Q3 2022 Otonomo Technologies Ltd Earnings Call
Good morning, Ladies and gentlemen, my name is Keith and I'll be your host operator on this call everybody.
Everybody. Please note this event is being recorded.
I would like to turn the meeting over to your host for todays call Mary Seagal C. E O of amass IR. Please go ahead Mary.
Yeah.
Thank you operator, and thank you all for joining US today welcome to autonomous third quarter financial results Conference call before we begin I would like to remind you that our discussions today will include forward looking statements and are subject to risks and uncertainties.
Relating to future events, and the future financial performance of autonomy.
Actual results could differ materially from those anticipated in the forward looking statements forward looking statements made today speak only to our expectations as of today and we undertake no obligations to publicly update or revise them.
For a discussion of some of the important risk factors that could cause actual results to differ materially from any forward looking statements. Please see the risk factors section of autonomous form 20-F filed with the FCC and other documents filed by us.
Telling them all from time to time with the FCC.
If you have not received a copy of the earnings press release. Please download one from the Investor Relations section of the company's website today's call will be accompanied by a Powerpoint presentation. You are welcome to view the presentation on a ton of months Investor Relations website following the call a rip.
Play of this webcast will be available on the autonomous Investor Relations website.
Please also note that we will present non-GAAP operating loss on today's call, which is a story call non-GAAP financial measure because of this financial measure is used in autonomous internal analysis of financial and operating performance Autonomous believes that it provides increased transparency.
Fee to investors of managements view of its economic performance.
Panama also believes the presentation of this measure allows investors to more effectively evaluate and compare the performance of a telling them all to that of its peers. Although autonomous presentation of this non-GAAP measure may not be comparable to other similarly titled measures.
Other companies are.
Reconciliation of this measure to its most directly comparable GAAP.
Financial measure is included in our earnings release.
Today, we are joined by Ben Volkow C O director and cofounder of autonomy and Bunny Mas CFO of atone them all.
Then we will begin the discussion with an update on the current state of the market and the business next Bunny will share an overview of the company's financial results.
We will then open the call for the live question and answer session with that I'd like to turn the call over to Ben vocal Autonomous CEO Ben. Please go ahead.
Thank you Lee.
Everyone and thank you for joining <unk> third quarter 2022.
No.
<unk> continued our run of strong quarters with all.
I'll start with our key performance indicators eating new high watermarks.
We did see some softness in our top line growth.
I merely due to macro related headwinds we encountered in the market.
What we've seen so positive growth on a quarter over quarter basis.
Even as we continue to see growing demand.
Of course, I would focus avs and.
And mobility six tool, we recognize it's a win rate of adoption in some segments.
It says we hope there continues to be challenging.
Accordingly in Q3, we continue to evaluate and adjust our investment.
And we've always thought that you.
Continued to be the other thing is you know the cash management.
And actually in Q3.
New product to these days.
Red Dog <unk> success, and key strategic alliance announcements.
To start we hadn't really rolled fusion.
Breakthrough capabilities it marries the drone.
Using smartphone based solution with connected vehicle data.
We've seen global fusion will be a cut or.
To accelerate the transformation underway in the <unk>.
Six tool to meet the growing demand for usage based insurance.
We slowed fusion <unk>.
<unk> providers can use it either as rich mobile and via couldn't pay their monthly data to create new connected insurance policy offerings.
As well as bolster existing offerings with additional IV accurate data sources to deliver a competitive advantage.
Since the announcement in September we have received a very positive market feedback as well.
Meaningful discussion with technology insurance carriers that continue to progress.
And in Q3, we also saw significant progress in the fleet sector Photonovel.
First the number of fleet vehicles.
Normal Clarksville increased 4.5 pigs in one particular exhaustive.
Well, let's see we can partner to onboard more than 10000 vehicles to the autonomous platform.
This process would normally take thousands and thousands of hours using hardware based telematics.
I'll weigh in here I would thought through the use of our system.
It's able to imported vehicles.
In one day.
Otherwise comparing with privacy regulations and achieving operational readiness.
This is a destruction of the time and cost. So it operates on its current to be able to set aside for augment telematics installation and maintenance.
This level of automation via a software defined telematics.
Clearly demonstrate the economic value to novel can bring to the switch six tool.
And why we continue to see interest and demand from switching operations.
Yeah.
We also continued to develop and scale our go to market to treat six or via our strategic partnerships.
In July we announced an update to the normal course.
This falls into.
So why did the key technology that is powering the new sales force ultra cloud products.
Is it sales folks who aren't partner, we are providing today must execute there to empower its salesforce evolution with connected car data.
We are targeting diesel ships suites, and the financial mobility ecosystem.
And I'm Super excited about this close partnership.
The latest vision allows customers to David are pulling work flows.
Specific actions at this distance and dispatch data execute deal sensing and <unk>.
Roger safety capabilities.
The auto normal hub enables customers to extract.
The data insights and monitor all the location, it's tattoos of entitled Suites.
Utilizing software based telematics from OEM connected car data customers can enjoy a solution, we tell too costly and expensive hardware.
Yeah.
Finally.
We also recently announced the integration of <unk>.
So no more smart mobility data platform, we can see PS digital vehicles.
The integration with other pay Nathan that is the right new insights for fleet management and maintenance based on connected vehicle data.
And generate new value and revenue streams.
It's a P digital vehicles.
Is it central cause out basically those would be so vehicle related data.
The solution without the companies show vehicle data between relevant stakeholders and the neighbors collaborative business models and value streams.
The automotive and mobility is value chain.
By combining Zika data.
C P digitally because of that.
We also have new insights for valley and.
That in turn can create additional value or new revenue streams for their businesses.
I will just close on Q3 highlights by mentioning that we continue to be active both on the OEM and strategic cause ice storms and not too exciting news in the coming weeks and months.
As I indicated earlier, we continued to see momentum attributes that are key to our business.
Some of the highlights.
Recurring revenues for the third quarter of 2022.
<unk> by 24% quarter over quarter.
And reflects 83% of autonomous revenues for the first quarter of 2022.
Bookings for.
For the third quarter grew to $2.2 million.
Bleach, 90% is generating recurring revenues.
They are cool.
As of September 32022 full.
4.8 million daus.
If you are the recurring revenue was at six point to $7 million and.
An increase of 11% quarter over quarter.
And we signed 19, new customer agreements in Q3.
Those are remarkable results and show the strength of the number of business and our continued growth in the market.
We added a record number of new customer agreements during the third quarter as we continued to see interest and demand falling coal market of connected car use cases increase.
For example.
Morbidity thinking.
Our research and analytics firm that he uses historical and current floating called data.
For modeling purposes to understand the impact of infrastructure development in Sydney, Australia.
J U a E.
And a company developing weather prediction models.
Chose also normal.
So connected vehicle data stores due to the wide roughly co golf coverage and GTP, our compliance with Coors light.
In addition.
Yesterday, we announced our latest press release Rumble.
No he didn't coincide with.
Seem to be doing integrated and sustainable solutions is creating value for clients by using historical and real time data from wood to Navajo to improving safety accessibility and efficiency for all users.
In the sweep segment, we are seeing tremendous momentum with new customer agreements.
Some of these include the Genting.
Fraud detection company that shows up to normal as it's connected vehicle data platform provider.
<unk> enabled product offering such as vehicle recovery across the U.
And two of them are piece of Skus.
A fleet management provider.
Did you say that it's normal to support each transition away from hardware based telematics two bedrooms support to hundreds of fleet customers using the power of sales too.
And finally G. P S trucking, it's sweet and asset management company, which turned towards normal.
Our expertise in working with OEM and connected car data.
As you can see it was yet another strong quarter across product development customer adoption strategic alliances and new customer wins.
Now for more detail on our Q3 financials.
It also to normal CFO Bonnie blogs.
Thank you Ben.
Revenues for the third quarter was 2022 2 million compared to 162000 for the third quarter of 2021 gross wells, primarily driven by growth in our core connected vehicle data and contribution of revenue.
Before I move further into the numbers I want to remind you that our non-GAAP item.
Stock based compensation expense depreciation amortization of acquired intangible assets contingent liabilities related to the flow acquisition and an impairment of intangible and goodwill non-GAAP information is presented excluding these items.
Our GAAP financial results, along with reconciliation between GAAP and non-GAAP results can be found in our earnings.
I will now turn to the detailed financial results for the quarter.
Our GAAP operating loss for kids, we 2022 was 37 million compared to $9 9 million in the third quarter of 2021.
The operating loss includes $26 3 million impairment charge of goodwill and intangible offset by a decrease in contingent in contingent liabilities.
Which created an income of $6 2 million.
In addition, the increase in the GAAP operating loss was mainly driven by operational expansion and acquisition of new companies and related amortization of intangible assets.
In the third quarter non-GAAP operating loss was 13 4 million compared to $9 1 billion for the third quarter of 2021 driven by operational expansion and acquisition.
Oh, well the cloud infrastructure and expenses completely.
Primarily costs related to third party cloud services, which increased by 71% from the 786000. It appears to be 'twenty 'twenty water to one 3 million in Q3 2022.
The increase is attributed to our growth in market data company ingest processed and stored and the mountain data used by our data customers.
Okay.
In addition, the cost increased as a result of the acquisition of Euro and slow.
Cost of revenues include purchasing it stayed the.
Oh point 6 million, an increase of 168% year over year, which reflects the costs, we pay to the Oems and other data provider or their data used in our products.
Innovation called farm, Indiana is related to the cost of services provided to the floor consumers.
Our research and development expenses in our sales and marketing expenses for the third quarter of 2022 were $5 8 million and $5 4 million, which increased by 98% and 120% respectively year over year.
Mainly due to the workforce growth of 232% and 129%, respectively, including the acquisition of <unk> and you're right.
Yeah.
General and administrative expenses for the third quarter of 2022 of them were four 4 million compared to $3 7 million in the same period, you rank coal representing an increase of over 21% mainly due to head count.
In kids read 2022, the company before.
Well I think tangible impairment test, which was triggered by the recent decline in the market Capitalisation management consider deep space recent decline along with other possible factors affecting the assessment of the company's reported.
The outcome of the impairment test resulted in a noncash charge of $26 3 million, which was recorded in the consolidated financial statement for Q3 2022.
The noncash charge completes a rifle the full amount of the goodwill and intangible assets previously recorded in our balance sheet.
Turning to the balance sheet, we ended the quarter with $155 5 million in cash cash equivalents short term investments restricted cash and long term deposit.
I'd be grateful $52 5 million from year end 2021.
This was mainly driven by 11 million cash investment in the global coordination and $41 5 million cashiers and operate in a stable.
And now I will turn it back over to Ben.
Thank you Bonnie.
As highlighted in todays call Q3 was a strong quarter.
With continued growth despite economic headwinds today.
The uncertain rate of adoption that comes with any new market creation or transformation.
We continue to be prudent with expenses and extended the action. They can to reduce cost will come into play over the course of 'twenty 'twenty screen.
Our installation and recurring revenues and bookings seeking the.
We are poised to is continued strong growth.
The coming quarters.
In the last three quarters, we have accelerated from about 35% recurring revenues in the end of 2021 to more than 80% today.
In the same theory.
We have grown revenues two three X of 2021 we.
We expect this momentum to continue and translates into a strong Q4.
We are equally excited about the product development and go to market progress in the business.
And we see our focused strategy is beginning to pay off.
In the insurance segment with new products in a unique position as the main their onboarding connected car data in there.
Sweet same thing.
We grew up a full 0.56 quarter over quarter in the number of cars connected.
And in the broader connected via cause Natus segment, where we see persistent demand for our corrugated the lives datasets ranging from trusts explaining to road safety.
Operator.
Now we are ready to take questions.
Thank you.
This time, we will begin the question and answer session.
To ask a question you May Press Star then one on your Touchtone phone.
If you are using a speaker phone please pick up your handset before pressing the keys.
To withdraw your question. Please press Star then two.
At this time, we will pause momentarily to assemble the roster.
And the first question comes from Josh Nichols with B Riley.
Yeah.
Yeah. Thanks for taking my question I was wondering if you could provide a little bit more detail right. We're about halfway through the fourth quarter and what the outlook was I know at the beginning of the year you were targeting a higher level of revenue with the flow and that that was going to be back half weighted but.
Clearly there's been some softening in the broader economy.
As for Q expected to be up materially from three Q I'm just curious what the cadence is expected to look like at this juncture.
Hi, Josh its a good question, we are not providing a forecast.
Yeah.
For the until the end of the U N.
Definitely we see challenges in the markets.
But at the same time, you know we ramped up his phone call till we just shared the strong backlog and bookings that we had so we are very encourage us once we anticipate from Q4.
But each time, there won't be any forecast or not visits we can share in terms of expectation how to finish the year.
And all I can add is we are very excited and we believe this will continue.
Continued the strong growth that we had in previous quarters.
Yeah, I guess, what are you not willing to give guidance for the quarter is it fair to say like first half of the quarter or is it like similar to last quarter or what we've at least seen like for.
Quarter to date.
U S used it says tussle scored in Q4 was like Q3 are stronger or weaker.
Yes.
So again you know we are limited in what we can say, we definitely very encouraged from what we've seen the market, it's not that the demand for it it's not affecting us.
Like everyone else.
But the seasonal just because of doing the work and the strategy on building recurring revenues.
We are seeing not just some revenues, but also on the booking we've said that we got to the right to me and he showed the gym there to continue to provide growth.
We cannot comment.
It was strong the quarter will be competitive.
He just wants.
But we are very bullish on the quarter.
Okay.
Fair enough right. So you are admittedly more focused on those kpis like bookings that you've talked about previously.
What's the near term.
Revenue.
Talked a little bit about being more prudent.
About the cash balance I think that that's probably a good decision given the macro backdrop that we have so non-GAAP operating loss of like around 13, and a half million that we had for three Q is that it is that a good baseline to use as a go forward basis is that going to come in a little bit of what's your expectation.
Yeah.
The cash burn going forward.
Yeah. So rod this is Bonnie hi, Thank you for your question.
So yeah, you can see that second quarter, we manage.
Managed to decrease the Ah.
Burn rate.
I'd say, that's how our non-GAAP , it's a pretty good indicator for our our cash burn rate.
We did do some coffee capping initiative that started in Q3 and well start to play.
The next quarter with additional infrastructure on cutting that we are looking at to say also that there was one.
Help us cut the cost.
Early 'twenty two 'twenty three.
We believe that the full impact of the reduction in force that we did in Q3 as well as some third party labor costs.
Although it is Paul.
And early next year and not this year and we will see a savings from our cost in this thing.
The jet range of 5% to 8%.
Per year.
Ah, but they're non-GAAP continues to be a and they can pay it back.
Back to them or a cash burn rate.
Yeah.
Great. Thank you for providing the detail on the trajectory there I guess, if these new agreements that the companies signed up or are they just kind of more exploratory earlier partnerships or is there a real revenue opportunity for any of these and if you could touch on the one or two.
Agreements that you can provide the most near term revenue opportunity over the say the next six to 12 months that would be helpful.
Yeah.
So.
This is Ben I'll try to address it in 2000 sheets that we covered in today's call and it says Cosan S. A D a.
The real thing.
The partnership with them.
Salesforce is a new product that they announced it in October .
The address to the automotive industry.
And normally it's really the software to the monarch spud and their insight tolerating the platform with connected car data.
I can share that the.
Titled something going in.
I can share that we are very very excited and we definitely see EMEA revenue.
The six to 12 months.
In Cmos if they close on at St. Pete.
C. P. We the new newly announced D V. H did you tell jokes is.
He is approaching organisations and enabling them to get better transparency.
And value auto still connected vehicles connected because data.
So are you there.
Pilots ongoing in paid pilots ongoing I should say.
Here also we anticipate revenues in the timeframe you discussed.
So those are the Rio two real things.
Not always all partnerships materialize to real business and read the news.
In this case.
This is Todd said on the right.
<unk> foods and we are certainly excited for what we predicted discipline bring in terms of revenues in the coming year.
Nobody says is the question.
Yeah, I don't want to hardware Q&A. So just final question for me if you look at the company's rubber revenue, but on a gross profit basis. Once you adjust for the cost revenue, but also those cloud infrastructure storage costs, you're getting close to be.
In breakeven I think you were down negative 400000, or so this year I know, there's a cloud storage costs are going to continue to go up a little bit but at what.
Revenue level, you expected to be a positive.
Positive on a cost of goods sold.
Adjusting for both like I said, our Cogs, but also the cloud storage basis revenue infrastructure costs.
So I think we've shared in the past that the Ito.
So around two to three years.
He then I think we can stand up behind that.
Yeah.
Yeah.
Yes.
As we all are.
And I can't share with you at one point.
Revenue.
What is the number of those revenues that will make us a breakeven depends on that.
Alright, Thanks, a lot.
The product that.
We have on the roadmap so I can't give you an accurate and.
Answer to that question.
Okay. Thank you I'll hop back in the queue.
Thank you.
Thank you.
And once again. Please press Star then one if you would like to ask a question.
And the next question comes from Harry warmer Deng with Needham and company.
Sorry. This is Ryan coach with Needham can you hear me.
Hi, Ryan.
Alright, then I wanted to ask about.
The Salesforce relationship sounds like this is a new market for sales force to penetrate in terms of the dealerships is that correct.
I I I I agree I think the way to doing some business there.
But I think it was much more human cells compared to <unk> 22.
Okay.
The next few months.
Got it so hopefully your data it gives them a much more powerful product to go after that market that's great.
And with regards thinks about the big picture here.
Kind of agreements and near term pipeline I assume that fleet insurance.
The prime focus for the company in between those two which one do you think could be more material to kind of the next 12 months revenue. If you look at your pipeline.
Yeah.
So.
The insurance stuff.
Demand, obviously more mature you know we acquired the slower a more mature company that already have the big.
An ongoing relationship with the insurance company. So obviously this remains our.
Most significant generating revenue.
In the coming year.
And for the slate this is like a new market for us.
And we do see a increase in the.
In numbers so far.
Next.
We have completed.
And we will see them growing in very drastic a percentage Q.
Q4 in 2023.
We'll continue to grow that.
And.
I think insurance continues to lead in 2023, and our fleet is definitely there to Uh huh.
You know it.
So drilling down and generate Roes that we are well we are anticipating.
And next year.
Got it that's helpful and lastly, kind of circle back on your commentary around the cloud cost there.
I assume you're not keeping like a history of all the data you're adjusting your basically processing.
You folks to process the data on your customers are paying for rather than collecting the history of all data on all cars, which really probably wouldn't wouldn't be very.
Financially.
Dangerous.
Correct.
No no that's not always the case in some scenarios, we maintain the data for a longer historical data for some use cases as a more valued and real time data.
For example, see diesel or Dot's, just want to understand what changes they need to do they usually like to look not just what's happening today, but also was there 10 days six months ago nine months ago that makes it did make storing data we maintain the name.
Is it much lower close to all of our colleagues in the cloud because it's not to be at the time. It can take a feed showcased the access to the data will take a couple of seconds.
Those are the biggest victims. So we maintain historic data in some cases, but we are maintaining in a way that the cost associated to the low.
Slow and not passing game he read way.
Two hours of course, I hope you take the question.
It does very much.
Okay. That's it for me thank you.
Thank you.
Thank you.
And this concludes our question and answer session I would like to or trying to Florida and Volkov CEO for any closing comments.
Thank you everyone for joining us today.
I want to see you in our next call.
Thank you.
Thank you.
Conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.