Rapid Branch Expansion Raises Fixed Costs

Rapid branch growth makes EquipmentShare more like an operator of hundreds of local depots than a light software company, which means demand swings hit the income statement fast. By the end of 2025 it had 352 full service branches, up from 267 a year earlier, and management tied that expansion directly to higher wages, logistics, maintenance, insurance, legal, and other site costs. That cost base only works well when machines stay rented and yards stay busy.1 2 3

• Each new branch comes with real fixed infrastructure. EquipmentShare describes a typical site as a 5 acre yard with office, shop, about 20 employees, and roughly $44 million of rental and support fleet at maturity. That creates local density and faster service, but also locks in labor, property, and fleet carrying costs before utilization is proven.2
• The revenue mix amplifies the cycle. Nonresidential construction drove 94% of revenue in 2023, and the rental business carried only about 20% to 30% gross margins, while the company was spending about 85% of rental revenue on buying equipment. In a slowdown, lower utilization and pricing pressure can compress those already thinner unit economics quickly.3
• Scale helps absorb downturns, and EquipmentShare is still much smaller than the leaders. United Rentals ended 2025 with 1,768 branches and $22.48 billion of fleet at original cost, versus EquipmentShare at 352 full service branches and $8.1 billion of OEC around the IPO. Bigger networks can spread overhead across more rentals and shift fleet across markets more easily when one region softens.1 2 4

The next phase is about turning branch scale into denser utilization and more software revenue per customer. If EquipmentShare can use T3 and cross selling to make each branch produce more dollars from the same yard, trucks, and staff, the network becomes a moat. If construction slows first, the same footprint becomes the main pressure point.2 3