Earnings call transcript Q2 2023

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Operator

Greetings, and welcome to Presto Second Quarter 2023 Earnings Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Chris Whitcomb, VP of Investor Relations. begin. may you Sir,

Chris Whitcomb

be afternoon, Ashish is thanks Vice Chris here Raj pleased Investor Good Presto’s call today. and Founder President joining My Relations CEO, to I’m Presto. name Whitcomb, and at on everyone, you. today’s for by CFO, and Suri; us of joining Gupta. Thank and I’m

as announcement, the wire have so issued, been hit an filing the release Just they any at minute. both and the should press

will note So adjusted on that refer with management non-GAAP to which call, measure. please a is that, EBITDA, today’s financial

accordance useful the for information this While be as information believes non-GAAP with Company intended in for not the financial considered this GAAP. measure of substitute provides isolation or financial a information presentation in to investors, the is presented

to a You to our such measures for press of release GAAP. reconciliation are directed

expressed begin, to any press this on materially made Please only to that press Before speak today’s refer these could details to the our the that please call during cautionary about will note release statement we of refer forward-looking forward-looking. statements in that today’s and these actual discussion Therefore, additional the filings some today. remarks this forward-looking please with cause statements results for Please made call as SEC those risks note in of from for be conference or release implied of differ today. remarks.

Presto. Go turn will Founder Raj. over CEO to ahead, I it of Suri, Now, Raj and

Rajat Suri

Automation. and second exciting brought of Chris, you, everyone, a joining has quarter Presto fiscal developments Thank you, XXXX our for new for call. today us thank earnings for lot

increase everyone known see in in and OpenAI. for a variety is applications industries. There years at artificial that transformational will what chatGPT we wide macroeconomic the intelligence. now is and dramatically have that On mainstream technology thanks Presto a AI productivity many of all to interest can And side,

developing GPT-X these leveraged been for since XXXX actually applications. Presto AI of several has applications and has

Altman, the CEO XXXX was our investors early Sam of of One in OpenAI.

our believed just and We a to a A.I., leader of traditional market always position, also not the in power Voice AI enhance in as but drive-thru leader. technology industries have pride great take for

models several stay. other language currently gain help our and make cutting-edge of believe under to the We are speech mainstream the intricacies here of development next Large products of over to adoption few years. sense will human

A.I. sector addition, In benefits greatly drive-thru beyond recently seen have have at AI labor taking have order Voice upsell drive-thru the has those challenges. solving labor but wanting food in that issues assistance. improved, the and Those the with increased shown

a they into The will ordering pressured guests to choices, opt given choice additional often although so. when food are never do

This front, XXX of nationwide. annual microeconomic another recurring customer revenue XXXX opportunity rollout chain the A.I. largest with contract Del Mexican major over a Presto. million second stores fast signing with to the food On announcement, is worth with a national the Voice enterprise started Taco, at $XX Presto total in

as well in Voice Additionally, chose Box, share have us. begun visionary A.I. with Del and by stores that has with And X,XXX conversations another was team management owned Taco same to which Jack the we implemented. sign the market. quarter-over-quarter sequentially group. by win now Taco and grown A.I. growth over Presto and this rapid The has Del collections the XX% A.I. Voice of the XXX represents cash has installed base its locations Voice

solutions. in operational in for XX% over in of recently Checkers successful of A.I. of named Presto Presto’s with represented has past interest spike the Taco announcement of Del a collections they that and combination a Year been AI, Voice their innovation has quarter. so The customer cash our efforts. led efficiencies rollout Our Supplier voice has interest to the

pilots, currently new fully promising they have pilots represent The to convert MSAs and drive-thrus to XXXX. and to brands We begun that we during over and live ARR $XXX calendar hope million potential implement in have XX,XXX with logos expanded. signed several partnerships totaling we with

and have these are with of several hope we stages to late more progressing XXXX. partnership to We customers announcements in

Our to end as these with handheld, kiosk, including Presto of line fully organically customers revenue across also maturing as Flex Flex, a Should deferred upgrade amortized. have we six tabletop, legacy contracts uptick legacy of product, QX. which platform the revenue to existing our customers in Several now was enterprise being partners primary XX% revenue. world-class XXXX. buster. renewed and of contracts through Most touch our drive-thru contracted expect prior operates and the all modes, declining see logos curbside, an Transaction business Presto up of albeit in continues revenue year are different existing testing versus process

operations also by expect hope level to Finally, at lower achieve much expenses streamline our burn around normalize higher quarter, to as on enables are this $XXX we million and normal has us recurring a in operate had path ARR. going public rationalizing last and at cash more we but vendor We profitability, taken than from steps spend. efficiently operating to to reduce which our one-off our to burn This headcount transition a resolved. Presto forward

it I’d Ashish CFO. Gupta, now, hand over And our to to like

Ashish Gupta

through you, highlights us current quarter XX, Thank December you XXXX. And Raj. joining everyone by once thank today. of I’d to again, walking ending like the start for our

million revenues the the gaming increase year been X% XX% down to increased successful for prior specific related GAAP revenue the related million a pricing precluded $XX for reflects but year ARR a have fees. million total, customer to rate. of due contract contract. $X.X This that our in in QX a $XX accounting treatment would recognition certain to revenue Transaction run to versus was ARR from $X.X QX. million, prior

the prior just customer quarter. and costs XX% higher business. prior impacts both and Gross accounting amortization residual was increases cash our versus collections COVID-related legacy deferred versus adjustment touch equipment due increased lower of year, to This the profit to COGS voice-related freight also mentioned, AI as the well due sequentially voice as from was expense installation in we replacement.

end through the bleed by COGS XXXX. We expense of legacy expect fiscal accelerated our P&L to

trained. to expect we this, as and into we Following gets AI-enabled convert over pilots time voice margins fully solution system-wide rollouts our expand

million OpEx expenses million $XX.X items for in well versus This merger. $X.X prior year. was XXXX normal from the trailing as of fiscal the QX impact as operating the includes QX

to As $X expenses, accounting for which as legal loss of to $XX professional a platform year. the a million included and with $X.X growth; The such, million resumed ancillary service related in were software was $X.X and spend in million $X.X public quarter a and our a public loss $X increase company million merger-related COVID. fees; adjusted to EBITDA compliance enable million increase in same temporary AI of $X coming expenses; out $X compared a of last compensation, quarter the headcount represents million OpEx year-over-year which order service stock-based company-related in of million increase higher million fees travel insurance, higher primarily of

QX have across process the the and goal initiated forward, our achieve combined to we functions. going operate business to and all with is to to OpEx synergies part reduce during as with detailed we along voice specific to of business take Both cost headcount vendor rationalization a started field steps We’ve get profitability exercise specific a and burn. This growth.

and the expenses operating by quarter focus actions XX% our a continued current cost structure. with by of business are taking to on We manage the the end cut

achieve business the a to We leverage. legacy that are analyze more where mature business and of like are also touch should beginning to expect operating we areas

year. be We expect which certain This revenue to the between guidance total ending expected discussed XXXX $X.X be $XX range is in fiscal is for million that adjustments $X June of to $XX we to to normalized million the of million. for the accounting million earlier,

would and the mission-critical that is especially them our In closing, technology large is us growth in to our product. like and what continues we sticky, enterprises excite that us to front to reiterate with global voice are customers opportunity of our about

you, With questions everyone. the going it turn that, for we are back operator over to to Thank

Operator

Thank you.

[Operator We question be Our first question-and-answer Chardan Capital ahead. will go conducting now session. Brian Dobson, a Markets. from Please comes Instructions]

Brian Dobson

Hi. very for taking question. Thanks much my

first, over give see color Taco. you bit just you bit about I off, rollout let’s about you a can you in kicking little it, mentioned more negotiation? you contracts little call you So in that And to the have process XX the, a late-stage currently help months? there next, it the current shape that I are can how what XX us talk Del taking guess, Do that think with learned guess, that

Rajat Suri

product. of we compelling, we question. were Taco, the to a upselling also to that And mean, Appreciate was science rest the that was before it to the that. to we to Brian. lot expand And do do decide got from front. pilot ROI I in experience and to to decision need as learned we’ve need Thanks, learned just of not what Taco this demonstrate think Del think so do the to difficult ROI – months side brand. with have to and No, stores. operators on I side their for Del the we within the on redeployment is, like, Yes. a couple the a a value down it Mostly labor that, with on able show to we’ve installing what Checkers a the prove I both them we to what the

that on amount a and sounds over here a that. years built well engineering on, weekly many, we this. and team on details have to in but together. have right to we large of very professional work report And execute basis. all we many a we’ve And QA measure of Account side, internal that there’s machine a it’s that projects KPIs daily a easy, product or we get It the management, on number on and

kind to this machine this we channels success. We of tabletop we and building communication in have the for team and previously of the of product, the our just of many Voice processes those with is success reimplemented And had work that’s leading what’s escalations. years lot and A.I., internally. a Again,

I the question. the first So part Can of think repeat answers again? your you second part that

Brian Dobson

Sure.

thinking The XX the as of Del was, you’re part next to Taco, months? the XX envision over how the first you about rollout do store question

Rajat Suri

Yes.

Brian Dobson

similar brand kind here? trajectory Or service to a master previous a expect expect we you agreements? Should different do of

Rajat Suri

a great Yes. question. That’s

stores, large they’re So some factors as it to maybe In is One there’s refranchise key anywhere corporate as versus have but from stores announced turned franchisee? much of corporate Del they’re XX% a how refranchise stores to case, right? many brand originally out of going not number anticipated. there, They a have a think going XX%. I to does they Taco’s couple

to into of out stores installed the their With Checkers, XX% XX%. it’s been Those obviously up So is. The I think franchisees a longer. It’s fast in we’ll the general. take the latest bit a now, that deployed or we’ve what base XXX year stores contract. I kind have. around so XXX We’ve of heard stores, XX% corporate very the now of end think with go they

would I that’s So how go. we for floor can say a fast

can going franchisees. up with think time, faster at a better willing I lot and with to to go execution fast to Over open we’re we just their go also that’s brand a better this. get and better this and

brand For component we a that whole franchisee new live of every with, education go this. there’s

franchisees. to course, team to used product. You deliver sales that’s talking need need a great to a And, of you

I over think be you product, this. to deploy deliver all will you if a great franchisees

every assuming them. And fast can greatest installs. push again, pretty from for have so there these a bound we a do all Because within our with for that they’re to our – pull anticipate it And them. are not it’s you that franchisees. advocates And actually maintain ROI to pulling like we money go system. can It’s it’s we

Brian Dobson

Yes. Thanks. I That’s color, excellent suppose.

it, about yet year? for And that million. that portion you’ll that reported How of of you’re million that announce the the it, is course much the from $XX contracts range there or stems $XX to to or Blue to of think Taco? that thinking call is call during be a announced Del ARR, be Sky able in, you As guidance

Rajat Suri

question. Yes. important Brian, it’s a very

all we of we customer of our had our way based call bake do fiscal of last and also kind right? in guidance, signed guidance, in kind not the do any sales mentioned logos. for quarter, on forecast earnings into projections, the as So and It’s forecast contracts first any forecasting kind we our

fiscal, your just of started much quantifying I the how just the I very part about not – would I Del now. but mean, with we’re Taco right. question Taco, given of least we’re number, mean, for say little getting that the since, And Del at

Taco So next guidance. Del from year’s the would revenue the be majority upside in of

Brian Dobson

be, is there And upside the that Yes. of a as I Del could just of is more Or function a to those guidance outlook material that are event? really suppose, ramp? XXXX included? Tacos that Or

Rajat Suri

projecting not upside, some but Yes. is there and we’re I mean, that’s – those lines. that along we right, hope

Brian Dobson

Yes, Thank have let excellent. and back And I suppose in you. the go. I’ll else queue hop a someone

Rajat Suri

Brian. Thanks,

Operator

Jefferies. with Samad question from comes Next Please ahead. go Samana

Samad Samana

Hi. Great.

using the and us specific that about? taking questions. in organization. terms mentioned company’s technology kind reductions? maybe main it of, the lower think headcount the where should cost? And being action cash forward-looking lowering So few areas? so, across functional how to that some we If what Has outlook? give you think of into you [Indiscernible] it been like, more were been a we should maybe Has factored Could the burn examples, about

Ashish Gupta

Yes. Samad. Yes. Hi,

So the – Board. macro, I a happy right, to across mean as it’s

the at business And We’re the functional item spend looking section gamut and also both cross every practically we of perspective where right, covers I mean, from a the of rock. a how is. it right and under of kind at perspective, looking looking look line

across touch. headcount product right in we’re and right on kind doing basically, and right, basis, call, the operating rationalizations, line every item, had focused getting earnings we’re more also headcount we on mentioned earlier look every function, headcount, So touch efficiency, leverage from line looking efficiencies a right, as and being right, and at it for of

at a basis. then right, just as from so across even percentage And looking headcount being a macro, right, a a shaving top certain right, – then also vendor there’s There’s component. And and efficient we’re cost the vendors, all and off more a unit component. then then

it’s – the all was it’s of bullet. silver no business, aspects So there if literally, at looking

Samad Samana

and the one had I gears. Understood. given And revenue more then company switch But a quarter, question I’ll last maybe think outlook. numbers just then

I should side use outlook? prior that think the And about framework revenue curious I’m how that in the as should heard billion today. for we we for $XX just anymore just ARR remarks revenue outlook I billion, think the you’ve prepared a $XX not given? that

Ashish Gupta

Yes.

and by providing of accounting but to entire the that’s So think remarks right, for of million. and in $X.X potentially I’m and my right the impact be fiscal, also is changes noting trying of mention which range thoughts, consideration revised quantifying $X to bridge mean, what impact to that that the the of I that’s calling for kind right. as I prepared guidance, then what out in million will the

Samad Samana

other are customers as going are an Raj, it about solutions trending just that maybe, end indication Taco the of, at But prospects. and for map engagement where spend conversations are we just solutions if rest with where for like, Del Great. step deal of And or maybe then you, you year? news, in Presto’s cycles gives is how deal how different priorities back big of the maybe from your mentioned terms – think the customers as with to we to will the

Rajat Suri

stores. pulled there deploy very – mean, the the mentioned, value live customers that their I installed about franchisees seeing from the and solution to excited Yes. it our were are it. with good from And Look, and in it adopt again, I to as is,

similar out Del dramatically and a nothing there I that’s seeing would we’re Taco different. other with brands. Checkers sentiment. There’s So it’s say

it’s in written of And all think I case And terms of for of priorities, the all us, high read still – I is so labor U.S. mean, stat customer people, customers. there. mind our they people. when to unfilled even repeat not top be over million of I is you pretty deal, there’s jobs turnover. in tend XX find It’s a easy And find still for to the

hearing be And It’s sometimes our of desired. the left what quality can kind and from customers. we’re

there’s in CEO you talk the sales. human the big upsell a will this redeployment with this no to, priority I QSR a improve AI – is they to every as as boosting an have to place is high a sales. that in and have of don’t that never upsell for tell And the want in well. we mean, fact so well as chain deal to that labor And is help country AI than a brand solution place forgets to better

promise. that big with third them brands a care that AI about really because consistent thing helps overall see helps to experience brand we’re is The their it and starting deliver

a staff, deliver to a push on – they offer. so new they limited the for out example, But can retrain hours. all has takes a long, And a can AI if it their time like long LTO, within if to time brand

big for another that’s So benefit these brands.

hearing year. we’re the top our serious what are this customers the customers, initiatives is so from with that And and one this the it, of and for initiative, three piloting about top

this going How the AI AI and every grow why executive helps us. about where that’s they about all are chatGPT so all in country. And business? their leveraging and is, of to It’s we’re these excited that the talk to team things talk be only

Samad Samana

Great. you. Thank

Rajat Suri

you. Thank

Operator

Thank I’d concluding pass like further seeing questions you. to floor remarks. any the back Instructions] [Operator at I’m for not this management to time.

Rajat Suri

for thank everyone, attending All the you, right. call. Well,

everything to First, Prestonians commitment There’s the thank over our of a to from fantastic am come traditional industries. a success He’s proud Ashish such AI of to how new in we’ve of the Especially, to the so X.X you’ve part CFO. more closing, I been short an the you, this been Gupta I’d opportunity and for and we take time great his like of years. me. contributions as achieve our team a instrumental able I’d much all last to Thank in for for group. for what frontier done pioneer see quarter exciting partner like for past company their to as Ashish, thank for

Ashish Gupta

pleasure a partnership. in been It’s Raj. you, Thank

Rajat Suri

Valentine’s call. everyone, you. thank you earnings again, for Thank And attending Day. our Happy

Operator

teleconference. today’s concludes This

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

Presto Automation (PRST) 14 Feb 232023 Q2 Earnings call transcript