Earnings call transcript Q2 2023

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Operator

Good afternoon ladies and gentlemen, and welcome to Phunware's Second Quarter 2023 Investor Conference Call. Currently all participants are in a listen-only mode.

Joining me today are Russ Buyse, Chief Executive Officer; and Troy Reisner, Chief Financial Officer. The format today will include prepared remarks by Russ and Troy followed by a question-and-answer session.

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

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

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

Russell Buyse

Thank new and for welcome much, call. position made our several XXXX that quarter including moves success, cost and bringing our We second CFO will investor this implementing a quarter strong conference significant reductions. company you very to in

In to and an Phunware our of category account lead to fold. customer generation addition, a new approach welcome based shifted we also the

segment U.S. Location-Based $XXX slice offers acres offer a invigorating the new affordably hospitality of water relaxation one of guests its can the customer as Platform the having Resort escape Thumper brands resort oasis representative main midmarket indoor by our market. a course, luxurious an of golf of billion XXX of championship dining am in wins experience. an Pond best park This proud possible class their effectively One most verdant of of of the is located use and to and and This the is its segment with is recreation an heart Phunware I woodland, captivating Minnesota, for over guests. world entire resort that spa, surrounded

and Technology the June, sales and in first and Technology Industry with at brands and Professionals Phunware Financial Toronto Exposition guest our marketing Canada leading for the than interested Annual was Conference generating technology the of where time in who to visited the world's proud As leads exhibit hotels, Hospitality Hospitality initiative, wayfinding part in Show revamped casinos for also are to connect with attendees technology our hospitality primarily messaging solutions. meet partners. companies, us from more resorts, XX XXX XXXX direct Convention and Toronto,

resonated experience contextual and apps The show, comprehensive Bahamas the Experience app. clear technology as out reliable though interest stream among this entrant in to [Technical with Despite new and of steady solutions. Difficulty] their story deploying our partnership a as stood wayfinding that Atlantis showcased our vendors. at hospitality, Phunware Phunware HITEC the we we guest with accurate there leader being Guest mobile with our a our that other was customers first were was relatively booth wayfinding

us of superior At HITEC, messaging. assisted, focused with of many part who clearly the a mobile in personalized broader patented combined were with none marketing independently the curated offered make as but dimensions campaigns our targeted combining to there wayfinding vendors or accuracy pack. on and AI guest platform, compared blue-dot rest both Phunware's experiences

was landscape vendor actively The every their at and HITEC and system, incredibly is were other but fragmented, integrations, them. property hospitality deploying essential for software management it flaunted how point-of-sale unclear many

on positioned our most facing focusing needed contextual the identify uniquely separate while we wayfinding need continue to will to engagement, Going ourselves integrations the and for prospects distinct with Phunware to and our guest clients. a solution deliver from use forward, competition by critical cases simultaneously

teams modules, for our to tool our the also our extending moves bring combined and the go us allowing improved mapping Difficulty] engagement be These On made sales to faster to [Technical locate where to to on innovation progress engagement best-in-class squarely product as marketing product for to, We've positioned want customer steady generation less our events contextual beyond. side, and navigation we from deployment engagement cost. to wayfinding hospitality, continued Phunware lead engagement. configure lead facilities and and healthcare and

its high offering unit end Lyte PCs for quarter. Our gamers this late workstations first introduced in

expect While high influencers offerings have margin promotion product line, hopes this higher we for social as out of to these channels. we be gradual we through growth roll and

long-term. options optimize to evaluating while this drive the strategic Lyte's medium to continue unit for toward profitability and We over business performance

us investors. We toward instrumental impact accelerate new negotiating terms Phunware, also already Troy has profitability. prospective cash our CFO. restructuring welcomed the with burn in reduce as bringing our at made a and discipline path growth help us Phunware's Troy substantial been debt down fiscal and Reisner to He's and

I that, with financial to to talk performance. our over will about Troy turn And it

Troy Reisner

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

privilege as a it's become of CFO months talented two Phunware team. a On ago a joined the personal about note, to Phunware part I and

As through quarter unless our I'll specifically financial GAAP noted. otherwise discussing measures results, we move second be

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

XX.X% revenue let's non-GAAP $X.X compared With On at million for margin Net a represented the XX% XX% the Gross that a to adjusted numbers. hardware revenues gross XX.X% margin to or approximately XXXX million. XX.X% revenue million, which XX.X% of our last second last look and compared of said, our was basis, year. year. was or represented $X.X totaled quarter take platform $X.X

last gross negative Our compared year. XX.X% compared Hardware last platform X.X% gross was margin to XX% to was margin XX.X% year.

an of increase $XXX,XXX. quarter margin A the inventory approximately significant contributor to stemmed in reserve gross the of our during drop from hardware

inventory begun excess capital. to sell have free any already to up We efforts working

on efficiently the turnover, managing in all supply Lyte with needed, on customer much demand. focused inventory our capital to chain, In are we improvement working decrease addition, while increase more continuing inventory meet hand to

$X.X compensation the Other amortization last operating combined million million to $X.X expense up operating which charges, excluding $X.X from a $X.X inclusive year items this of based goodwill By compared year. Total to approximately making approximately noncash was operating million for impairment, noncash approximately compared intangibles was in million approximately a stock $X.X were last prior down $XXX,XXX is expense and the year. of expense year. adjusted $X.X million million quarter these

are for pleased $X.X quarter. that the fourth see We operating loss decreased million. to non-GAAP expense adjusted consecutive $X.X to compared quarter-over-quarter EBITDA Non-GAAP our was million

a share last was to share shares $X.X million per earnings or per was average million approximately year. loss calculate Net million weighted $XXX.X and to share compared used $X.XX per year. $XX.X approximately $X.XX loss The $XX.X million approximately of last approximately versus net

was for last at the same year. of revenue deferred end million quarter and backlog Our the and totaled $X.X the

sheet, Moving the with closed quarter $X.X approximately in cash. the we balance to million

During the remaining to fund digital substantially operations. liquidated we quarter, all our of assets

additional to stack to ATM pad In addition, which approximately million simplify from strategically utilized we a launching XXXX debt at-the-market in for notes. cash year. $X.X offering remaining us us our give the warrants our to has priority our convertible have were significant remainder of by for been July, or raise A outstanding expire the allowing to

a that the addition, mic handing finalize the several Difficulty] financials, we debt to go I to restructuring while address gone in through continue to before back opportunities? expect financing future In the evaluate couple the Now we've we Russ. of other short-term near wanted [Technical topics of our

potential transition the digital progresses the path further Funware of with the environment. our focusing our first down management's First, as are teams a of we completed, world to full unveil

are that, of committed part cash reducing As to our we burn.

have run to first marketing. annual on or up initiative A saving to savings and significant serving we achieving We our expect on approximately current do by our provide focus right-size across rate of we Complementary $X to not million. reductions and our these our to implemented growth. to reduced any organization. cost that step all July, expect savings impact significant significant was sales that workforce In departments cost customers is XX% other cost

we're we Since our is marketplace. industry maximizing leader, an focused location laser our in platform are the ensuring potential based on

we our As consider marketing partnerships marketing at expanding teams. and time the further our sales right may are in Russ and internal investments noted,

model, Russ in Phunware's inherited is company hardware business and our in we and the we have a the Technology, core a services that hardware application Next, clear I terms questions location a of Software-as-a-Service mobile software our identity to many received about a realm. be of While I want based company? or business Lyte are Phunware

healthcare to invest expect alternatives are Lyte. we That focused with mentioned, the currently and Russ do next we said, to on the to optimize taking evaluate along Technology, fuel opportunities. for seeking growth strategic are we we where Lyte well. where and our sectors continue several while hospitality diligently As to and LBS is weigh and inorganic operate months we complimentary SaaS

conferences New we Investment corporate HC We our New major November present and efforts to in with both XXth the Annual themselves. and XXth to the look are on York as opportunities further Conference attend capital investors XXth and financial conversations Upcoming Annual and September other conferences York institutional at conferences investor Conference will Global many remain tell Wainwright meetings MKM's story our to markets. XXth the that one-on-one to on our financial XXth. profile forward in and event with financial and active strengthen the We plan meetings ROTH

back With for Russ closing over the turn to like that, to remarks. call I'd

Russell Buyse

very HITEC also made progress thought will can road best previously ability the big Pond to reach our serve to for customer delighted segment time, journey our solutions. I'm additional to we the offers only wherever am We portfolio response same new to expenses we've of working to happy I'm hospitality at reduce the product and and our platform the our out with in At solutions the and map lean to add I the underscoring optimistic our the innovations reach other put our depth decision on Troy. Thumper our we the value us possible hospitality of and about category see midmarket on by that Thanks, industry. that in are rapid impact affordable and LBS made and the a position received at extend us tough workforce the ahead. brands.

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

Operator

Instructions] ahead. line from first from Darren, [Operator Please is Darren our MKM. your live. coming And go is Aftahi question today ROTH

Darren Aftahi

can a Thanks guys. sort properties or I here too entities you do to seen, some need you taking wins vertical, the broader like are to about of healthcare guess, questions. location? larger just way the If for heard feel in of you've to by as didn't my hear I location there of that. And your kind there I pertains hospitality you that guess could a go you into comments Russ, get may it kind Hi, of of much approach, meaning faster a go level the Is sense multiple market and then that there. space I excitement in about

year the terms of in what are seeing for up from actually backlog could actually to you now terms in what to end of add you the sight or generation like line in Just LBS? revenue of the end being of

Russell Buyse

to glad is there greater is good are area, To the first questions approach I'm hear market, to with question it sticking kind of Darren multi-part singletons, you're still those they're answer Hey voice. is the which always your absolutely increase to surface your refreshing. a way about yes.

we have more. existing channel a have they also force actually partners into relationships new of walking referral are So some using that sales us of is have our have where relationships, course some direct we we and accounts which these

of of approach have to these kind get we ways do to brands. kind prospects, Correct but to multiple

because an And ourselves one are not this ours. the with So who either. time partnerships, offering and and between complementary we it's at trying find the what X a to not is, helpful there natural natural time brands offerings they companies we're because it's like have relationships reach at have channel is don't very just a

we're that's So how doing that.

like I did about of extension asked was the pipeline didn't a minor and our workplace, in even in few we second too half hospitality. announce the is expect in we with It year our like smart of space some this healthcare. notable a name would a rack verticals in with customers. this both and up But current healthcare brands it business We rich quarter but like has there. it later You healthcare, other a significant potentially say see healthcare win one to

I've hopefully addressed your questions. So four

Darren Aftahi

new Great. And and a he's then may Troy Troy. then be multipart welcome since for

and guess And the cuts evaluating So not of quarterly on a we million, where it going and point, reduction long-term annual starts down full words further kind the truth for $X.XX basis, plan P&L, guess fun that's a in you're second mouth inferring Phunware to of just reductions? maybe the sense for for us when your the third I given of the workforce baked the benefit million life those like putting strategically two $X you not in savings, give benefit Lyte is quarter did that? to see or but start any to I is can part sounds you that that options what things, workforce be a is when the year that that to Thanks. fully into road of then

Troy Reisner

thanks Darren, and question the as the Well for well. like I two-parter

business into of and technology, and our and we it this an as model, best utilize So it I we have can. not look I hardware it's our Russ part came first the core Lyte to asset it's business but and we want said,

do venture, what that working we, too are we're team with hard in future. at options Lyte, how we're a profitable makes other So looking and our the but also the

we're to next to of then by a make the at step take year longer look the around term and and going beginning the them weigh year going Lyte. we're decision I think of hopefully balance options, those the

respect And the the mid-July. to in workforce place then reduction with reductions, cost in took

So full effect QX we see we'll will in hit won't QX. and in but -- of it yet we'll bit we see in fair of it a the that see QX,

Darren Aftahi

Great. Thank you.

Operator

you. Thank

Buck is is line Wainwright. Your your from Scott, from live. Please ahead. next coming question go Scott H.C.

Scott Buck

have Hey, this location play really I kind does the curious, afternoon, become the fall some Gaylord, Atlantis, upscale resort in wins of to of when good industry? based to in it when I'm you mandatory dominoes space? guys. thinking mean, services, the does start when in hospitality this did kind sector. I'm nice

Russell Buyse

is the hour, that it? of the isn't question that's Right. Yes,

So start the it's win exponential and in about growth you other, foot just in one all business front markets, next in. to then stakes the establish they've or in of because year to of table the that one stage to it's to just in have everybody then that And then early by the get trying it thinks followed part see kick in got this, two a be after they're that you

of we'll So is But my I to year, perhaps expect also see maybe middle a what bit the to little better. noticeable mean don't climbing. is then get more I as that until mean next like by sorry. evidence then. numbers and wins see like in as in good then flat a strong of I I'm bit bookings yours, guess just we'll And and that start up like a stock little I see climb. the think

Scott Buck

[Indiscernible] current that's [indiscernible]. assets

Russell Buyse

there in background. talking the is someone Sorry,

Troy Reisner

Yes, question I didn't catch Russ. either, that

Russell Buyse

did I Yes, point? a was of me everyone middle that still answering here in to question about growth rates, up

Scott Buck

it That's me. guys. Sorry Thank you. from

Russell Buyse

Okay.

frustration expecting to already So the part prospects proportion is bit them pipeline, awareness. get to and the lost The causes that that and in that we the that momentum the coming information see customers and our problem of so see into of in finding are set start of to give entering are we're pipeline. directions experience, build higher last the new time the to among They're of lost there staff the trying of informed the guest the of year. visitors patient more a have a the I'll guests problem, seeing the give experience, tending we're of later we of their

Operator

Thank you.

question next line from is question from is, yes live. Your ahead. is go next your Please Ascendiant. your Lucas, Lucas coming Ward

Lucas Ward

so Yes, grow that you the path for afternoon. just on Yes, I'm company's this PhunToken Hi, guys. still of thanks. and Lucas in an Hello? update I there's curious Woo. sort if development Good that the Ed give could whether if wondering business? helps platform. is Ward a for that's, Okay was PhunCoin

Russell Buyse

a we a reset our pace kind our about Obviously, a plan. adjusting asking doing quarter bit That this of is for and little of of Thanks are definitely part that. progress. of Yes.

still issue should road like part planning you weeks. We this is product coming the PhunCoin it and more be map. of our the per the are quarter strategy from hearing still this to summer last statement of in part about and us But

Lucas Ward

question. I channel follow-up one just have color just curious to to Pond how more came And Thumper about that? that which Thanks. little about, the great. Okay, generated a was like Back win,

Russell Buyse

force I the know exact who direct our That actually and folks don't from it us our joined the one genesis, but came in one of was sales spring.

hold we the kind talked and got benefits offer So the he for a company owner-operator the the relatively Thumper about of and could new advantages theirs. like and there Pond of to at that property

is, this So this. I am excited about

so One closer to things to messaging team going up. it install wayfinding I this and without advantage that's nerdy even the send of set to a platform, full like there of not us get mention be the our is requiring to to having both using beacon didn't is a to their customer they're a customers, take the

this us. is really So exciting for

Lucas Ward

sounds Cool, good.

from it Thank you me. that's Okay, much. very

Operator

question is Instructions] is [Operator your your coming Brothers. ahead. from you. And Thank line from Halpern Howard, Please go Taglich live. today next Howard

Howard Halpern

good vertical Hey, recent the new that win guys. great you a the high rise if that a has you of type consider talk Wonder of sort about different Houston afternoon, with also across potential and luxury in could the little US? bit

Russell Buyse

Yes, I'm case. happy absolutely about that. talk the That to is

but also can Houston serve but focus nauseam, do have you've hospitality channel other me with verticals, some we we as in So exactly and opportunity markets that. on heard say our and buildings multiple this smart is like ad outreach partners we healthcare,

they're of parking, want, the could door a slid and so fit basically right a So with whole and we integrations setting building, in in transaction natural the solution thing building partner locks, have smart a to our tenant was that involved for residential up there. access that and a the just all

rates. bit little a slower killer we've and we with building do us we galore those. just been pace make that here of with The pretty lot experience got an a solution out-of-the-box solution. think close more integrations that like to can interest we've higher think a has But We got smart of

Howard Halpern

could the their and need about expanding across, talk and…? in Like bit throughout within? you country Atlantis a Okay Gaylord strategy little your properties and

Russell Buyse

one our So the of sales things ? Sure to is refine we've pitch. try done

say So up they mobile like that or messages, point or for they a the wide property an mapping capabilities. them or go there we're let lot the focusing attraction from visit. know passing lot when interest have them that customers, them core parking of send And whether which they're a on relationship and with closer them if enter to is wayfinding leg then kind say the enter lets like the engagement next our of hotel it's the might want of using

kind how And And so of out. basically of a that's we course, you're in this hospitality are capability. door working of kind rolls if on access space,

into was this and there to that of door on version there. in, have quarter branded locks first just to their rooms these Our out facilities they past allow smart and iOS to use through plug get smartphone from it expands the in us the will for then their app guests kind where

to lot there them. things of channels more with other and So are we do want

Howard Halpern

okay Okay, you. guys, thank

Operator

are you. Officer, Executive to further floor to queue no Phunware's questions I this Buyse Chief now at back there Russell in Thank would time. like the turn closing And comments. for

Russell Buyse

to Well, thank all for you Phunware. continuing follow

As a work much very we're solid you but a progress, we've see got product. still can in

in the seen those in markets quantity also pipeline. quality serve. markets directly the in both enlisting momentum. those channel we we concordance that improvement to partners are that or We can't reaching the our in establishing reach through in already out and more with we're We're accordance and sales and natively sales partners I've in

gains the we the we've performing. optimistic that Lyte a So second we reductions think cost the can I'm about is we half with have, efficiency done that economically and make where more very

logos we sales think this significant of second year. continue also momentum with can half the the We some

time for attention. again So you your thank and

Operator

conclude call. Thank you. does conference This today's

this and You may day. have Thank lines disconnect at phone for your a wonderful you time participation. your

Phunware (PHUN) 10 Aug 232023 Q2 Earnings call transcript