estimates by 3.4%.
Looking ahead, sell-side analysts expect revenue to grow 2.4% over the next 12 months, a deceleration versus the last two years. This projection doesn’t excite us and suggests its products and services will see some demand headwinds. At least the company is tracking well in other measures of financial health.
RB Global has been an efficient company over the last five years. It was one of the more profitable businesses in the business services sector, boasting an average operating margin of 17%.
Analyzing the trend in its profitability, RB Global’s operating margin decreased by 1.7 percentage points over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability.
RB Global Trailing 12-Month Operating Margin (GAAP)
This quarter, RB Global generated an operating margin profit margin of 14.5%, down 1.1 percentage points year on year. This reduction is quite minuscule and indicates the company’s overall cost structure has been relatively stable.
Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.
RB Global’s EPS grew at an astounding 18.7% compounded annual growth rate over the last five years. However, this performance was lower than its 27.8% annualized revenue growth, telling us the company became less profitable on a per-share basis as it expanded.
RB Global Trailing 12-Month EPS (Non-GAAP)
We can take a deeper look into RB Global’s earnings quality to better understand the drivers of its performance. As we mentioned earlier, RB Global’s operating margin declined by 1.7 percentage points over the last five years. Its share count also grew by 69.5%, meaning the company not only became less efficient with its operating expenses but also diluted its shareholders.
RB Global Diluted Shares Outstanding
Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.
For RB Global, its two-year annual EPS growth of 16.7% was lower than its five-year trend. We still think its growth was good and hope it can accelerate in the future.
In Q3, RB Global reported adjusted EPS of $0.93, up from $0.71 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects RB Global’s full-year EPS of $3.84 to grow 9.2%.
It was good to see RB Global beat analysts’ EPS expectations this quarter. We were also glad its revenue outperformed Wall Street’s estimates. Zooming out, we think this was a good print with some key areas of upside. The stock remained flat at $97 immediately after reporting.
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