QXO, a digital technology and services company formerly known as SilverSun Technologies, grew Q2 revenue 10% year over year but also posted a steep net loss as it took on the personnel costs of new senior management.

QXO Inc. plans to become a “tech-forward leader in the $800 billion building products distribution industry … targeting tens of billions of dollars of annual revenue in the next decade through accretive acquisitions and organic growth” in the digital business technology market.

Founder and CEO Brad Jacobs says the strategy is the basis for long-term growth.

BradJacobs-JacobsPrivateEquity-QXO

Brad Jacobs, chairman and CEO, QXO Inc.

“We have an accomplished senior management team and board of directors in place, and approximately $5 billion of cash to execute our strategy, following two private placements,” Jacobs, a serial entrepreneur, said in a Q2 financial statement. “These are all cornerstones of our plan to become a tech-forward leader in building products distribution through accretive acquisitions and organic growth.”

QXO was renamed in July from SilverSun Technologies Inc. With the costs of QXO’s new management team and severance paid to departing SilverSun CEO Mark Meller, QXO said its first-half 2024 operating expenses increased $5.72 million, or 61.5% year over year. QXO reported a first-half net loss of $452,000, compared to year-earlier net income of $621,000.

QXO eyes opportunity in AI and B2B ecommerce

QXO asserts that the building products distribution industry’s nascent use of technology, particularly AI and B2B ecommerce, represents a compelling opportunity for QXO as a tech-focused entrant. “QXO’s combination of scale and innovation should elevate the customer experience, increase sales force effectiveness and enable margin expansion,” the company says.

As a value-added reseller of business application software, QXO  offers solutions for accounting, financial reporting, enterprise resource planning, warehouse management systems, customer relationship management, business intelligence and other applications.

The company adds that the $800 billion building products distribution industry is highly fragmented, with approximately 7,000 distributors in North America and 13,000 in Europe. Building product categories include access control, construction supplies, doors and windows, electrical, HVAC, infrastructure, lumber, plumbing, siding and decking, wallboard and ceiling tiles, and waterworks, among others.

QXO also noted that ecommerce represents “only a single- to mid-single-digit percentage of total revenue” in the building products industry.

“This share is expected to triple by 2030,” the company says.

How QXO wants to transform distributors

QXO asserts that technology can further transform distributors’ businesses through:

⦁ price optimization.

⦁ demand forecasting.

⦁ warehouse automation and robotics.

⦁ automated inventory management.

⦁ route optimization for delivery fleets.

⦁ supply chain visibility.

⦁ end-to-end digital customer connectivity.

For the second quarter ended June 30, QXO reported:

  • Total revenue rose 9.7% year over year to $14.54 million.
  • Software product revenue increased 14.5% to $3.78 million
  • Service and other revenue increased 8.0% to $10.76 million, compared with $9.96 million.
  • A net loss of $591,000, compared with net income of $344,000.
  • Adjusted EBITDA was a loss of $1.21 million, compared with a gain of $705,000.
  • As of June 30, 2024, the company had approximately $971 million in cash on hand. In July 2024, the company completed two previously announced private placements, increasing its cash position to approximately $5.0 billion.

For the six months ended June 30, QXO reported:

  • Total revenue increased 98% year over year to $28.98 million.
  • Software product revenue increased 9.7% to $7.26 million.
  • Service and other revenue ose 9.9% to $21.72 million.
  • A net loss of $452,000, compared with net income of $621,000.
  • Adjusted EBITDA was a loss of $708,000, compared with a gain of $1.37 million.

Paul Demery is a Digital Commerce 360 contributing editor covering B2B digital commerce technology and strategy. [email protected].

 Sign up

Sign up for a complimentary subscription to Digital Commerce 360 B2B News, published 4x/week. It covers technology and business trends in the growing B2B ecommerce industry. Contact Mark Brohan, senior vice president of B2B and Market Research, at [email protected]. Follow him on Twitter @markbrohan. Follow us on LinkedIn, Twitter, Facebook and YouTube. 

Favorite