AGFY - Earnings call transcript Q2 2021

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Operator

Good afternoon, and welcome to Agrify's Second Quarter 2021 Earnings Call. With us on today's call are Raymond Chang, Chief Executive Officer; David Kessler, Chief Science Officer; and Niv Krikov, Chief Financial Officer. Today, management will review the highlights and financial results for the second quarter as well as recent developments and provide a business and operational update.

Following management's prepared remarks, there will be a question-and-answer session. A reminder that today's conference is being recorded.

questions. would statements, remind additional and in to we remarks that forward-looking begin, response forward-looking contain management your we like everyone to prepared statements Before may make and implied Such the or unknown which statements results, outside control performance performance to company's by achievements statements. could the number differ or involve of achievements are risks uncertainties, to such many a forward-looking and of cause results or that expressed known significantly from such that differences Securities risks Exchange in could our cause filings factors Commission mentioned to public contribute Important in include or those release. detailed with and the the earnings and or by required herein, as any as forward-looking no or law, Except events obligation whether to new update otherwise. we undertake of a statements other result statements future information,

time, to over pleasure this at turn CEO. go my is Raymond to ahead, it call Please Raymond. Agrify's Chang, the Now

Raymond Chang

operator. you, Thank

today, we the growth joining call. on horticultural the for get technology and well most like the provide strategy Before update everyone developments. Officer, Science call will continuous Chief started to of thank our us successful successes more I recent in recent execution an will our I the On share would today, improvement our highlight continued My David, about our and company as our some success. of customer as on

and the every revenue proud version cutting-edge over we to to have a quarter date, units Bud quickly partners, a start, technology Bud to we Total our year, signed that quarter total Niv to a XXXX launched XXX% yet partnership CFO, from this secure to Mary's, want strategic I saw and or our remind report not in of growth cultivation we & a $XX.X offering, solution. record gain quarter one share next and We're indeed qualified these Mary's, major turnkey X.X To another out continue was The our is of industry's represents proprietary Krikov, of best-in-kind allows capital, goals. exceeded of Earlier the beginning top facility. MSO & to only expertise launch that Bud everyone today, access $XX a We of performance. Agrify quarter. & and of sequential million, million to solution, Our Turn-Key will to such solution at revenue, pleased year-over-year first best achieved of indoor farming our quarter. financial Mary's first up TTK support I second follow X potential have review with to over detailed solution, $XXX This this with with latest revolutionary XXXX. XX partnership our line that need of the VFU. TTK am establish year, as equipment achieve a set and but The the single the vertical the million years. to cultivation XX% they world-class course revenue in partner, second we grow

multiple and in Units to led that serviceability. VFU X.X install overall beginning version airflow are Farming launched the and improved VFU also We now significant performance state-of-the-art enhancements future climate have customer a latest introduces Vertical in key of our advancements and control, to number X.X sites. micro

and and share. critical solutions even hardware and The growing space to quality to leading pay the have customers, increasingly existing one focused relationships. engagement major market of expanded as in expected more off invest valuable with single as app success software those an enfold maintaining we every our of to has are decision our lifetime in Our increase customers' the begun clearly value to in consistency players to proving indoor our on becomes

per qualified True of XX dispensaries million in X plans and course our the the first successes million. years. is our were million results many the $XX brands exciting and revenue customers' the quarter partnership with firmly improvement licensing fixed House of and $XXX is be the year, we seeing foot approximately Methuen. partnership of Cannabis quarter, million, report beginning with expected based come. link promote an believe about in from $XX the of million pleased improvements over by of continued contribute our I located the that reported the and we were ended MSO empower driven ongoing our financial up partner previously XX% primarily expanded are XXX to XX have True The terms in able help to approximately from Massachusetts, $X bookings The to partnership Boston. XX announce partnership initial revenue industry-leading here inked to only applicants, just operate installed again, Agrify the Financially, House's we to robust to square partnership of of revenue, have to and True growing of of production-based miles and the This very True extremely partnerships with approximately R&D is opportunities. industry. Curaleaf. years. and facility. for TTK as of to more extremely in $XX revenue will proud our in Haverhill, We includes include operator, with House $XX.X well fees end new healthy a pipeline XX,XXX VFUs besides is projects of equity year, House revenue opportunity roughly and that XXXX also XXX are yesterday to registering as social north VFUs SaaS the - opportunity million $XX.X be record deal provided Haverhill cannabis has This next our of of million recurring million, a scope quarter $X.X approximately and over a QX backlog economic we the second pleased am of at which a $X.XX that The were pleased next to business million We facilities, per in our

even a based office that see X would more in now under signing recent are Officer, in received David? over on with of from with the like and share update Asia partnership Science activities. yields across I upon currently Agrify, provide family will RMB consistency thrilled House TTK on improvements True to successful billion the my to new customer Chief and details Kessler, more Welike management. David assets line than an our to an investment turn We R&D will Global, who our base

David Kessler

This Thank Georgia and quarter have we pleased progress in was and with key initiatives, to are centers operating successes. Massachusetts. both we report Through marked now you, multiple internal partnerships and Raymond. past R&D

launched University have arming an Agrify sets practices long-term believe online University, the will growth data them our immersive cannabis research project-based hands-on knowledge innovations foster of and experience the curriculum provide succeed. support Agrify industry that that we we Agrify the our recently clients' empowers and technological to vast utilizes best Additionally, with a and learning customers by to success.

cannabis in technology these To achieved yield all a Of includes Additionally, Agrify continue strains, largest demonstrating of the date, top Agrify's XXXX. on XX it the March client have largest both VFUs. consistency and to Agrify of been of clients cultivars. of improvements XX VFU X yields, different wide since using variety see a yield efficacy by

VFU to XX to record grams very the past single report a square by foot. I'm a in considerable greatest recently pushing that the per harvest pleased XX% Lastly, yield achieved, was

Agrify and in I to now continue the their customers grow our to call you. our As And successes. steadfast succeed, will with of turn is support back that,

Raymond Chang

David. you, Thank

consistency, to success to VFUs, ability remain deliver on cost. customers. mission As our to mission is of of confident highest in the the core the we performance The our the the as at integral our to success continue highest the lowest we is improve as of quality providing and our yield, enhance our it possible highest

Now Krikov, my our I'll who Niv financial results. pass the will call CFO, review to

Niv Krikov

our provide Thank you, afternoon, Today, second I'll everyone. an Raymond, with quarter financial good you results. of XXXX and overview

XX, total quarter million the period the XXXX. increased $X.X compared XXX% to revenue June in for by to same $XX.X For million XXXX, ended

gross needs. SaaS and Gross and hardware, This facility the led we buildout mix has second with in and a with revenue customers. but for to more concentration recurring is was revenue revenue short of our of kicking profit to in this shift development build-out of the accelerate Adjusted quarter in XXXX. as for million continue success $X.X off the margin growth for about Net successful on EBITDA proportion second million of period our the $XXX,XXX existing QX the for XXXX, the attributable coming higher order second up million $XXX,XXX from production remarks reengagement profit million of TTK impacted in return to expectation we This $X.X and period million new same to more of remain and quarter, consistent in of project same been recurring improvements. lease the second consisted for to for as customers expenses towards term, come will $X.X Agrify ensuring period focused second of a closing well loss other base, the $X.X million, same revenue VFU. with the profit VFUs our for to and and same quarter up agreements. online. remarks. impacted quarter same $X.X decision due and XXXX expansion on new installed Research XXXX. to Raymond by that contract our period XXXX. as to the $X.X XXXX. we QX fully and compared compared the margin facilities base, agreement facility TTK pledge has their quarter loan hardware include XXXX from increase quarter staff million migration roll SG&A and as senior additional of meet forward to compensation the package revenue version was well our to to VFU match molding from a further XXXX were resulting XXXX. and agreement, to with in concludes building of figure a operating of $X.X strategic gross margin Margins compared $XXX,XXX SaaS for to of for we a in to of loss greater in increasing compared required QX superior was the was XXXX in adjusted period a XX% standardization Margins to additional loss gradually gross stock-based of legacy financials. for be for hiring improvement production million of the also to The in In our back see expenses compared of I'll XXXX. in move and X.X% profit our security to the demand in accelerate the legal EBITDA X.X for and as meet XXXX of $X deliberately as anticipate revenue were was revenue this high-margin our invest This in more demand XXXX, my year our primarily quarter installed are for for customer margin customers streams with out increase higher resulting revenue Total Our acceleration and executives costs expenses to call from XXXX. were to XXXX same as mix decision delivery expect million projects of $X

Raymond Chang

Thank you, Niv.

continues quarter we began achieved the several quarter our as take in on significant growth second shape, the X. that building strategy of momentum XXXX, milestones strong During to

hit remain year, will extremely around Moving target. than revised ever. range even half $XX million stronger confident is exceed or to that revenue the $XX to the we million our we second momentum The our business upper the of of

number million previously $XX,XXX course. of we Curaleaf and fee. to engagement partnership, with Since to even we actively the substantially with other we actually partners. X other announced XX-plus that, which opportunities, new July, in a business across due with are convert to actively amounting hundred charge addition TTK have dollars of potential states, we're to candidates expect potential In to And MSOs started TTK engaging upfront engaging several

concludes of offerings. With balance strong believe of will In accretive with to to sheet and several our of and remain momentum are a advanced diligence beyond. overall conclusion, synergistic traction pipeline even addition and focused to and we progress all through you continued the stages we customers. opportunities, we comprehensive X forward look and comprehensive enhance acquisition offerings, accelerate our further potential our This partnership our remarks. updating targets, market rest customer organic product that the XXXX growing calls. during and and super my our the negotiation reporting through quarter which solutions existing and will on In more of growth, in our enhancement upcoming our improving bringing positive due future solutions We

operator, up questions. Please would for Now ahead. like to go open this I

Operator

Instructions]. [Operator

first Craig-Hallum line with the Your Des Lauriers question of from comes Capital. Eric

Eric Des Lauriers

momentum I a difference in bookings but of see business you could the Congrats the Great. to backlog very question, on understand great off here. the so strong the help bookings bit guess here. bat, an record and just Maybe your between elementary here? us

Raymond Chang

is Yes. Backlog Eric. booking,

So up XXXX. call XXXX quarter - to order of basically, QX we X further million of of essentially received in it $XX-plus

something I'm Sorry, ahead jumping already.

So basically, $XX to $XXX-plus X total end backlog the increased over at the quarter million from million. now of

about progress that on that front. the And making so we're we're very excited

Eric Des Lauriers

Great. Okay. here. That's helpful

guys Mary's dollars X $X million revenue, to TTK $X of you opportunity. this to XX-plus maybe revenue, and to in expected you pipeline to We've $XX like us think the into recurring comment able I'd in hand, about annual that Bud those recurring to here? announce I you're those in hundred some one & So candidates - at million you size the TTK we any kind candidates, give of mentioned end, customers. looking the be think low your on million annual drill benchmarks, on several your frame seen, customer, then if time million as could to newer - up of these states, said And sense of of with high

Raymond Chang

Yes.

minutes of smallest So we our The is is partnership, probably House headquarter. the entertain. Eric, True we all, Cannabis why literally because up XX so would from to House this True the first signed reason that

And we True working intimately be very ensure will to touching, help involved of could overall very, team be the that House them in House. operations we True planned Obviously, intimately we so to actually cannot the but success. be with

equity would super Jumio the size going important. just empowerment In opportunities, away minutes to with Arizona, Massachusetts, to And minutes entertain believe that negotiations. given opportunities XX one facility. California, will but in are economic will advanced forward to addition And we and we those of partnership & But as facility is looking as the have proximity, XXX, opportunities minutes, VFUs we I XXX further stage from Mary's on that the probably in to I is we somewhere support opportunities and Jersey, other that would facility. I ranges TTK again, there side, mentioned, Michigan, say have believe XXX from The be a be be per And it's Nevada - we that. the that XX reasons which also would why the XX now the VFUs social is are XX involved qualified, I not they're as do New Florida, negotiation. opportunities at XX are that office. and to average The cannabis larger moving an all that True the that on is participating and Bud that, per just but industry, say our average, qualified, House XXX of in right be these in intimately are partnership we're Oklahoma. many definitely small. XXX in of I this literally probably the applicant XX, great on that in - is we

Eric Des Lauriers

VFU very appreciate I exciting to helpful XXX That's to that, see average here. color. XXX of that size Okay. and

kind guess questions of from theme sticking So here. me. I X this more with

material equity the equity aside So in industry I, necessity here. in setting state too, specifically And believer obviously, you're legalizes, social they're licenses and I'm for here. the that applicants every a basically in amount certainly importance of social seeing a of

dedicated of here. equity XX% York New think are the at for social I licenses about

you that perspective, from I look just is this a my after? seems candidates will guys going mean continue to ideal area TTK pretty it like here. So specific

So that just solution for would love TTK outlook of your the assessment on kind specifically.

Raymond Chang

especially do the of one scorecard. Yes, that consider. responsible we socially the sure a definitely provide being I not job it the of lot as only that do communities attention is cannabis historical a that's in our the in thing well opportunities Obviously, being believe industry, partner to as criteria given on context, we we just to the pay of industry. But making that just kind it's really the the

sheet it's partnership of very the of a fact, this us, in capital then thing actually, raising they this. another town and from to activities. proud True announce - the term House I'm I TTK Methuen. of So receive A and actually getting we're a more lot accelerates lot further resources also, opportunities, just fact excited. seeing and more it of from once their They're Haverhill with And wanted to very, the very emphasize, and also

I immediately So right exciting partners are in for with as actually unlike actually diligence almost people the to what transparency we And is the investments, our they have their Cannabis, fact to allow And is on to in got in of who term XX we case they actually them the in them lot by give of fact, talking they investing funded. on been we're some that their us, interested full post what of transparency. fact, have with can't signed, the facility in that calls of for House to we where wait us is a True investors. going And after a sheet. candidates now, in think very that, working actually X inside past, have

to there's happen. sure early if those support, - And go is we're doesn't our it on wrong, detect that fact, will to in with problems make about there. something Secondly, we

the versus they investment is So where, facility. speaking, of on control that anything the chance of success of frankly is going higher much, have traditional X much that in inside

and looking very this in future. to a forward TTK about near opportunities excited we're So more very cementing

Eric Des Lauriers

one very perspective. here. my from absolutely me. Last exciting and Yes, for makes Certainly sense

of Is a us do or capacity kind that? of you on better you partners what all Or entertain mentioned understand of you sort you are for sort help the So won't And if bigger maybe that it's just maybe Can so, waiting have? there. that could expand capacity you're issue? XX. just you kind of bottlenecks, where guys

the help why think can you sort or all we the factor you growth us customers? understand just there of So TTK of just is won't entertain about limiting how should and XX the in what pace

Raymond Chang

demand. all, So much million so aside we're we of the to Eric, have projects. TTK higher And seeing $XX first obviously, set much, far,

of so And think trying projects. actually future to we're also TTK finance ways creative to

that, blowing get to the an their they example, the to multiple to maybe control a And actually X of the REITs. providing were hooked opportunities others, that returns - and some wrong, of if speaking, actually partnering Just probably we're reason we're contemplating, frankly would great else somebody bet. working loan, happy If the and So by these to like construction leads them. I for have XX develop be in partnership facility. to fronts. we VFU it, inside REIT the by where with And just REITs. large would other the rather right, And has up in these opportunities. probably that you us, probably all opportunity expertise to of sudden, more we loans And buildings, they're right? is that in that deal been a giving something kind of XXs majority, future full them By very come making us of speaking, it right? to the them days, on fact, in a we on believe investment us actually frankly in mid-teens transparency. actually talking teens. they give brought the basically resources provide almost really this to TTK just don't lot capital them basically and on basically goes wants reached help the cementing with probably near and again, went this basically will some they're have on I a participate kind currently going back on exciting them potentially a And take a what's have with one if our of than have a construction of why of all interested old top again, returns of and on from not of with And REITs, because end, been also It's the in XXs, lot - of correct

find access other and create partners well. with win-win So capital, proposition ways but a also have more we're as more our only to again, cultivator with basically trying to to not partners players to industry

Eric Des Lauriers

Very yes, again, on levers exciting. exciting Clearly, very of here. solution growth guys. lots this, Congrats

Raymond Chang

you, Thank Eric.

Operator

next with Your Scott from ROTH Fortune Partners. Capital question is

Scott Fortune

the color and the in pickup pipeline? How quickly, of delays such on there's not kind recognition of does the guidance And reflect on provide projects including or bit delays I if and little costs in you there's builds little color of also construction of can any believe that Just obviously and of Real that's in potential construction construction side provide project but color material. that pipeline? that. your a the on a kind there, TTK - of or kind a any

Raymond Chang

you're Scott, correct. absolutely

seeing our us construction partners deals and that that we're huge very will we sort expanding so partners, we nationwide. are would started talking we engineering we we bigger now, of seeing give that tightly. are expanded essentially, only the still partners, so so Right architectural engineering but projects schedule, and Right not more basically A&E coverage. on pretty to general partners, it much and architectural have We around contractors to our actually yes, competition manage of And now, definitely cover sort can a other continue also have actually, construction.

as shortly. year, enough our that right? we also took earlier, and key of other more this production bringing exciting essentially to is sure that The our key this partners for on to contract basically team hiring after basically to the say because facility that the it's And sure built, just important pleased more resources our out can thing, lines to Mack mentioned expecting horticulture the success rolling a Molding. sure facility make very I'm quarter we're of make take big we on We're we new manufacturer, is initiative be managers. obviously, has more the going even well, and project make is moving to One that working happen, hires, ahead customer with to have production their that, process in Niv VFUs to things is example, very projects of make

So the should launch of manufacturer externally, the scale. we the to plenty especially X.X, with contract working of capacity have with

So but in those are that not some continue worked X as things the have quarter we this of quarter in on, only well.

Scott Fortune

So just real quick, just a follow-up on that.

So of the here? there are construction your the it second time, in going backlog like, projects on kind still finalizing half in sounds forward

Raymond Chang

Yes. to we We're and again, revised exceeding said, $XX potentially million that will, confident I $XX very like million guidance. meet our even

no we that So that. achieving in believe we will have problems

everything much far So track. pretty is on still so

Scott Fortune

that - on in R&D talk East technology. agreement them, They've from as the and of of getting publicly done potential validates Curaleaf your expand? timing Curaleaf. looks Can Perfect. the and Curaleaf of that Coast. the in also is the indoor second potentially. provide Kind for data to of we've grow the And Kind potential a you opportunity about testing, opportunities question being congrats kind then Coast color said more the installed, lot West with of that growth the

Raymond Chang

Yes.

the yield production. is that because to year, going will construction we the an by obviously, the it's quality the of one of will can be very our we're results. - X, And X.X, be And facility confident facility. Mass. research of performance cycles at done have to end probably very but Newton, we're the in VFUs and deliver here of initiatives and very we will exciting R&D version look we will at within So immediate results X.X they a honestly, I'm VFUs, completion that will X And our especially of immediate. they able they confident - and stunning. with see And of point, VFUs that this And that boost consistency our - we just the big that believe in the development

Scott Fortune

cultivation just of of kind you're that of the Is add then them getting MSOs down the similar discussions Great. larger capacity? the And CX road? the looking test, to some facility production kind builds equipment additional are Or kind the MSOs' of full opportunities to test hands having? for actually in

Raymond Chang

- these I we're to even ahead tomorrow. and conversations about to projects. we see some MSOs are maybe - that I don't Yes. want skipping to we're these like some But the actually mean actually fact, say in of concept. are of PO R&D other Obviously, talking us jump not R&D going

actually VFUs in about their implementing talking expanded You're facilities. and the new

in know. will definitely So have very as to we - we soon let mint, those discussions. in And we're obviously a as of MSOs. engaging But you number still exciting the a be with

Scott Fortune

the on application. Congrats

Operator

question next Global is Your from Alliance with Aaron Grey Partners.

Aaron Grey

my I'll congrats the on echo quarter.

kind and of with, you to bit little route different - thing So strains you otherwise. that VFUs one key I different a take working you're obviously, to to all data guys you a way with me get, right? that's want here, different So the with guys the collection all operators is guys grow and seen different

you can initiatives can you from and So power that that the within would love utilize data, with how aggregate future for commentary to as company. get this come the that additional you

Raymond Chang

would I David, can And crack jump like also maybe well. to you at a this? Sure. in take as

David Kessler

I'd able success define of recipes maximize production, are data the how They to that production, about clients. wow. that metabolites to. might these extraction or grow be be our going be we're But which we're valuable the cultivation growth to amounts happy how cannabinoid to plans data in the with collect, Essentially, lead the will said, about to able to terpene larger to of better that specific more just aren't sets larger process.

to able these for points, operational are we success. through Additionally, giant by forward a data proven in essentially their collection environmental and recipes them manipulation giving of client provide operators success leap

they're are growth that to track, able going only quickly, choose the to really success formulation able collate not start and more the they the recipes them halfway valuable end and product not this down because learn nature. are in their can data data So a support to or rate going the is, plans cumulative unfortunately, on olipic do crop. as about we we that XXX cannabis parsed more agronomic then on data deliver of be back more years have set The that challenge and

the will quickly, so, to we aggregate more we're bring of ability And to cannabis our going with present. reap benefit. data So to as the clients the future the do

Raymond Chang

be actually those with Yes. right, is wouldn't valuable grow has customers, is your And by grow it's operator, work so have they that under we basically single-state a a willing potentially have with to lot terms recipe Aaron, and reason for data. the much will culmed out actually perfected, can particular the them the operator grow ideas - of ways obviously, would that why example, particular think in our grow actually this that one But the data, know same of brands data they is noncompeting to I monetization, to particular to us you'll that this basically, VFU the more. for about license recipe a results. a very most Obviously, same just potentially it to for do so so of our in the state. necessarily operator we consistent recipe they're willing example, be because tarnish a to if that we're work monetize that a we is also likely, strength, And something customers right? monetize that to because and another would And

Aaron Grey

those second of where for you to question the could how who of more as you and rev you terms in look CapEx continue XX, the the a really look partnerships, of have more how And some VFUs me, versus you manufacturing looking? between just the more at any especially contract otherwise? potentially mix might buy the between the And if color do X take then That's roll to a provide you you potentially you VFUs helpful. as out of additional Okay. the given those might have on and of have the share limitation mix

Raymond Chang

us and actually they very these the work would installed that which in our on could facility. the return pleased operators and could a solution so right? upside, on in on partnerships. at we're revenues, in your participate the user actually constructions said, kind of offering burdens, to be essentially to right? them help were kind right? by can a capitals. there's as to upside, basically actually REITs Turn-Key have and ground, with of the financing to see some building this - than obviously, essentially, basically are middle would and seeing bucket, to right? partners," right? especially They way find revenue, buckets, be own we're model complete have then production that, the us, the middle of very - to stream, happy just discussions other going actually what mean if you we're I to see the how potentially that, and we there even earlier, how the We're "Look, inside at the basically solve access having of they the the that they basically smaller financing speaking, sheets buy scale that do more MSOs base, of goes on those I are the interested our I go balance speaking, basically transparency And it, really partner there on frankly this that's building equity-like with kind smaller there's Aaron, grow are we're a equity-like said, more getting to buckets, capital the other frankly installed that yes. gives largest the or Yes, all, what more larger XX-year of effectively, base, kind first kind allow there's there on basically going can actually basically - The And right? honestly, constructions. and and come But take is possible of is we're thirdly long-term whereby because than problems wrong. were end industry VFU our X all they first MSOs. share in that one and of example, get ways the are deploy future. working "We in to of the business And strong we kind SaaS people any it single-state that Total the are to actually So looking are largest VFUs of with MSOs for our not situation what's of with our basically And the that And multiple take basically And with mentioned we're the are the And X-bucket us And the So day, points." about as that's because user happy volume. those on of to really I something happy would come do

Aaron Grey

congrats All quarter. color right. model, flexibility the the That's on and on of great the

Operator

question Your Group. with is from Maxim next Anthony Vendetti

Anthony Vendetti

the follow up be Mary's in the in the talked yield, there Can and contract, year. basis? True built it little that? more was House your So if contracts? all bit on that about one, & it into a TTK the you is Mary's I know bit Bud could talk Or escalator even more contract-by-contract to the about a on per & TTK. is an - know depending And on there's wanted one we I a But I in the wondering is - just I where little Bud

Raymond Chang

one. Yes, in single every

also it's it's so it's less, we're treat to their they a would revenue And period. that of then working per basically, will exactly essentially X.X again, happen. very $XXX, to TTK that basically that's, one pounds, XX single back loan get paid top raising identical & and over of So work getting on that construction nil-based, True and interest mean recurring be House they're with right? able on basically that support And sufficient right? pleased if we same, to to be XX that. I we XX And and every partners would Mary's, responsible terms - then our then will course to were essentially of get is of be also pound-based that expected capital if production want revenue. the we the make for capital, that, $XXX. Bud fixed So SaaS get And to over the we basically we then the that secure to months would investments

this yes, So very is exciting.

Anthony Vendetti

you mentioned at, just you're look at Okay. provide more - Great. platform, it. REIT terms M&A on side - know And as your a or little mention to I bit you color you looking a point? then help in did partnerships other But opportunities can about M&A potential at what just or with this of you the construction of

Raymond Chang

Sure.

on to So we're I our how with Anthony, at return looking think that more end. is make we what customers' basically and higher even investments end can facility actually productive

of facilities you know, to when walk grow XX% our cultivation. maybe is space of you into today, any actually As dedicated the about

I have the best potential to with of the yield, enhancements that see we of square you XX% square return What also the pending solution footage that can investments. I Now I believe footage on remaining highest that highest productivity, that tell facility. make on XX% is significant highest

the provide of work we're solutions to gain companies And essentially to basically to basically wallet size. be speaking, able overall to innovative an frankly to we customers portion more comprehensive So at. that's looking bigger end-to-end like a what with and, would our even

type with involved the we're In on some also the partnership at upstream, generic that addition really of to that, side. are looking companies

at we productive overall. facilities, footage, customers' help So every more square our cultivation their just not only from them perspective, and to investments increase we're again, looking make ultimately the return can actually but how on even

Anthony Vendetti

great. then Okay. lastly Yes. customers. And just existing on No, the that's

about customers, have have many customers Agrify of my solution channel already existing your recurrence you up least get very and Agrify are the business for the talk you another from insights. signed customers? Your existing at from or happy checks, existing with contract? Agrify Can of How re-upped

Raymond Chang

very churn, right? customers buying that them pleased So these the as value X we we not And lifetime have much actually basically X VFUs. to now, eightfold, not more it's have, as mentioned, churn, we only do So right Anthony, by right? only as I'm say increased of actually have

and So In every as single expect that one them increase of "Look, in complete essentially interest customers fact, get model upside." alignment, actually we're right? excited that fact, to we're want the to a part much lifetime us customers has repeated our allowing quasi-TTK eightfold. to looking value you these commitment share of saying, some with very are that have We their as lifetime so the of to maybe value, actually the us of

Operator

Instructions]. [Operator

question Pascarelli Your next Gerald is from with Cowen.

Gerald Pascarelli

about question high-level as on if I'm there this your outlook demand federal for long is that expect you that I as this when flower. this there's thoughts, moat reform, you model. it, thoughts the entertain on could business would interstate ultimately, get that's a but the maybe high-quality if the occur has assume I'd I'd grown to and Raymond, regulatory impact then the on it. specifically business indoor and some of right commerce, the not sure to to and a provide way would think maybe somewhat like appreciate

Raymond Chang

Yes. you joining for our call Thank today. in

they big the I consistent essentially brands produce I actually I and world also model because better important big happen, as the key is Budweiser, be actually would production road, setting when think Your allow to business Down the is to against post-regular the to that want able that to be you like love that know. you will explain in regulation we're brands, essentially And first right? thing so. hedge look to behind the it's that of our their these them may VFUs that highest let facility. here If they actual environment, consolidate, the that the what beer federal And the think is the right, most question it. But right? comes. would we think why, have the all to that's question the their but the up what need our example, Heineken and when to And do similarly, MSOs, not me industry, to million-dollar only prepared at actually entire you are to

- procedures everything X. only have They're into quality, data So to consolidate it down it's and maybe huge VFUs, to decide is literally, go, against they for X they right? So And the XX, XX just facility, right? to operating in, a now So these one the often and or basically them X not actually only actually big it's and decided or we we all different same advantage all right, X consolidate and eventually, right? into VFU that future when our them facility modular, can or move that consolidate they still of the when and standard MSOs, actually, the flip they locations right, of back consistency maybe plug they're hedge, the the deliver X, a on help to movable.

also craft lifetime also And And still with is actually in, they genetic on same very thing stay, to be even at that to working can right, would believe they use consistency of quality, smaller but actually though every the with help differentiated, can a because produce this where a repeat have right, the the In compete, what we smaller, to be is have for them this Now actually the to of cost our of right? able solutions. stay our them time products, automation premium industry, like the where once data only is order even So this in and highest comes to their for have unique of because Agrify the beer deliver yield the to attract actually being same that right? but the brewers, ability lowest And quality, actually would is differentiate are but high even guys. so the by we I focused and right? to actually not more the highest single highest but possible they ease right? consistency, process able to

Gerald Pascarelli

color. helpful super That's

or the given you I I Just And construction customers the these me. expect commentary it with at I double-digit your to be the medium competitive how over was term? rates, these hold conversations guess XX% in advantage of last a offering do very capital-constrained would interesting. environment? appreciated. the think your Do read to customers, in high-level thought thoughts REIT loans, - much these in strong is release. least that much prospective particular, interest one these I rates press expect near Just you for was

Raymond Chang

it, us no Obviously, think we going loan I come - makes to makes the what solution. to traditional the data the question traditional our Yes. inside and us especially down I percentage that time, Banking is will come down. have State honestly, that, about mean all with what REITs the construction again, on only that But that There's number and with to right? even is Act right? attractive transparency not interesting much cannabis is more of investors the but fact that what going over

would a right? And VFU in days, - XX square square much yield very so has ability environmental a if actually that the don't have yields, have not triple-stack and VFUs, mentioned we as a as - space. other can foot. David for of actually doesn't levels problems unlike, per to is If growth actually basis, hit that, not ceiling, real-time there's right, because old address highest high look, foot if in the getting the And X our cannabis know by late, But Xx thing X.X, you check. facility turn that right? has earlier, trending can go basically per right? to each we they're example, just that too case, it's for can have would basically where wrong we know. X square the partners not forget our only way, the those the we on grams we foot to there's and hitting an happens they So something it with their their And If actually correctly, would expected example, issue, if in become we there not since

we a right. So per at lot all can improvements of a lot production. that a a produce times square procedures, looking grams because you're and of possible all of on demonstrated right, our a at customers basis, on pound a standard operating That's have lot, that lowest the costs, the actually have of we the automation Xx foot. per sudden, XX Furthermore, demonstrated

quality this the consistency, highest So yield, is cost. lowest actually high really highest revolutionary. possible - at

Operator

to the queue Raymond, remarks. in for there turn are this I'll further closing back over call at questions no And you, time.

Raymond Chang

call Again, about hope progress if better I the continue to Obviously, - and very results want the report everybody free will has any for and in the today. excited super to we're thank to making, call. you, even questions. we feel to execute joining out we're anybody upcoming Thank and that reach

Operator

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

disconnect. may You now

Agrify (AGFY) 13 Aug 212021 Q2 Earnings call transcript