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.
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.
<unk>, 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.
We're 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 autonomous form 20-F filed with the SEC on March 31, 2022, and other documents filed by 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 today's call will be accompanied by a Powerpoint you are welcome to view the presentation on autonomous Investor Relations website. So you saw the call.
A replay of this webcast will be available on a ton most 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.
<unk> Zhu investors of management's managements view of the economic performance.
<unk> 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 it <unk> 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 autonomy, 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.
Next Bonnie 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 Dan will be joined by Bonnie with that I'd like to pass the call over to Ben Boelkow. Ben. Please go ahead.
Thank you Juliet.
Hi, everyone and thank you for joining us on our fourth quarter and full year 2022 financial results Conference call.
Before I get into our Q4 results.
Let me first address the needs of our agreement to enter into a merger transaction.
Recently, it was announced last week.
We couldn't be more excited about the military.
It is the IV complementary.
Jesse.
To create exceptional customer centrica.
Davidson.
The rate growth side.
One thing that is a real <unk>.
MTV and predictive mobility services and products.
Digital platform integration for faster.
The response with multichannel delivery.
Value creation across the mobility ecosystem or full year transportation insurance carrier fleet companies and mobility service profile.
The combined company will be extremely well capitalized.
With revenues, no hardwood and $85 million in 2022.
With solution operating in more than 26 countries.
With more than 100 partnership agreements a cross sell to more people year in transportation insurance.
Lease and rental sector.
Covering more than 17 million vehicles.
And more than 80000 connected assistance service professional.
And of course, Turkey registered and pending patents.
Week over one 7 billion connected vehicles expected to be on the road by the next decade, the combined company.
We serve market totaling more than 100 billion.
This all stock transaction is expected to close in the third quarter of 2022.
Upon closing.
Bruce currently feel urgency 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 would be happy to address your questions regarding the merits here.
The end of our prepared remarks today.
Now, let's shift our focus to Q4 and year end 2022 results fall 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 over quarter.
And we signed substantial new contracts that will position the company well for continued growth in the coming quarters.
Q4 also marked a significant shift in our 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.
The year over year impact of these cost reductions.
As a result in substantial cost savings for the company.
We think that these tests are to normal up with and preserving the necessary capital to build a sustainable and scalable business.
For the full year 2022, our revenue growth product development and customer success has been nothing short of remarkable.
We grew revenues from $1 7 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 line 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.
From a market perspective.
Half of 2022 was all about extended decision cycles retail ecosystem.
As a result with strong demand, we see for the normal Doctor services did.
Did not translate into revenues as quickly as we expected.
We anticipate that these macro factors will persist well into 2023.
And does our positioning the company accordingly.
We've seen Axa 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 of key applications and use cases.
And because of the adoption of new transformative economic model.
There are segments of the industry.
Q4 continued our momentum across key metrics.
Some of the Q4 highlights.
Revenue for the fourth quarter of 2022 grew by 6% quarter over quarter.
Recurring revenue reflects 82% of auto numbers revenue for the fourth quarter 2022.
Bookings.
For the fourth quarter grew by 65% quarter over quarter.
The $3 6 million or <unk>.
79% is recurring revenues.
Backlog.
December 2022 was $6 3 million.
Annual recurring revenue or <unk>.
<unk> was $7 million.
The increase of 5% quarter over quarter.
For 2022.
Eurostar will follow.
Revenue for 2022 was $7 million.
Compared to $1 7 million in 2021.
Okay.
For the full year 2022 recurring revenues was $4 8 million.
Booking.
For 2022.
Were $9 3 million.
We increased also 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 segment in the mobility sector.
We have gone through at my age and maintenance management console as well as for 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 for the FX.
I want to touch some of the strategic partnerships announced in the quarter.
First is Microsoft.
Microsoft has predicted auto normal.
Colton improve its global marketing products and services.
With streaming connected vehicle data provided by us to normal.
Microsoft to develop enhance names so it's mapping services for Microsoft.
Users across Microsoft Azure Windows.
Including providing coverage traffic conditions.
There's a dislocation in your route optimization.
Yeah.
Microsoft will use connected vehicle data.
<unk> traffic data road safety events and roadside Baker twin.
When the reach and validate its current road network data.
With this additional debt to see Microsoft can derives additional insights to support its marketing products and services.
Such as new roads beyond next week or 10 restriction for example.
Microsoft's mapping products and services.
And could it go on branded solution and license third party offerings.
We also signed a multiyear partnership with global automobile.
Can you picture, where no group to provide fleet customers easier and cost effective access to reach actionable vehicle data insights across multiple vehicle brands.
Unlike other solutions that we can.
I could not be hardware.
Okay.
Okay.
<unk> don't get to be installed.
To gain access to the data.
Oh, so normally is able to access the vehicle data directly from Renault group, who really know cloud platform.
Easily connect for suites.
So moving from hardware to software based telematics.
Reduced installation and maintenance costs for fleet customers as well as time spent managing these softer market devices.
We also signed a multi year agreement we can Terry.
The awards to assist technology ecosystem for smart mobility infrastructure management.
We integrate connected vehicle data available through the to an almost smart mobility data platform into in Terry.
Mobility for us.
The additional data so we won't be Paris, and New York, New mobility insights from multiple sources of traffic intelligence.
Okay.
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.
Yeah.
And finally my screen.
Hi.
The business unit within Michigan Group.
Specialized in driving behavior that kind of Ics.
That's a normal to advance the development of its new lease zoning.
Identification services in Europe .
Michigan VDI.
Leverage acceleration and exploration connected vehicle data.
Available for the Delta normal smart mobility data platform.
To identify potential exit events or sports.
And they help European Goldfields charities.
Use risk and improve road safety for drives it.
Beginning instron and followed by additional countries across Europe .
No for me.
More detail on our Q4 and full year 2022.
And then it also turned off our CFO Bonnie.
Yeah.
Thank you Ben.
Revenues for the fourth quarter 2020 to reach $2 1 million compared to $1 1 million for the fourth corner of 2021.
Growth was primarily driven by growth in our core connected vehicle data and the contribution of the float revenue.
Before I move further into the numbers I want to remind you that our non-GAAP item consists itself.
Based compensation expenses restructuring expenses, depreciation and amortization of acquired intangible assets contingent liability income related to the lower compensation 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 restructuring costs of $2 2 million and transaction costs of $1 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 $1 9 million compared to 14.
14 million for the fourth quarter of 2021.
Our cloud infrastructure expenses consist primarily of costs related to a third party cloud services, which decreased by 12% from $1 1 million in Q4 2021 to $1 9 million in Q4 2022.
The decrease is attributed to the efficiency.
We 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.
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, or $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 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 $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 cost if excluded it reflects a reduction of 29% quarter over quarter, mainly due to reduction D&O insurance costs 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 Capex ZEVALIN short term investments restricted cash and long term investment a 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.
Now I will turn it back over to Ben.
Okay.
Yeah.
Yeah.
As highlighted in todays call Q4, and the full year 2022.
Great progress and challenges to overcome for two numbers.
Exiting the year, we believe that we are well positioned from a capital standpoint to adjust to the rate of market adoption we are experiencing.
Growing our ecosystem of partners and creating strategic credible partnerships.
And today is this focused on segments, we believe was good.
Our momentum is carried into 2023 as we started the year with a bank.
So.
The class action goes to see the blast to execute against the two normal has been dismissed.
You may remember the strange low suits claim they total normalized <unk> hardware truck devices to BMW vehicles in the U S.
Well, we believe that the dismissal of disclosed suite, both the blood based fitness of the plaintiff's complaint as much as it reinforces the importance. They total normal places 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 factory improve customer experiences and safety for our automotive OEM transportation issue in <unk>.
Rental and suite partners and their customers.
The teams are now engaged to support the anticipated close and 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.
Yeah.
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 the cost very carefully.
As mentioned in the call we are in finalizing the process upside terminated approximately 100 employees.
And now we are doing some other cost reduction as mentioned in the call. We are already managed to reduce our cloud services cost and looking to reduce it in other places.
And it's gonna be a substantive E.
Cutting so.
We believe it has gone up take us too.
Between 35% to 40% cut in our.
Burn rate.
And going forward from <unk>.
Probably the beginning of Q2.
Okay.
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.
We should expect to see.
So unfortunately, there's not a lot which 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 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 are.
We think that we are we cannot describe it as that.
It could.
It significantly vary from.
At this point to be a closing point.
Mhm.
Right, but I guess I think you did disclose in our 6K right that there was going to be I guess at least as of the date that it was filed the conversion rate was.
111 share for every 1.41.
Shares of <unk> 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 it close.
E D.
Turning them off older as the world gets around 33% of the combined entity.
And it can change.
You, a percentage up or down depends on and other conditions.
Yes.
Sure.
Okay. Thank you.
Youre welcome.
Okay.
This concludes our question and answer session I would like to turn the conference back over to Julia <unk> 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.