Earnings call transcript Q1 2023

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Operator

Good afternoon, ladies and gentlemen, and welcome to Phunware's First Quarter 2023 Investor Conference Call. [Operator Instructions] Joining me today are Russ Buyse, Chief Executive Officer; Randall Crowder, Chief Operating Officer; and Matt Aune, Chief Financial Officer. The format today will include prepared remarks by Russ, Matt and Randall, followed by a question-and-answer session.

As a reminder, today's discussion will include forward-looking statements. These forward-looking statements reflect current views as of today and are based on various assumptions that are subject to risks and uncertainties disclosed in the Risk Factors section of our SEC filings. materially, reliance differ placed not may them. on results and should undue be Actual

investor being may is discussed measures. matters Relations which the Additionally, further collateral today on the the on GAAP but release, earnings the I press Investor to presentation, filings investors.phunware.com additional encourage current and non-GAAP SEC website is wear. in available Phunware’s investors.phunware.com. Reconciliation to include visit font to press also you at financial forth access information set only the not section earnings release, of financial non-GAAP

At things Sir, this CEO, time, you I to Buyse. would like to Russ over turn may proceed. Phunware’s

Russell Buyse

are, to conference their in enhance they and in Thank you contextual how just are reach them with engagement, We experience We strides welcome about. quarter is potential they of to That achieve interact trying QX our moment. call. this and when a Contextual XXXX is huge investor that. what very all to Phunware to buying much, realizing engagement where first made purpose. brands to bring users in

experience. platform, solutions progressed consumer-grade for the our health product health our engagement. our our to module, providers And solution, updated offering engagement our foundation for we form enable a care with both contextual We and our provide SmartApp underpins we updated which SDKs, and Starting patient creates which industry mapping the customers. exceptional experience care industry to

brands management alike. Optimizer, mobile which without large curates users This all our of the hospitality We and of or unique boom is different a applications. the Experience also sub-brands buildings download multiple requiring to flexibility experience for and launched streamlines patient across experiences hospital companies,

uses Office Phunware preferences based progress, most learning their geofence while machine activity. to matter and the patent product that users to a technology, U.S. about for And technical what predict previous will has innovation talking experiences awarded Patent event prediction on a we're location,

their delight we've more experience ability serve company. enhance compelling tremendous advances All of users to and with underscore brand's to a these progress as the a made

deployment the Phunware Hotels operational. front, are Rockies, customer Marriott now Gaylord with Palms finished by the Texan, On its and national fully properties Opryland,

Our under square pavilion also with budget schedule. with both integration their Health us, of feet parking VHC expanded this XXX,XXX system and engagement their deployment teams and adding Debut. a finished rollout ahead outpatient

We prospects. have several soon. late in announce is environment delayed we to The around is the economy large stage has pretty current nervousness opportunities selling pipeline rising with at the headed, a challenging rates that with some hope and where decision-making interest that

seen network cybersecurity, IT, the experts buildings. the joined brings been by Connect brings also technology our on stresses remote over services wayfinding Siemens partnership ecosystem, Fortunately, business to digital optimize you, and I'm intelligence. regional that past tell This we've and banks the of software Blue in together has unaffected quarter. to Dot a power delighted the Funerwear development, smart

workplace as automation smart multi-dwelling platforms, unit seamlessly and system, solutions system integrate and related Siemens Our Apigee the building platforms. management GezagoCC, with including

they network Connect reach closely journey to enlisting sales efficient to our as our across markets, direct of see target partners exceptional way towards deliver We we to to with to as Siemens and will customers forward buildings our working broaden We complement experiences ecosystems force. them customers be effective other look infrastructure. to smarter and and and experts an more

publishing efficiency ROI increase costs, and of and solutions adopting gain leadership investments to also more awareness, content studies, more and are reduce We strengthening effort including our to demonstrating and imperative the opportunity thought alike. drive revenue industry customer our marketing

can and the reward engage where On token right them. brands consumers, marketplace between the the we work for blockchain fun continue coin side, fund consumers to to facilitate and brands on to

regulatory power and continuing greater to privacy they given will and users. this, a last audiences to want, steady reach we're winter offers reach As will prospective the to brands and quarter, slow and on and our fully approach compliant preserving help it This their mentioned current customers headwinds. our existing ads include complement and offering taking give solutions I crypto industry

side, headwinds business QX. light unit market On the faced our affecting hardware whole the same the PC in

However, on we industry the averages costs. managed outperform acquisition while to materials and discipline maintaining customer

now And our financial our Anne, will CFO, Matt performance. cover

Matt Aune

progress thank everyone. I'd a first and of Russ, Thanks, performance our review us and all strategic for XXXX good today initiatives. afternoon, you our like for financial on to key quarter joining

For GAAP be noted. measures, financial otherwise discussing I'll unless specifically clarity,

financial X-K Our and results. a press release, provide website non-GAAP GAAP to all of reconciliation

platform totaled of $X.X XXXX Net our XX% revenues first the or of $X.X which represented million. of million, revenue for quarter revenues net

XX.X% million. hardware compared XX.X% the margin by the it. Platform net to of Gross non-GAAP or margin year. to for primarily cause was compared compared compared a of adjusted revenues gross can year. wear, gross last associated light platform of gross to revenue year. and margin basis, $X.X XX.X% a totaling year-over-year X.X% sold with was last last XX% to basis, XX.X% On fund Our XX.X% X.X% was a goods year. non-GAAP represented On revenue last XX.X% be attributable margin to The mismatch adjusted drop cost was

QX. As excited the are previously to we mentioned, have Gayler extremely in completed deployment

for multiple If as margins the taken of for to from revenue, deploying ultimately project would costs SaaS QX. single a be be GAAP the all revenue to able the closer much to recognition revenue the able in of a with in that However, to to by are contract, the we up our that quarter. the in during which shift be non-GAAP gross the means project were match revenue will over not be revenue locations base bigger last happen will continue year. offset the associated QX absorb life will margin this to build X-year time This time requires software we from

X in with by target by Our by life terming a quarter-over-quarter show EBITDA reaching unit's to the Phunware XX% profitability continued hardware adjusted business to X improvement next operational quarters. of business loss the

from a this the million $X.X up last were intangibles, was year was compensation noncash last year. expense expense prior operating compared million, year. and to items Other $X.X year. operating making of million excluding $X.X million By stock-based million $X.X combined in $X.X $X.X amortization adjusted expense compared these charges, million operating to Total noncash it

forward see are non-GAAP We consecutive to for last Adjusted was was compared on have EBITDA plans long-term the continue metric that operating the breakeven loss sharing this loss million ways we We for to to $X.X showing EBITDA expense quarter. in breakeven. the get we committed to future. pleased look second adjusted go quarter are in to narrowed our to a consecutive year. as but to to Non-GAAP dropped third improvement $X.X million quarter-over-quarter breakeven, was the path still and

compared to year. versus million $X.XX $X.X loss $X.X deferred at $XX.X last or Weighted Net net last quarter loss share to revenue per $X.XX were million was million end year. $XXX.X per per $XX.X earnings million. share shares average Backlog million totaled share or calculate the used the and of

Russ point to year. As at and a expect for stage pipeline several we be deferred low revenue deals and the the late in number a the have large mentioned, QX backlog

based approximately today's sheet. $X.X with $X.X million Moving We and assets on the $X.X hold debt. prices. and cash in digital balance currently We million in quarter million of cash the closed to

towards We to equity operations cash evaluating debt various and are options fund neutrality. to as actively push we continue

and forward further as XXXX themselves. Cancer conferences and the remain Conference and events Needham XX conferences financial our other active through May with many markets. and we tell and and our institutional to and XX at present capital meetings June story to will on Fitch the high-class our major We corporate Technology meetings XX will look through strengthen profile XX. The the financial efforts with financial Media investor be Annual investors attending Tech conversations We Conference next is opportunities conference both one-on-one in Gerald those XXth the

over to I would With Randall. the like turn to that, call

Randall Crowder

Matt. Thanks,

to During contract streamline the great strides offerings. we we price, quarter, our core how bundle and took

professional customers resulted we and still past, are close a our dot blue annual way a best-in-class from overly our number now software third-party scalable advanced is This capable development mobile been an and a take drastically hardware has branded everything fund our that to the can license. shop but integrations sticker our of finding, include any of and to solutions are that a like a pricing, in so location-based change where only For delivers of care improve any important In cycle services will very we required complicated straightforward and that for can SaaS we to well services license, that now very shock, real-time contracts sometimes sales maintenance, any configurable, sold own rate. simple simplified actually point offering enterprise prospects. responsible with custom is application received launch believe, by we

features for limited need on can both less don't a platform templated and month. not our scale customers than application Enterprise for to that mobile and functionality. settle apps launch $X,XXX now low-code are proven They will an enterprise-grade in

Our product platform our customers making. benefit we from important the approach improvements all because is are

is unicorn Opryland have For example, of Gaylord but something many Convention conference we Nashville. at in tried configurable Center location-based industry. Resort and services the that and deliver our solution with something in successfully failed tested a This vendors to

Phunware made possible. has However, impossible the

account and seamlessly Our center and venues time new any for organizers to will hardware engagement personalize attendee layouts our additional the right platform adjust route can ability organizers while exhibits their can to giving optimize or to attendees finally conference routes convention help event the space without and fingerprinting. reconfigure

significant both to partners We to partners will open and next industry, our who month. be locally doors are several abroad. are reviewing strategic working with the across hospitality These thrilled live be closely able solution

to digital care to in Speaking at TD year Chicago our front thrilled prospects. of and Senex conferences, health this numerous we door were with HIMS partner showcase

and at year by next in for Las as our we'll in Marriott. will connections great each Tahamas Hotels well conference Atlanta premier amazing casino at Vive work made hospitality in Toronto, resorts also and showcasing Vegas as which Vitec remains Nashville for the Gaylord High-Tech be be We where month

to blockchain, regulated to trading to summer follow issue maximum are Regarding XX% this we coin's on Fun supply securitize of approximately still thereafter. with track

holders this their notified ensure accounts. set and At time, properly up time all given are to we rightful been working to have

which its announce successful Switching we at the test to gears well, serviceable industry token available our we to to our looking as will applications. to new be and growing our increase trends. summer blocks third-party light, headwinds leverage fun this in drive are new due line With of awareness market and despite of size wallet, within excited functionality also workstation fun utility take are macroeconomic brand the to fund advantage the ways via will

things remarks, to to over closing like turn Russ. back I'd For

Russell Buyse

changes Randall. our deepen and markets. Thanks, contacts happy this and progress I target the the made we've customers our quarter with made with past our reach To extend very we've conclude, am to in

contextual we invest market our grow into bookings inorganic as At spending expect time customer OpEx. can for our engagement. same on control We're marketing. transactions opportunities business committee transactions. see forward and and fronts discipline is on strategic these and needs all more Expect solution energy focused growth, growth from market-leading our the about You to actively more to time, looking developments through meeting to going the us sales with

location-based We last anywhere capabilities you any can engage in screen service almost thing; longer to or one the need of term world which it just whose anyone than a platform, MAS as we've it using is range more investments a no are immediately. activate as we in mobile-first And and platform. our context about We the capture everything multiscreen our a where the matters. deliver software call enterprise and to made significance fails

I call for go now to ahead. Operator, questions to up please the open operator. the would like

Operator

be Thank with first you. At ROTH Our Aftahi Instructions] is [Operator will this question-and-answer a conducting question time, coming we from MKM. Darren session.

Darren Aftahi

Sorry, On pipeline, deals XX you in that's right I Two, now? one, last in days? may. And what ahead. if guess, are verticals your I the how maybe characterize, can changed those go

Russell Buyse

hospitality most to going the pipeline we are activity voice middle And And to say which things see X have your the in the have hear just good X that in and now are quarter how we later was last in over our more changed that see ones I to favorites. as join So again. that health care, and in stages of the verticals stages. kind were are the opportunities

Darren Aftahi

second my And to Great. then of that kind leads question.

clients sort the that wondering, with integrating in and into inroads that the just made in provide just in your any over of opportunity book map lift platform you've of opportunity road generative terms I'm time? revenue around all hospitality or Given more is terms AI, of law maybe to

Russell Buyse

which, speaking make Well, plug of write especially just course, me, and AI is as opportunities come certainly eye -- looking something where models we're naturalistic very like us that sense turning language as for for an up that to with on, would excuse keeping And could or Britelanguage, it in. spoken have large we're well. be to

they contextual which reaching and are We are they engagement, about consumers where when is those are.

an customers. that. We're And offer writing will so the there reach those essentially, may if you way application will, that we to be that allow still the in looking at them

Darren Aftahi

one last for Maybe Great. one Matt.

Just But Or hands kind about revenue like costs way mismatch deals just of Gaylord. when smooth that is comments out the that any and a you GAAP of function to called your on and out? is there a valor accounting with growth. and

Matt Aune

I a we've less on mean, it to as or GAAP quicker deploy able to of of base. over upfront function accounting. got as going call, more mentioned is be much up there's time, a And bigger to Yes. as build I less I mean the with that Certainly, also, we're work. resources, not

customer had next that a quarter, significant on to if margins whereas like year, like change points. there's So impact it only might one X margins, if by happens, last something it has X pretty or the happened

It's the amount should we the the as just short of So accounting more Gaylord more, and was it's to these can a going that see already deployments But that more. different faster. we grow matter base in need term I faster over X get just still we that of of time. fast, And a and was but improve as work sites. nothing GAAP mean then significant there mature do rules. we to will just kind of

Operator

is Scott from Our H.C. Buck next with Wainwright. coming question

Scott Buck

I'm to incremental up revenue curious, a expect of what color expectations scaling just that are give Siemens of in see with on from you us bit and maybe could partnership terms we little partner? the some could when

Russell Buyse

that sort we're hot Well, partnership. presses in of off Siemens the announcing

training to up directly enter the function whatnot. and there's I'm with of we going within we smart pipeline a see that But doing period out within Siemens and expect quarter of a to deals that going partnership it's concrete of of related, so a really workplaces, of certainly be But themselves. cross we to set opportunities kind And see partnership the working bring do So that quarter of like a of expecting do be will -- of business strength here. or Siemens getting to or the kind kind X. a that especially

Scott Buck

a revenue that the remember there people spending? helpful, just, business, Russ. there? Great. to something What's That's as I were hardware Or of on had seem in guys kind those? environment is else -- and on there down And new of then macro I products Is XX% like to cutting the you the it And some pipeline. going going mean, year-over-year. looks status is follow-up, put discretionary then back on

Russell Buyse

XX%. PC off in were market, Yes. MAX actually The basically entire Thanks a for including bit was asking. quite sales and group down is their Apple, The almost Max off PC XX% QX.

XX points PC tracking of space. in actually the ahead there So were we the cohort

focus the with stay and customer as costs costs discipline we've cost we that our in make sure is acquisition so just line around build what And really on done well.

of kind we of So kind a had we're if of ahead normal market. tracking plan

that unit. I seeing you greater be bottom wider well light as that And out for think -- as of in better line, revenue the products too. than asked we'd about the

quarter. workstation to this are lines the We expecting introduce

that complement users, power are serve. that to offerings us business give will already that market that's we a and good So aimed gamer at the

Scott Buck

last Great. helpful. That's for me. then And one

or the of looking Curious that of the additional quarter expected Just year? some in last what for to guys the levers pull is at you done if there here few rate this have we're a the reeling rest kind on kind OpEx, run job of quarters. nice you versus have

Russell Buyse

I'll Matt, one. you let that talk Yes, about

Matt Aune

well. on Yes, something reduced had sure. Yes. consecutive of as constantly we're be will quarters we're we call, is QX of No, looking I and mean reducing said at. this -- I a we've anticipate Like couple the it,

mean, mean, majority I OpEx headcount. is our So we're terms levers, in I -- of of

of and evaluating rightsized we're have. so for sure headcount And we're deals the the making we number

and quarter there of a QX end We trimmed seeing you're the in have really last impact here yet. the towards few a few of made not that --

little a a be And then or the to just continue make there'll a continuing slow evaluate grow. staff process a don't think of quarter-over-quarter. single we're kind it's weren't mostly drop I to see I of process. bit to need those just in OpEx but going in -- going is sure have million sure if going So be million and that evaluating savings terming expenses $X and we we'll there. forward making it's the $X quarter, of But again, we to stuff

Scott Buck

Great. much. very you Appreciate Thank guys. that,

Russell Buyse

you. Thank

Operator

next Taglich Halpern is Brothers. question with coming Our from Howard

Howard Halpern

you businesses less deploying Are customers the now guess, projects? I customers towards model committed a are you a But the they hesitation then model, your now Service, much fund. the -- are going pivot, forward seeing or with pipeline, a are by Software and really in customers your business to hesitation SaaS-based more the because with as with of seeing lot

Russell Buyse

Yes, of which earlier location-based the say there, easier little simplifying their there. sort to will. option and also, every if formerly it it for understand you talk they variables contemplate beacons had you around -- for to thinking And easier lowered what out as about And for them Randall being this is unbubbled. because about fewer addition to and we've taken to and everything makes kind consider. floor, in it's have in we've yes also it to we've just of heard goes costs them don't that for fulfillment they also kind -- services And of have the We around together. what all And and broken done, had are the we them of committed. them, kind rebundled was pricing own

now have get So where month. customers a bundle for started as as we a little could X,XXX

us that end And offer. can more. more the end, size in of so doesn't that the lower packaging middle opens really range It affect terms we gives of variability in enterprise the at the margins the it or opportunities much and the

Howard Halpern

bringing And announcements, trained terms in prior up running [ph]? I Okay. of those you Siemens, partners, and leads know of but and are fully most your announced just in

Russell Buyse

doing where a and few this, have more and we where like We It's are we not mentioned constructing don't a lot to building workplaces to up work within of smart of have in as on we partnerships exclusive with they're are broaden future. about Phunware. it expect a Siemens, the effort. that, But area working markets running that a we direct sales like especially that's kind in focus where that. have from specific outbound and the an And

folks course, of the And so we're structure give kind those of looking it we've the as for we've materials the to of to easier incentives be to their players. And advocates sales well proper -- approved training as train of and our kinds got agreements them the to make here.

turn will do indirect their can pure co-selling this a them, it's on of it own... completely model kind eventually, where into with where of So instead they

Howard Halpern

last going revenue, now you extremely one to revenues, for to margin back with not be guess, Matt. it's I that one But they're you'll And revenues the forward, margin? revenue Okay. be Gaylord the XXX% going high recognize will to going especially mismatch up. able brought in

Matt Aune

certainly. Yes,

the blended kind our yes, gross maintenance support margin the portion continuing deployment kind is be devoted essentially several next years. that'll XXX% in So will forward, of that going with be for of to and

it will impact time. we there quarter saw. over first rightsized in get It's bigger as just the So a

Howard Halpern

margin. seeing the in you're And hardware, still in gross Okay. improvements

as that can as improving to forward going it You're and maintain not -- discipline you're you much quarter-to-quarter. going

Matt Aune

Yes.

we're slightly management in inventory various door. and So in that working terms dipped QX, out gross there's some still through quarter-over-quarter and of products getting the margin factors

light did and However, quarter-over-quarter on it company. lose best since did while had an the the overall its quite basis, quarter even some money, owned improve business bit a we've

And doing well. so is bottom line

have QX a from of year. last acquisition customer Our and quite costs bit QX trimmed

X to kind to X finally better in the able we're quarters. be thing breakeven next So this going feel where like in to of to process here the we're we fine-tuning get or

happens this quarter So hopefully, we'll Magna. but quarter, if in this see it

Howard Halpern

Yes.

Operator

from Ascendiant next Woo is with Our Ed question coming Capital.

Ed Woo

in Yes. change you environment economic given noticed pipeline Have any cycle? the the your uncertain in sales

Russell Buyse

more little a I Yes. characterize is The bit just would a bit it more little slowness, caution. way

end. is drop it We of the kind haven't pipeline, the this a when of seen any out comes decision multi-stakeholder but to enterprise

more, own kind their checking they kind so And a and local having I interest for even being mean of rates year. good double of at high or is last hospitality the alignment their despite are a forecasting. decade

And of going. so to countercyclical nature. care pretty And is in them we course, expect keep health

is bit little of budget natural cycles, that combined slowness this So the with more function a due more to a uncertainty.

Ed Woo

luck. guy’s Thank wish good I you. you

Operator

Thank you.

end We of question-and-answer our have session. the reached

back I remarks. now the turn call any management will So, over for to closing

Russell Buyse

have to I Well, nothing further add.

environment, the in of really quality comments as you really time. as covered brands contextual not we does that very our experience your improve being their engagement despite what help so all this have there platform that where guest think I their experience, revenue; everything. is and the to their good reduce costs think no it attractive using well patient enhance season able I'd is [ph]. their a and kind the of is I location-based do to like of product thank for still do kind does our to economic still, time

Operator

today's you your we lines participation. this at This and conclude thank conference, does Thank disconnect you. time, you your may for and

Phunware (PHUN) 11 May 232023 Q1 Earnings call transcript