Q1 2023 Near Intelligence Inc Earnings Call

May 15, 2023

Speaker 1: You.

Speaker 2: This is Gwen Lauber with NEAR, and with me on today's call are Neil Matthews, Neil's Chief Executive Officer, and Rahul Agarwal, our Chief Financial Officer.

Speaker 2: Our earnings press release was issued this afternoon and is posted on our website.

Speaker 2: The primary purpose of today's call is to provide you with information regarding our first quarter 2023 performance and offer an outlook for our second quarter and full year 2023.

Speaker 2: Certain statements made on this call that are not historical facts, including those related to our future plans, objectives, and expected performance, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

Speaker 2: These forward-looking statements represent our outlook only as of the date of this conference call.

Speaker 2: While we believe any forward-looking statements made on this caller reasonable.

Speaker 2: Actual results made different materially because the statements are based on our current expectations and subject to risks and uncertainties.

Speaker 2: These risks and uncertainties are discussed in our filing with the SEC.

Speaker 2: You should refer to and consider these factors when relying on such forward-looking information.

Speaker 2: Any four-looking statement made speaks only as of the date on which it is made.

Speaker 2: And we do not undertake an expressly disclaim any obligation to update or alter our forward-looking statements.

Speaker 2: Whether as a result of new information, future events, or otherwise, except as required by applicable law.

Speaker 2: I encourage you to visit our investor relations website at investors.near.com to access our first quarter press release.

Speaker 2: SEC report and the webcast replay of today's call.

Speaker 2: During the course of today's call, we will refer to certain adjusted financial measures.

Speaker 2: We use these non-GAAP financial measures to review and assess our performance and for planning purposes.

Speaker 2: These non- GAAP financial measures should be considered in addition to not as a substitute for or an isolation from GAAP measures .

Speaker 2: Additional information about these non- GAAP measures , including a reconciliation of non-gap to comparable GAAP measures is included in our press release.

Speaker 2: Finally, unless otherwise stated, all financial comparisons on this call will be made to our fiscal year 2022 results on a historical basis.

Speaker 2: And with that, let me turn the call over to a nail.

Speaker 3: Welcome, everyone, and thank you for joining us today.

Speaker 3: Let me start with a financial highlight.

Speaker 3: First quarter revenue was $15.5 million.

Speaker 3: slightly about the high end of the time.

Speaker 3: Net revenue retention for the quarter continues to be greater than 200%.

Speaker 3: and came in at 110 percent while within a part of the expectation.

Speaker 3: Notwithstanding on target revenue growth, we continue to sharpen our focus on the path to profitability.

Speaker 3: against our plant, adjust to be better. We have delivered that other expected adjust to be better, negative seven million dollars.

Speaker 3: This should further improve our year-end adjusted a bit of realization. This should further improve our year-end adjusted a bit of realization.

Speaker 3: The results of our quarter support of the means that has registered companies continue to spend on products that deliver ROI.

Speaker 3: Because our solutions provide insights that help our customers to make better decisions and to more effectively utilize their budget,

Speaker 3: We believe our customers will continue to subscribe to our solution as they help them to understand which programs are the positive impact on the bottom line.

Now, additionally, one question has come up in all my meetings.

It's part of the foundation that a products a built on.

And Genitive AI should help us develop even more advanced solutions in the future.

the natural complement to over 10 years of our learning and innovation.

Now, I'd like to talk to you about the US products strategy for the future.

Today,

We are solutions are built on three pillars.

near solutions built on three pillars. Data, privacy and AI.

Each pillar enhances the others making a solution better.

enhances the others making our solution better. Let's take the first pillar which is data.

Data is what we understand. It's what we build our initial business on over the past decade.

Data is what sets me apart from other companies because you believe that the FI quality is a proprietary large scale data that is unmatched. The FI quality is a proprietary large scale data that is unmatched.

The problem is, how do you say that data is a jet field that you need to clean your AI model?

Data is what helps us realize a vision of truly helping organizations in better education.

Well, other companies talk about the scale of the data and how far is it going to be?

We are interested in investing heavily in data quality and depth.

We believe we have been updated. A focus now is on providing a customer with the highest quality data and it is even more used to be better.

We believe that we can further improve the quality of our data by embedding AM models in the pipeline to the data.

The second pillar of our foundation is privacy.

Clearly, you cannot aspire to be a leading trustworthy global data company without having made significant investments in privacy and driving a lot of innovation through our work on privacy.

A potential product with private design, which provides the largest social things and appeals. Now. What's the year. What about the might the

Being in compliance with local regulations everywhere.

our customers to business is crucial for the leading company. And our customers take comfort in knowing that we work everyday to ensure that our privacy-built solutions are in compliance.

In our industry, privacy is stable state.

The Code Belarus EI.

We've been leveraging machine learning and AI in our platform and products for the past decade. Many of you have seen this work demonstrated in our OZPAR platform where we use natural language to query people and the behavior across places and product categories. In 2016, this was groundbreaking because it allowed our customers and partners to seamlessly access our larger repository of consumer data.

using natural language. With the development of Gen.A.D.V.A.I, we are even more excited about NEO's opportunities.

for our customers and to be even more differentiated from our competitors.

We look at Gen.A.D.V.I as a significant platform and shift that will have profound impact on many industries, including our own data industry.

our proprietary data will be a major competitive depreciator as we believe we'll be able to train our models not just to help our customers discover insights, but also to fill in the knowledge gaps while protecting privacy.

Newer 3 pillars, data and AI underpinned by privacy provide us with a solid foundation today.

But it's the convergence of our high quality proprietary data with generative AI in an ever changing regulatory compliance landscape which we believe will give us an even greater advantage in the future.

What is important? At near, our goal is to maximize data you're clicking while protecting privacy.

We're driving innovation to make sure that our customers get maximum value of data.

We believe our high quality data coupled with generative AI will put an end to having to choose between the value of data and compliance.

We believe that we have the tools that will in the near future allow our customers to be privacy compliant without sacrificing the insights that the beta delivers.

Genitive AI should allow us to bring the traditional model and to fill in the gaps so that we are able to not only be privacy compliant, but should provide valuable insights to our customers.

Moving on to our quarterly results, a significant part of our Gold Market Strategy is our focus on landing and expanding within our customers.

We have had much success by starting with a small deal with a customer in one geography or division and then expanding the relationship over time.

We were able to do this by providing solutions that exceed their expectations.

On the last call, I mentioned a large European retailer who started working with us a few years ago. It is a small subscription to our platform.

We had just renewed the contract with us for an 8-figure, one year subscription. And that's a great example of our land and expand strategy.

Building on that experience during the quarter, we also signed a new customer, Aldi, one of the top supermarket chains in the world, in partnership with Post

The customer will be here to drive good poll traffic into their stores and measure the effectiveness of their tap campaigns.

near solutions will allow them to get a better understanding of the appropriate cashment area for each store and has them attract prospects and customers.

In the first quarter, one of our customers, one of the world's largest commercial releases services and investment firms renewed its contract with near with a clear extension for its Canadian units. In its denoted Kindle Unit, the customer renewed its subscription and expanded the relationship by adding on a second product.

In time, I believe we will continue to expand our footprint with this customer.

During the Carter, we also expand our relationship with the tourism partner of a more insights to explain across New York State.

to high demand to continue to expand the number of points of interest we have to offer within your plans.

Through its relationship with Nier, the partner can better understand who is the reservation prince, providing his customers with insights at a more granular level.

In the US, we signed a partnership with a leading visual marketing platform, well for travel marketer.

The customer's platform uses artificial intelligence and travel data to provide multi-channel marketing solutions that drive visitors to destination. The customer's platform uses artificial intelligence and travel data to provide multi-channel marketing solutions

New York's Insights will help them deliver deeper reporting on the impact of digital marketing programs for their customers, which will in turn have those destination marketers measure and prove their impact to the stakeholders.

As you know, here is a global company.

Beyond its large customers in Europe and North America, we also have a large presence in APAC. One of the customers is Yahoo Australia and we recently expanded our multi-year relationship.

Since beginning their relationship in 2020, we are as expanded into editions of a series that Yahoo serves.

near solutions serve as a measurement tool for Yahoo X-APAC property, helping the customer to demonstrate increased value across its online properties.

Recently, we also closed our largest single contract in Southeast Asia with Admatic militia. This is a leading digital media company in Southeast Asia that works with some of the region's largest brands. This is a popular formal population.

Again, this is a three-year deal in partnership with a minimum commitment well into seven figures.

Another exciting aspect of NIR is the broad array of challenges.

that we helped to get our customers saw. For example, in the US, we recently worked on a study with a county of Kauai and several government agencies to help them understand tourist moment throughout the county.

Our goal was to deliver real-world insights that would provide information that would help transportation planning on the island.

The insides will have them to understand residents and visit the trial patterns, identify intuitive solutions for reducing static conditions.

and contribute to planning for a more sustainable quality.

Clearly, here is a global company. I believe our land and expand strategy is working, resulting in large a B and longer contract. We learned an upward increase in the salaries of a miller. I believe that reflects the future of more daily wages,

In the end, our success will be driven by our ability to deliver a promise to consumers that the proprietary data is safe and our promise to enterprise customers that they can be privacy compliant while maximizing the insights that the data delivers.

We believe that we will be able to achieve both because of the strong foundation that we built on our three pillars, data, privacy and AI.

As a leading, trustworthy global data intelligence company with a history of innovation, we will continue to build products with privacy-led design and to provide our customers with the largest source of intelligence on people, places, and products.

Now I'll turn the call over to my colleague, Rahul Agrawal.

Thank you, Anil. For the first quarter of 2023, gap revenue was $15.5 million, just above the high end of our guidance, and up 10% year over year.

Revenue from subscription customers came in at 88% of our revenue.

Net revenue retention or NLR measures are success in retaining and growing revenue from our existing customers and was 110% in the portal.

We have seen this number fluctuate from quarter to quarter and although it was below our expected long-term steady state goal, the NRR was in line with our expectations for the first quarter.

Now looking at some key profitability metrics.

GAB Cross Profit was $10.4 million in Q1 representing 67% Silver Cross Profit margin.

Our long-term gap growth profit margin is expected to be relatively steady in the 68-72% range barring any unusual items.

based compensation of $5.8 million and one time expenses related to the closing of the business combination of $6.8 million.

Having already made substantial investments in our go-to market and our ND teams going forward, we expect our operating expense structured to remain fairly stable over the next few quarters, with sequential growth of approximately 2 to 3% per quarter.

Having already made substantial investments in our go-to market and our ND teams going forward, we expect our operating expense, structure to remain fairly stable over the next few quarters, with sequential growth of approximately 2 to 3% per quarter. However,

of the competition. Gap operating loss for Q1 was $22.3 million, and Gap net loss was $19.2 million.

Looking at the ballet sheet.

We ended the quarter with $56.5 million in cash and cash equivalence, including restricted cash and $25.2 million in accounts receivable.

Our accounts receivable balance remains slightly elevated due to delayed collections we experienced during our reorganization.

We continue to expect our AR balance to normalize by the middle of 2023. Our total outstanding depth based on GAP as of 31st March 2023 was 95.3 million dollars.

Turning to cash club, cash club used in operations in Q1 was $9.2 million.

Moving to our outlook for Q2, we currently expect revenue to be in the range of 17.5 to $18 million

Adjusted EBITDA is expected to be approximately negative $5.5 million down from negative $7 million to Q1.

We are re-itreating our guidance of approximately $81 million in revenue for fiscal year 2023 on the back of our expected long-term steady-state goal of 120% NRR.

well delivering strong top and bottom line results and believe that NIA remains well positioned to maintain this momentum and operating discipline throughout 2023.

Now before I turn the call over to the operator for questions, I would like to highlight a form 8K filed earlier this afternoon.

As described in the form 8K, our senior secured lender, Blue Torch Capital has agreed to temporarily forbeers from exercising its default related rights and remedies against the company with respect to certain existing defaults under our financial agreement. The forbeerence is an effect until May 20th, subject to earlier termination in the event of certain additional defaults. We are actively working with Blue Torch for a waiver and amendment to the financial agreement.

Thank you and anticipate that we will find the Form 10-Q on or before the 19th.

If we are unable to obtain a waiver from Blue Todge and amend the financing agreement prior to termination of the forbearance period, Blue Todge may, among other rights and remedies under the financing agreement, declare all or any portion of the outstanding loans under the financing agreement to be accelerated and given payables.

are outstanding convertible divincers also include across default provision that could be triggered upon the indebtedness under the financial agreement becoming or being declared due and playable.

And now I would like to turn the call over to the operator for questions. Operator please.

Thank you. Ladies and gentlemen, if you'd like to ask a question, please press star one one on your telephone. Again, to ask a question, please press star one one. One moment for our first question. Our first question comes from the line of Mike Lattimore of Northland Capital Markets. Your line is open.

Great. Thanks very much. Congrats on the strong results there. Start the year. The guidance for the second quarter calls for a meaningful step up in revenue sequentially. I guess is that tied to sort of a normal seasonal pattern or is that relates to strong bookings you've seen so far?

If you remember our last earnings call

The reps are just ramping up the sales reps that we have, that we have set up earlier in the year, last year. And we believe that a lot of this ramp up will happen over the course of the next few quarters, especially in, you know, over this quarter and then Q3.

And so a lot of this is ramped up towards the end. And that's why you would see the difference in this, in this quarter.

Rahul, you want to just add to that? Sure, I'll do. Thanks, Mike. So as we had highlighted.

Yes, we see that to be a 12 to 13 percent growth, quarter on quarter, but we are fairly confident we'll get that.

Great, and I guess implied in that responses that the Salesforce productivity is tracking to your expectations. Thank you.

I guess implied in that responses that the sales force productivity is tracking to your expectations. Yes.

And just maybe a color on the broader landscape. Are there any particular regions or verticals that are showing relative?

Maybe a color on the broader landscape. Are there any particular regions or verticals that are showing relative strength or softness?

Yeah, you know, there have been four verticals that's really working well for us. That's retail, restaurants, real estate and tourism.

we see sort of solid growth in the tourism vertical that we have seen in the past few quarters as you can see consumers start traveling and there's a need for data to understand these travel patterns.

especially also in retail, there's a good sort of optic in terms of retail analytics and data required in consumer behavior around retail. So these are the verticals that's really working well for us and we are doubling down on these verticals.

Very good. Thanks very much, Have a great rest of luck with your welcome.

Mr. Walbrey, your line is open. Oh, great. Thank you. So, two questions, one big picture and then one just much more focused. Can you start by just reminding us what the TAM is for NEAR and sort of what the best-profiled sort of opportunities are for it?

And then on the, you know, for people who don't have the background, can you just remind us the background of how we got in this situation with Blutorch and what the background is on that?

on that relationship. Sure. Thanks Patrick. Let me take the first part and my colleague can address the second part. So the total time is around 23 billion for our offerings, which actually comprises two parts.

So one is on the marketing intelligence side, which is a product that we sell to the marketers and the CEO most of organizations that we work with.

The second is what we call the operational inclusion part, which is what we offer to chief data officers and chief information officers and chief technology officers.

So these two are two different products that we have and it's very interconnected behind the scene, but it offers different cut off our data in terms of one is a cut of people and the other one is a cut of places.

And that comprises this 23 billion market that I spoke about. On the second piece, Rahul, you want to just respond to that? Sure. Thanks, Patrick. So, yes, just refreshing here. We had a requirement under our Senior Lender Creator Agreement.

to raise certain junior capital within a certain time period.

While obviously we have been working alongside scaling the business and focusing on getting that funding into the door, there have been some delays. We have closely worked with our senior security lender, which is Blue Touch Capital, and they have been a great partner in terms of our work.

to make sure that we get more time to get them on into the door. So we are working on that particular aspect right now. And like I mentioned, we have a four-beer and still 20th of May to essentially resolve this situation.

Great, thank you both. You're welcome. Thank you. Again, ladies and gentlemen, if you'd like to ask a question, please press star 1-1 on your telephone. Again, to ask a question, please press star 1-1. One moment, please.

Thank you. I'm sure no further questions at this time. Let's turn the call back over to a meal for any closing remarks.

Turn the call back to Mr. Neal for any closing remarks.

Thank you, Robert. Thank you for joining us. I look forward to speaking to you throughout the quarter. Thank you.

Thank you. Ladies and gentlemen, this does include today's conference. Thank you all for participating. You may now disconnect. Have a great day.

I I.

Will.

Hello, and welcome to Near Intelligence's first quarter 2023 earnings call.

This is Gwen Lauber with NEAR, and with me on today's call are Neil Matthews, Neil's Chief Executive Officer, and Rahul Agarwal, our Chief Financial Officer. Our earnings press release was issued this afternoon and is posted on our website.

The primary purpose of today's call is to provide you with information regarding our first quarter 2023 performance.

Certain statements made on this call that are not historical facts, including those related to our future plans, objectives, and expected performance, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements represent our outlook only as of the date of this conference call. While we believe any forward-looking statements made on this call are reasonable, we are not sure if any forward-looking statements made on this call are reasonable.

Actual results may differ materially because the statements are based on our current expectations and subject to risks and uncertainties. These risks and uncertainties are discussed in our filings with the SEC. We should refer to and consider these factors when relying on such forward-looking information.

Any forward-looking statement made speaks only as of the date on which it is made. And we do not undertake and expressly disclaim any obligation to update or alter our forward-looking statements, whether as a result of new information, future events, or otherwise.

Accept as required by applicable law.

I encourage you to visit our Investor Relations website at investors.mirror.com to access our first quarter press release.

SEC reports, and the webcast replay of today's call.

During the course of today's call, we will refer to certain adjusted financial measures.

We use these non-GAAP financial measures to review and assess our performance and for planning purposes.

These non-GAAP financial measures should be considered in addition to, not as a Substitute for or in isolation from, GAAP measures.

Additional information about these non-GAAP measures, including a reconciliation of non-GAAP to comparable GAAP measures, is included in our press release.

Finally, unless otherwise stated, all financial comparisons on this call will be made to our fiscal year 2022 results on a historical basis.

And with that, let me turn the call over to Anil. Welcome everyone and thank you for joining us today.

Let me start with our financial highlights. First quarter revenue was $15.5 million.

slightly above the high end of our time. Net revenue retention for the quarter continues to be greater than 100%.

and came in at 110% well within our popular expectations.

Notwithstanding on target revenue growth, we continue to sharpen our focus on the path to profitability. In this video series, I will be explaining to you why

against our planned adjusted data, we have delivered a better than expected adjusted data of negative $7 million to one.

This should further improve our ear and adjusted a bit our realization.

The results of our quarter support our belief that as budgets tighten, companies continue to spend on products that deliver ROI.

Because our solutions provide insights that help our customers to make better decisions and to more effectively utilize their budget,

We believe our customers will continue to subscribe to our solutions as they help them to understand which programs had a positive impact on the bottom line.

Now, additionally, one question has come up in all my meetings.

Now additionally, one question has come up in all my meetings. What are we doing with Generative AI?

The AI is not new to me, it's a part of the foundation that the products are built on.

And generative AI should help us develop even more advanced solutions in the future.

It's a natural complement to over 10 years of our learning and innovation. Now I'd like to talk to you about New York's products and our strategy for the future.

to over 10 years of our learning and innovation. Now I'd like to talk to you about New Year's products and our strategy for the future. Today, I'd like to introduce you to our new product, the New Year's products.

We are solutions are built on three pillars.

solutions are built on three pillars, data, privacy, and AI.

Each pillar enhances the others making our solution better. Let's take the first pillar which is data.

Data is what we understand. It's what we built our initial business on over the past decade.

Data is what sets me apart from other companies because we believe that we have high quality, proprietary, large scale data that is unmatched.

You probably heard me say that data is objective that you need to train your AI model.

Data is what helps us realize our vision of truly helping organizations in a better decision. While other companies talk about the scale of the data and how fast they are doing the data, NIR is investing heavily in data quality and depth. We believe we have enough data.

Our focus now is on providing our customers with the highest quality data and making it even more useful to them. We believe that we can further improve the quality of our data by embedding AI models in the pipeline to fill the data.

The second pillar of our foundation is privacy.

Clearly, you cannot aspire to be a leading trustworthy global data company without having made significant investments in privacy and driving a lot of innovation through our work on privacy.

Our products are built with privacy-led designs to provide the largest source of intelligence in concerning omniscience.

being in compliance with local regulations everywhere.

Our customers, the business is crucial for the leading company and our customers take comfort in knowing that we work every day to ensure that our privacy built solutions are in compliance. In our industry, privacy is the mistake.

The third pillar is AI. We've been leveraging machine learning and AI in our platform and products for the past decade.

Many of you have seen this work demonstrated in our AllSpark platform, where we use natural language to query people and their behavior across places and product categories.

In 2016, this was groundbreaking because it allowed our customers and partners to seamlessly access a large repository of consumer data using natural language.

With the development of generative AI, we are even more excited about new opportunities because we think we'll be able to add more value to the work we do for our customers, and to be even more differentiated from our competitors. We look at generative AI as a significant platform and shift.

that will have profound impact on many industries, including our own data industry.

We also believe that it will uncover a chasm where our proprietary data will be a major competitive differentiator as we believe we'll be able to train our models, not just to help our customers discovering science.

but also to fill in the knowledge gaps while protecting privacy. We have three pillars, data and AI, underpinned by privacy, provide us with a solid foundation today. But it's the convergence of our high quality proprietary data with generative AI in an ever-changing regulatory compliance landscape.

which we believe will give us an even greater advantage in the future. What is important? Here, our goal is to maximize data utility while protecting privacy.

We are driving innovation to make sure that our customers get maximum value out of data.

We believe our high quality data coupled with generative AI will put an end to having to choose between the value of data and compliance.

We believe that we have the tools that in the near future allow our customers to be privacy compliant without sacrificing the insights that the data delivers.

Generative AI should allow us to break the traditional model and to fill in the gaps so that we are able to not only be privacy compliant, but to provide valuable insights to our customers. Moving on to our quarterly results, a significant part of our go-to-market strategy is our focus on landing and expanding within our customers.

We have had much success by starting with a small deal with a customer in one geography or division and then expanding the relationship over time.

We were able to do this by providing solutions that exceed their expectations.

On the last call, I mentioned a large European retailer who started working with us a few years ago with a small subscription to our platform. They had just renewed their contract with us for an eight-figure, one-year subscription. That's a great example of a land and expanse strategy.

Building on that experience during the quarter, we also find the new customer Aldi, one of the top supermarket chains in the world, in partnership with Post The customer will use Nier to drive football traffic into their stores and measure the effectiveness of that campaign. You will see more? ever Nuclear

NIRS solutions will allow them to get a better understanding of the appropriate catchment area for each store and help them attract prospects and customers. In the first quarter, one of our customers, one of the world's largest commercial realistic services and investment firms renewed its contract.

with a three-year extension for its Canadian unit. In its United Kingdom unit, the customer renewed the subscription and expanded the relationship by adding on a second product.

In time, I believe we will continue to expand our footprint with this customer. During the quarter, we also expand our relationship with a tourism partner to offer more insights to clients across New York State.

Due to high demand, they continue to expand the number of points of interest we have to offer within the New York Times.

Through its relationship with NIR, the partner can better understand his visitation friends, providing his customers with insights at a more granular level.

In the US, we signed a partnership with a leading digital marketing platform built for travel marketers.

The customer's platform uses artificial intelligence and travel data to provide multi-channel marketing solutions that drive visitors to destinations.

Near's insights will help them deliver deeper reporting on the impact of digital marketing programs for their customers, which will in turn help those destination marketers measure and prove their impact to their stakeholders. As you know, Near is a global company. Beyond its large customers in Europe and North America, we also have a large presence in APAC.

One of the customers is Yahoo Australia and we recently expanded our multi-year relationship.

Since beginning their relationship in 2020, we have expanded into additional geographies that Yahoo serves.

NIRS solutions serve as a measurement tool for Yahoo! x APAC properties, helping the customer to demonstrate increased value across its online properties.

Recently, we also closed our largest single contract in Southeast Asia with admatic malicious.

This is a leading digital media company in Southeast Asia that works with some of the region's largest brands.

Again, this is a three-year deal in partnership with a minimum commitment well into seven figures.

Another exciting aspect of NIR is a broad array of challenges.

Our goal was to deliver real world insights that would provide information that would help transportation planning on the island. The insights will help them to understand residents and visitor travel patterns, identify intuitive solutions for reducing traffic conditions.

and contribute to planning for a more sustainable quality. Clearly, near the global company, I believe our land and expand strategy is working, resulting in larger deals and longer contracts. In the end, our success will be driven by our ability to deliver a promise to consumers and to the world.

that the proprietary data is safe, and our promise to enterprise customers that they can be privacy compliant while maximizing the insights that the data delivers.

We believe that we will be able to achieve both because of the strong foundation that we built on our three pillars, data, privacy, and AI. As a leading trustworthy global data intelligence company with a history of innovation, we will continue to build products.

with privacy-led design and to provide our customers with the largest source of intelligence on people, places, and products. Now I'll turn the call over to my colleague, Rahul Agrawal.

Thank you Anil. For the first quarter of 2023, GAAP revenue was $15.5 million, just above the high end of our guidance and up 10% year over year. Revenue from subscription customers came in at 88% of our revenue. Net revenue retention or NRR was $15.5 million.

measures our success in retaining and growing revenue from our existing customers and was 110% in the quarter. We have seen this number fluctuate from quarter to quarter and although it was below our expected long-term steady state goal, the NRR was in line with our expectations for the first quarter.

Now looking at some key profitability metrics. Web gross profit was $10.4 million in Q1 representing 67% gross profit margin.

Our long-term gross profit margin is expected to be relatively steady in the 68% to 72% range, barring any unusual items.

CAP operating expense was $32.7 million in Q1. This includes stock-based compensation of $5.8 million and one-time expenses related to the closing of the business combination of $6.8 million.

Having already made substantial investments in our go-to-market and R&D teams going forward, we expect our operating expense structure to remain fairly stable over the next few quarters with sequential growth of approximately 2-3% per quarter.

investments in our go-to-market and R&D teams going forward, we expect our operating expense structure to remain fairly stable over the next few quarters, with sequential growth of approximately 2 to 3% per quarter. However, the growth of our operating costs

We may make additional investments in newer technologies including training, resources and research to remain ahead of the competition. Gap operating loss for Q1 was $22.3 million and gap net loss was $19.2 million. Looking at the balance sheet,

We ended the quarter with $56.5 million in cash and cash equivalence, including restricted cash, and $25.2 million in accounts receivable. Our accounts receivable balance remains slightly elevated due to delayed collections we experienced during our reorganization.

We continue to expect our AR balance to normalize by the middle of 2023. Our total outstanding debt based on GAAP as of 31st March 2023 was $95.3 million.

Turning to cash flow, cash flow used in operations in Q1 was $9.2 million.

Moving to our outlook, for Q2 we currently expect revenue to be in the range of $17.5 to $18 million. Adjusted EBITDA is expected to be approximately negative $5.5 million down from negative $7 million in Q1.

We are reiterating our guidance of approximately $81 million in revenue for fiscal year 2023 on the back of our expected long-term steady state goal of 120% NRR.

In summary, we continue to execute well, delivering strong top and bottom line results and believe that NIR remains well positioned to maintain this momentum and operating disciplines throughout 2023. Now before I turn the call over to the operator for questions, I would like to highlight a form 8K filed earlier this afternoon. As described in the form 8K, our senior secured lender Blue Torch Capital.

has agreed to temporarily forbear from exercising its default related rights and remedies against the company with respect to certain existing defaults under our financing agreement. The forbearance is in effect until May 20th, subject to earlier termination in the event of certain additional defaults. We are actively working with BlueTorch for a waiver and amendment to the financing agreement.

file a form 12B25 notification with respect to the late form 10Q and anticipate that we will file the form 10Q on or before May 19th. If we are unable to obtain a waiver from Blue Torch and amend the financing agreement prior to termination of the forbearance period, Blue Torch may

among other rights and remedies under the financing agreement declare all or any portion of the outstanding loans under the financing agreement to be accelerated and due and payable. Our outstanding convertible debentures also include a cross default provision.

that would be triggered upon the indebtedness under the financing agreement becoming or being declared due and payable. Now I would like to turn the call over to the operator for questions.

under the financing agreement becoming or being declared due and payable. And now I would like to turn the call over to the operator for questions. asked please

Thanks Mike. I'm here. So I will.

Thanks Mike. This is Anir here. So I will, you know, just.

Take a second there before I pass it to Rahul. What we are seeing is, if you remember our last earnings call, the reps are just ramping up the sales reps that we have, that we have set up earlier in the year, last year. And we believe that a lot of this

ramp up will happen over the course of the next few quarters, especially over this quarter and then Q3. And so a lot of this is ramped up towards the end, and that's why you would see the difference in these quarters. Rahul, you want to just add to that? Sure. Thanks, Mike. So as we had highlighted...

Q1 generally remains stable, flat, and we start to really see people coming back from holiday starting to make decisions, starting to really sign up for additional subscriptions and so on and so forth, which is essentially going to drive these numbers up. So reiterating our guidance for Q2, yes, we see that to be a 12 to 13% growth quarter on quarter, but we are fairly confident we did that. Great, and I guess implied in that response is that the Salesforce productivity is tracking to your expectations.

growth in the tourism vertical that we have seen in the past few quarters as you can see consumers start traveling and there's a need for data to understand these travel patterns. Especially also in retail there's a good sort of uptick in terms of retail analytics and data required in consumers behavior around retail. So these are the verticals that's really working.

while the line is open.

Oh, great. Thank you. So, two questions, one big picture and then one just much more focused. Can you start by just reminding us what the TAM is for NEAR and sort of what the best profiled sort of opportunities are for it? And then on the.

You know, for people who don't have the background, can you just remind us the background of how we got into this situation with Blue Torch and what the background is on that relationship.

Sure. Thanks, Patrick. Let me take the first part and my colleague can address the second part. So the total TAM is around $23 billion for our offerings, which actually comprises two parts. So one is on the marketing intelligence side, which is a product that we sell to the marketers.

and the CMOS of organizations that we work with. The second is what we call the operational inclusion part, which is what we offer to chief data officers and chief information officers and chief technology officers.

So these two are two different products that we have, and it's very interconnected behind the scene, but it offers different cut of our data in terms of, one is a cut of people, and the other one is a cut of places. And that comprises this 23 billion market that I spoke about. On the second piece, Rahul, you want to just respond to that? Sure.

Thanks, Patrick. So yes, just refreshing here, we had a requirement under our senior lender creator agreement to raise certain junior capital within a certain time period. And while obviously we have been working alongside…

scaling the business and focusing on getting that funding into the door. There have been some delays. We have closely worked with our senior security lender, which is Blue Touch Capital, and they have been a great partner in terms of, you know, working with us to make sure that we get more time to get the money into the door. So we are working on that particular aspect right now.

And like I mentioned, we have a forbearance till 20th of May to essentially resolve the situation. Great, thank you both.

we have a forbearance till 20th of May to essentially resolve the situation. Great, thank you both. You're welcome.

forbearance till 20th of May to essentially resolve the situation. Great, thank you both. You're welcome.

Again, ladies and gentlemen, if you'd like to ask a question, please press star 11 on your telephone. Again, to ask a question, please press star 11. One moment, please. Thank you. I'm showing no further questions at this time. Let's turn the call back over to Anil for any closing remarks. I'm trying to call back to Mr. Anil for any closing remarks.

Thank you for joining us. I look forward to speaking with you throughout the quarter. Thank you. Thank you. Ladies and gentlemen, this does conclude today's conference. Thank you all for participating. You may now disconnect. Have a great day.

Q1 2023 Near Intelligence Inc Earnings Call

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