Q4 2022 Otonomo Technologies Ltd Earnings Call
Good morning, and welcome to the autonomous <unk> fourth quarter and full year 2022 earnings conference call.
All participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by zero.
After todays presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on your telephone keypad to withdraw your question. Please press Star then two please note. This event is being recorded I would now like to turn the conference over to Juliet Mcguinness Senior director of.
Communications at Autonomous Please go ahead.
Thank you operator, and thank you all for joining US today welcome to autonomous fourth quarter and full year 2022 earnings call before we begin I would like to remind you that our discussion today will include forward looking statements that 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 forward looking statements.
Forward looking statements made today speak only to our expectations as of today and we undertake no obligation 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.
See the risk factors section of the China, Most form 20-F filed with the SEC on March 31st 2022, and other documents filed by the Panama from time to time with the SEC.
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.
This call will be accompanied by a Powerpoint you are welcome to view the presentation on a ton most investor Relations website. So you saw the call.
A replay of this webcast will be available on the ton miles investor Relations website.
Please also note that we will present non-GAAP operating loss on today's call, which is our historical 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.
C. G. You investors amendments managements view of the economic performance.
Also believes the presentation of this measure allows investors to more effectively evaluate and compare the performance of a ton about two out of its peers, although with China. Most presentation of this non-GAAP measure may not be comparable to other similarly titled measures of other companies.
A reconciliation a reconciliation of this measure to its most directly comparable GAAP financial measure is included in our earnings release.
Today, we are joined by Ben Falcao, CEO and co founder of economy, Bonnie Moab CFO of autonomy and Ben will start us off with an update on the current state of the market Q4 results and a summary of 2022.
Well I mean, Moab will give us an overview of the company's financial results for Q4, and the full year 2022.
We will then open the call up for a live Q&A session. During the Q&A section of this call then we'll be joined by Bonnie with that I'd like to pass the call over to Ben Boelkow. Ben. Please go ahead.
Thank you Juliet.
Everyone and thank you for joining us on our fourth quarter and full year 2022 nights a week.
The conference call.
Before I get into our Q4 results.
Let me first address the needs of our agreement to enter into a marriage and transaction.
Recently, it was announced last week.
We couldn't be more excited about the merger.
It is the IV complementary.
Yes.
And it will enable us to create exceptional customer centric.
Davidson.
The rate growth.
By advancing that Israel.
Defense, even predicting mobility services and products.
Digital platform integration or close to it.
With multichannel that easily.
Value creation across the mobility ecosystem for yen transportation insurance carrier. So these companies and mobility service profile.
The combined company will be extremely well capitalized.
With revenues know how good an $85 million in 2022.
With solution operating in more than 20 countries.
With more than 100 partnership agreements a cross sell to more people yeah in transportation insurance.
Lease and rental sector.
Covering more than 17 million vehicles.
And more than 80000 connected the Houston service professional.
And of course.
<unk> registered trading spot.
We call. The one 7 billion connected vehicles expected to be on the road by the next decade, the combined company.
We serve market.
More than $100 billion.
These talks conviction is expected to close in the third quarter of 2022.
Upon closing.
The group currently you'll cogent.
What would be the CEO of the combined company.
I will continue on the journey and will be joining the board of directors of the combined company.
I'd be happy to address your questions regarding the merger.
At the end of our prepared remarks today.
Now, let's shift our focus to Q4 and year end 2022.
It's close to normal.
Q4 was yet another record breaking quarter for to normal with positive revenue growth and continued strong bookings.
Almost all our key metrics were positive quarter on quarter.
And we signed substantial new contracts that will position the company well for continued growth in the coming quarters.
Q4 also marked significant chief operating strategy.
As we took the difficult but necessary steps.
To reduce cost to be more in line with our revenue outlook.
The overall market adoption.
Okay.
We estimate the year over year impact of these cost reductions.
Result in substantial cost savings for the company.
We think that this takes us to a normal up when I'm presenting the necessary capital to <unk>.
Build a sustainable and scalable business.
For the full year 2022 our revenue growth product development and customer success.
Be nothing short of remarkable.
We grew revenues from $1 $71 million to $70 million.
And we exited the year with 82% recurring revenue run rate.
Why we did not meet our expectation on the top of the guidance for the year and then we would've preferred to have less disruption in the business.
We remain optimistic about the future of the market and our strategy.
Okay.
From a market perspective, the big hospitals 2022.
It's all about extended decision cycles retail ecosystem.
As a result.
As long as demand, we see for a number of Doctor services did.
Did not translate into revenues as quickly as we expected.
We anticipate that these macro factors will persist well into 'twenty two 'twenty three.
And does our positioning the company accordingly from a scenario perspective.
The next two to three years will be people.
The mobility sector.
As we believe the industry will reach a tipping point.
The adoption of software defined telematics.
Because of the increasing number of connected vehicles on the road.
What is the rate of electric vehicle adoption.
Because the month tuition or key applications and use cases.
And because of the adoption of new transformative economic models.
At a segment of the industry.
Q4 continued our momentum across key metrics.
Some of the Q4 highlights our revenue for the fourth quarter of 2022 grew by 6% quarter over quarter.
Recurring revenue was 682% for the numbers revenue for the fourth quarter 2022.
Bookings.
For the fourth quarter grew by 65% quarter over quarter.
The $3 6 million.
79% is recurring revenues.
Backlog.
As of December 2022.
It was $6 3 million.
Annual recurring revenue.
There are what $7 million.
An increase of 5% quarter over quarter.
So 2022 years.
Tom will follow.
Revenue for 2022 seven.
$7 million.
Third to one 7 million in 2021.
For the full year 2022 recurring revenues was $4 8 million.
Bookings.
For 2022.
The $9 3 million.
We increased those so our current OEM contracts.
From 'twenty to 'twenty four.
We added 55, new customers for connected vehicle data and insurance in 2022.
We completed the slow acquisition to address multiple insurance one of the largest segments in the mobility sector.
We launched suite my age and maintenance management console as well as school fusion with combined phone and card data to create a one plus one equals three offering to insurance carriers.
And we increased the number of.
Fleets vehicles on the platform by more than five five and ethics.
Okay.
I want to touch some of the strategic partnerships announced in the quarter.
So that's Microsoft.
Microsoft has predicted also normal.
What are the true global marketing products and services.
The streaming connected vehicle data provided by the two normal there.
Oh, my crystals to develop none.
So it's nothing services for Microsoft's mob fuses.
Across Microsoft Azure Windows.
And being.
Including providing coverage traffic conditions.
There's not the vacation and route optimization.
Yeah.
Microsoft will use connected vehicle data.
<unk> trusted data road safety events and road sign data Tweens.
When you reach and validate current road network data.
With this additional debt.
Microsoft can derives additional insight.
To support its marketing products and services.
That's just new roads build next week or 10 restriction for example.
Microsoft's mapping products and services, including co branded solution.
So talk to yesterday.
We also signed a multiyear partnership with global automobile when you picture, where no group to provide food to customers easier and cost effective oxitec.
To reach actionable.
Data insights across multiple vehicle brands.
Unlike other solutions that require us to knock it hardware such as Obi D don't get to be installed to gain access to the data.
So normally is able to access the vehicle data directly from Renault group, who.
No cloud platform.
Easily connect full suite.
So moving from hardware to software based telematics.
Reduced installation and maintenance costs for fleet customers as well as time spent managing these austin market devices.
We also signed a multiyear agreement with Terry.
The award drastic technology ecosystem for smart mobility infrastructure management.
So we integrate connected vehicle data.
Variable through the 10, almost smart mobility data platform.
So in theory.
Do you see for us.
The additional data so we won't be Paris, I look new morbidity inside from multiple sources of traffic intelligence.
Advantage did you tell him mobility infrastructure solutions for the public sector and commercial enterprise customers.
And then either on its mission of creating a future of smelter and connected transportation.
And finally my screen DDI.
The business unit within Michigan Group.
Specialized in driving behavior that kind of Ics.
That's a normal towards advanced the development of.
Neil Neil zoning.
Identification service in Europe .
Michigan D D I b.
That's right Jack simulation and exploration connected vehicle data and have.
Available for the Delta normal smart mobility data platform.
To identify potential extra then all these boats.
They help European Goldfields Securities.
<unk> can improve road safety for drives it.
Beginning instron and followed by additional countries across Europe .
No for more detail on our Q4 and full year 2022 notches.
And then it also totaled almost CFO for anymore.
Yeah.
Thank you Ben.
For the fourth quarter 2020 to reach $2 1 million compared to one 1 million afford a fourth corner of 2021.
Growth was primarily driven by growth in our core connected vehicle data and the contribution of the floor.
Before I move further into the numbers I want to remind you that our non-GAAP item Colonsay yourself.
Based compensation expenses restructuring expenses, depreciation and amortization of acquired intangible assets contingent liabilities related to the flow of course, Asia and impairment of intangible and goodwill.
non-GAAP information is presented.
Excluding these items.
Our GAAP financial results, along with a reconciliation between GAAP and non-GAAP results can be found in our earnings release.
I will now turn to the detailed financial results for the quarter.
Our GAAP operating loss for Q4, 2022 was $17 2 million, including every structural cost.
$2 2 million and transaction cost of one 9 million compared to $16 2 million in the fourth quarter of 2021.
In the fourth quarter non-GAAP operating loss was $13 8 million, including transaction costs of one 9 million compared to 14 point to 14 million for the fourth quarter of 2021.
Our cloud infrastructure.
It consists primarily of costs related to a third party cloud services, which decreased by 12% from one 1 million in Q4, 'twenty 'twenty 129 million in Q4 'twenty to 'twenty two.
The decrease is attributed to the efficiency.
They measure the company adopted to reduce its costs.
Cost of services include purchasing them data point 7 million, an increase of 148% year over year, which reflects the cost we paid to the Oems and other data provider for their data used in our products.
In addition, 4 million is related to the cost of services provided to our customers.
Our research and development expenses in our sales and marketing expenses for the fourth quarter of 2022 were $6 2 million and $5 9 million, which increased by 29% and 36% respectively year over year, mainly due to the work.
<unk> brought in the in connection with the flow acquisition the.
The increasing workforce does not reflect the recent restructuring process, which will take effect in 2023.
General and administrative administrative expenses for the fourth quarter of 2022 were at $6 4 million compared to $6 3 million in the same period a year ago.
The current quarter expenses include $1 9 million in transaction costs, if excluded it reflects a reduction of 29% quarter over quarter, mainly due to reduction.
Sure Scott and management bonuses.
During the fourth quarter. The company started a process of cost reduction, including head reduction of approximately 100 employees worldwide.
This process will be completed by the end of the first quarter of 2023 and is expected to result in substantial cost savings.
Turning to the balance sheet, we ended up the quarter with 146 million in cash cash equivalents short term investments restricted cash and long term investment.
Decrease of $67 5 million from year end 2021.
This was mainly driven by 12 million in cash used for the flower Quintation and $55 5 million in cash used for operating activities.
And now I will turn it back over to Ben.
Okay.
Yeah.
Yeah.
As highlighted in todays call Q4, and the full year 2022.
<unk> progress and challenges Torvill council to them.
Exiting the year, we believe that we are well positioned from a capital standpoint.
Just to the rate of market adoption, we are experiencing.
Growing our ecosystem of partners and creating strategic credible partnerships.
Today's this focused on segments, we believe was good.
Our momentum is carried into 2020 free as we started the year with the bank.
So.
The class action goes to see the ability to execute against that to normal has been leased.
You may remember the strange low suits claim they total normalized hardware tracking devices to BMW vehicles in the U S.
Well, we believe that the dismissal of disclose suite, both the broad based to the Miss of the plaintiff's complaint as much as it reinforces the importance they total normal basis on data privacy.
We are pleased with the outcome of this important step in our efforts to resolve this matter and defend autonomous reputation.
And position in the industry.
Second our recently announced agreement to merge with diligently.
He is going to create a mobility service powerhouse that can in fact improve customer experiences and safety for our automotive OEM transportation insurance rental and suite partners and their customers.
The teams are now engaged to support the anticipated close.
And the integration in the third quarter of 2023.
Operator, we are now ready to take questions.
We will now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad, if youre using a speakerphone. Please pick up your handset before pressing the keys to.
To withdraw your question. Please press Star then two please.
Please limit yourself to one question and one follow up at this time, we will pause momentarily to assemble our roster.
[laughter].
Our first question comes from Josh Nichols with B Riley. Please go ahead.
Yeah. Thanks for taking my question I'm, just kind of curious I mean, obviously, there's a lot going on with the company, but just to hit on some of the expense management items that you talked about added towards the end of the call. So the company had an operating loss of around $14 million in the fourth quarter.
How is that expected to change going forward and once all these cost saving initiatives are completed is there a target cash burn quarter.
The run rate that the company is looking at achieving.
Yeah.
Yeah. Thank you for the question Josh Yes, we can we continue to monitor very carefully.
As mentioned in the call we are in finalizing the process upside terminated approximately 100 employees.
We are doing some other cost reduction as mentioned in the call. We are already managed to reduce our our cloud services cost and looking to reduce if they're not there are places.
And it's gonna be a substantive E cutting so.
We believe it's gone up take us to.
Between 35% to 40% cut in our.
Burn rate and going forward from a.
Probably the beginning of Q2.
Thanks for clarifying and then just last question for me.
Can we talk a little bit about the pro forma cap structure of the new entity I know, it's subject to a couple of things that could change but.
Overall based on the current exchange rate like what's the shares outstanding today, and what's that going to look like on a pro forma basis, our cash and debt.
Level balance sheet items.
You should expect to see.
So unfortunately, there's not a lot we can share at this point and also there are lots of moving pieces between signing and closing it could take several.
Chevron a month and a there isn't a lot of things that are going to change between signing and closing. So we are not disclosing at this time, how the cap table volatile.
We think that we are we cannot describe it is that it could.
Significantly vary from this.
At this point to be a closing point.
Mhm.
Right, but I guess I think you did disclose in the 6K right that there was going to be I guess at least as of the date that it was filed the conversion rate was.
It wasn't 111 share for every 1.41.
Shares of Ottomana stock right that we're gonna be outstanding at least.
That's how I interpret what was disclosed in the 6K that was published.
We did disclose the a E D.
We are telling them all there as well.
It's around 33% of the combined entity.
And it can change it to you know a few a percentage up or down depends on and either foundation.
Sure.
Okay. Thank you.
Youre welcome.
Yeah.
This concludes our question and answer session I would like to turn the conference back over to Juliet Mcginness for any closing remarks.
Thank you everyone for joining us we look forward to seeing you on our next call.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.