Q1 2024 Urgent.ly Inc Earnings Call

Operator: Good afternoon, and welcome to Urgently's first quarter 2024 conference call. As a reminder, today's call is being recorded, and your participation implies consent to such recording. At this time, all participants are in listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press pound zero on your telephone keypad. With that said, I would like to turn the call over to Jenny Mitchell. Vice President of Finance Strategy and Investor Relations. You may proceed.

Good afternoon, and welcome to urgently as first quarter 'twenty 'twenty four conference call.

As a reminder, today's call is being recorded and your participation implies consent to such recording.

At this time, all participants are in listen only mode.

A brief question and answer session will follow the formal presentation.

If anyone should require operator assistance during the conference. Please.

These press pound zero on your telephone keypad.

With that I would like to turn the call over to Jenny Mitchell.

Jenny Mitchell: Vice President of finance strategy and Investor Relations.

Jenny Mitchell: You May proceed.

Jenny Mitchell: Thank you, Oquader. Good afternoon, everyone, and thank you for joining us for Urgently's Financial Results Conference Call for the first quarter ended March 31, 2024. On the call today, we have Urgently's CEO, Matt Booth, and CFO, Tim Hofmeyer. Following Matt and Tim's prepared remarks, we will take your questions. Before we begin, I'd like to remind you that some of our comments today may contain forward-looking statements that are subject to risks, uncertainties, and assumptions that could change.

Jenny Mitchell: Thank you operator, good afternoon, everyone and thank you for joining us for urgently financial results conference call for the first quarter ended March 31st 2024 on the call today, we have urgently CEO, Matt <unk> and CFO, Tim Hoffmeyer following that in Tim's prepared remarks, we will take your questions.

Speaker Change: Before we begin I'd like to remind you that some of our comments today may contain forward looking statements that are subject to risks uncertainties and assumptions, which could change.

Jenny Mitchell: Should any of these risks materialize or should our assumptions prove to be incorrect, actual company results could differ materially from these forward-looking statements. A description of these risks, uncertainties, and assumptions and other factors that could affect our financial results is included in our SEC filings, including our most recent annual report on Form 10-K for the year ended December 31, 2023, our quarterly reports on Form 10-Q, and other filings and reports that we may file from time to time with the SEC. Except as required by law, we do not undertake any responsibility to update these forward-looking statements.

Speaker Change: Any of these risks materialize or should our assumptions prove to be incorrect.

Speaker Change: So a company results could differ materially from these forward looking statements.

Speaker Change: A description of these risks uncertainties and assumptions and other factors that could affect our financial results is included in our SEC filings, including our most recent annual report on Form 10-K for the year ended December 31, 2023, a quarterly reports on Form 10-Q, and other filings in airports.

Speaker Change: That we may file from time to time with the SEC.

Speaker Change: As required by law, we do not undertake any responsibility to update these forward looking statements.

Jenny Mitchell: During today's call, we will also discuss certain non-GAAP financial measures. A reconciliation of GAAP to non-GAAP measures is included in our earnings materials and press release, which are available on our website at investors.geturgently.com. A replay of today's call will also be posted on the website.

Speaker Change: During today's call. We will also discuss certain non-GAAP financial measures a reconciliation of GAAP non-GAAP measures is included in our earnings materials and press release, which are available on our website at investors don't get urgently dot com.

Speaker Change: Replay of today's call will also be posted on the website with that I'll now turn the call over to Matt.

Matt Booth: Thank you, Jenny. Good afternoon, everyone.

Matt: Thank you Jenny good afternoon, everyone and thank you for joining us today for our first quarter 2024 earnings call. As we have stated in previous calls and discussions during the first half of 'twenty 'twenty. Four you are primarily focused on the financial and operational improvements that we can turn our focus to accelerating profitable growth.

Matt: We're on track with these improvements in future quarters, and we look forward to discussing growth strategies and business expansion efforts more broadly.

Matt Booth: And thank you for joining us today for our first quarter 2024 earnings call. As we have stated in previous calls and discussions, during the first half of 2024, we are primarily focused on financial and operational improvements so we can turn our focus to accelerating profitable growth. We are on track with these improvements, and in future quarters, we look forward to discussing growth strategies and business expansion efforts more broadly. In terms of the first quarter, we're very pleased with our results, which exceeded our expectations we outlined during our last earnings conference call. Our revenue for the first quarter of 2024 came in at $40.1 million, which was above our guidance range of $35 to $38 million, mostly due to higher than expected volume.

In terms of the first quarter.

Matt: Are you pleased with our results, which exceeded our expectations, we outlined during our last earnings conference call.

Matt: Revenue for first quarter of 2024 came in at $40 1 million was above our guidance range of 35 to 38 million, mostly due to higher than expected volume.

Matt Booth: Our gross margin of 23% is our fourth consecutive quarter with gross margins of at least 20%. In addition, our non-GAAP operating loss of $5.1 million was a 35% improvement from the fourth quarter of 2023. I can update you on the progress we're making with our key operational and financial improvements. As it relates to our operational improvements over the last several quarters, we have transformed our customer service operations by optimizing the staffing balance between nearshore business process organizations and onshore calls.

Matt: Our gross margin of 23% is our fourth consecutive quarter with gross margins of at least 20%.

Matt: In addition, our non-GAAP operating loss of $5 1 million was up 35% improvement from the fourth quarter of 2023.

Matt: Demonstrating our progress towards achieving non-GAAP operating breakeven.

Matt: Beginning of the third quarter.

Matt: In support of a sustainable growth I can update you on the progress, we're making with our key operational and financial improvements.

Matt: As it relates to our operational improvements over the last several quarters.

Matt: We have transformed our customer service operations by optimizing the staffing balance between nearshore business process of organizations that onshore Carlson.

Matt Booth: We continue to leverage technology and optimize our service model to drive additional improvement in this area. For example, we've enabled real-time data streaming capabilities to improve efficiencies in our call center, such as streamlining alerts and proactively identifying high-risk jobs.

Matt: We continue to leverage technology and optimization of our service model to drive additional improvement in this area.

Matt: We've enabled real time data streaming capabilities to improve efficiencies in our call center, such as streamlining alerts and proactively identifying high risk jobs.

Matt Booth: We expect telematics integrations with our partners will also result in efficiencies and additional cost savings. Improving margin continues to be a priority. In the prior quarters, margin improvement was primarily driven by our actions regarding price changes and partners. We have also and continue to perform technology platform upgrades that drive visibility and efficiency in the marketplace as we launch capabilities that further optimize the match of service provider to service event. In addition, we expanded our dynamic pricing algorithm to incorporate location-based pricing at a granular level to further optimize our margin.

Matt: Telematics integrations with our partners will also result in efficiencies and additional cost improvement.

Matt: Improving margin continues to be a priority in the prior quarters margin improvement was primarily driven by our actions regarding price changes department.

Matt: We have also and continue to perform technology platform upgrades that drive visibility and efficiency in the marketplace as we launched capabilities that further optimize the matching service provider servicing that.

Matt: In addition, we expanded our dynamic pricing algorithm to incorporate location based pricing at a granular level.

Matt: Optimize our margin.

Matt Booth: Our progress in this area over the last 12 months has been notable. When compared to Q1'23, our Q1'24 gross profit of $9.4 million is slightly higher than our Q1'23 gross profit of $9.3 million, but with 19% less revenue than the first quarter of 2023.

Matt: In this area over the last 12 months has been notable when compared to Q1 'twenty three our Q1 'twenty four gross profit of $9 4 million slightly higher than our Q1 'twenty three gross profit of $9 3 million, but with 19% less revenue than the first quarter of 2023.

Matt Booth: Improving our gross margin and reducing our operational expenses is critical in achieving non-GAAP operating loss break-even by the beginning of the third quarter. Post-merger integration is at the forefront of this effort as we eliminate redundant functions and integrate autonomous urgently technology. We recently launched OEM Telematics to improve the customer experience by speeding up the process of gathering critical data about the vehicle. In addition, we have started to develop software specifically related to long-term platform upgrades, scalability, alert improvements, portal enhancements, and payment automations. All of these, we believe, are critical functions for additional operational improvement.

Matt: Improving our gross margin and reducing our operational expenses as critical and achieving non-GAAP operating loss breakeven by the beginning of the third quarter.

Matt: Post merger integration is at the forefront of this effort as we eliminate redundant functions and integrate autonomy all of hirschmann technology teams.

Matt: The recently launched OEM telematics to improve the customer experience by speeding up the process.

Matt: Gathering critical data about the vehicle.

Matt: In addition, we have started the capitalized software specifically related to long term platform upgrades scalability alert and prove much portal enhancements payment automation. All of these we believe are critical functions for additional operational improvements.

Tim Hofmeyer: Kim will provide an update on improving our balance sheet and debt refunds; we believe we are tracking well against these priorities. Overall, I'm very proud of our accomplishments this first quarter, which included delivering financial results above expectations and guidance provided that I believe the team continues to make great progress in executing against our strategic priorities, shoring urgently up for the near and long-term growth opportunities ahead of us. On that note, we're pleased to announce that our launch with the top five OEMs occurred in late March.

Matt: Tim will provide an update on improving our balance sheet and debt refinance.

Tim Hoffmeyer: We believe we are tracking well against these priorities overall I'm very proud of our accomplishments. This first quarter that included delivering financial results above expectations and guidance provided and I believe the team continues to make great progress in executing against our strategic priorities shoring urgently up for the near and long term growth opportunities ahead of us.

Speaker Change: On that note.

Speaker Change: Please to announce that our launch with a top five OEM occurred in late March the integration on watch with successful our operational performance was strong and we received positive feedback from our collaboration or partnership thus far.

Tim Hofmeyer: The integration and launch was successful. Our operational performance is strong, and we've received positive feedback on our collaboration and partnership thus far. In addition, we believe our sales pipeline is solid, and we have started to return focus on our growth strategy. We look forward to sharing more about this in our next earnings call. As we look ahead, we remain focused on expanding our existing B2B incident business through new partnerships and expanded relationships with existing partners.

Speaker Change: In addition, we believe our sales pipeline is solid and we are starting to return focus on our growth strategy.

Speaker Change: Forward to sharing more about this on our future earnings calls.

Speaker Change: We look ahead.

Speaker Change: Main focused on expanding our existing <unk> incident business through new partnerships.

Speaker Change: And our relationships with existing partners.

Tim Hofmeyer: Second, achieving non-gap operating breakeven through our operational improvement margin expansion. And third, leveraging our assets from Autonomo, together with Urgently's core technologies, to provide innovative and differentiated services to our partners. Thank you for your time and continued support. I'll now turn the call over to Tim to discuss our financial results in greater detail.

Speaker Change: Second achieving non-GAAP operating breakeven through our operational improvement margin expansion and third leveraging our absence from autonomous.

Speaker Change: Gather with originally <unk> core technologies to provide innovative and differentiated services to our partners.

Speaker Change: Thank you for your time and continued support I'll now turn the call over to Tim to assess our financial results in greater detail.

Tim Hoffmeyer: Thank you Matt.

Tim Hofmeyer: Matt, and good afternoon, everyone. Today, I will discuss our results for the first quarter ended March 31st, 2024. For the first quarter, revenues were $40.1 million, down 19% or $9.5 million from the same quarter last year. The year-over-year revenue decline is primarily related to our decision to move away from less profitable revenue, including the loss of one insurance partner due to our change in strategy, as well as the customer partner non-renewal that we have discussed during, and this was partially offset by volume and rate increases from new and existing customer partners.

Tim Hoffmeyer: And good afternoon, everyone today I will discuss our results for the first quarter ended March 31 2024.

Tim Hoffmeyer: For the first quarter revenues were $40 1 million down, 19% or $9 5 million from the same quarter last year. The year over year revenue decline is primarily related to our decision to move away from less profitable revenue, including the loss of one insurance partner due to our change.

Tim Hoffmeyer: <unk> strategy as well as the customer partner non renewal that we have discussed during previous calls.

Tim Hoffmeyer: And this was partially offset by volume and rate increases from new and existing customer partners.

Tim Hofmeyer: The first quarter revenue of $40.1 million exceeded our guidance range announced last quarter. For the first quarter, gross profit was $9.4 million, up approximately $100,000 compared to the same period last year, and notably when taking into account a revenue decline of 19% in the first quarter compared to the same period last year. The increase in gross profit was primarily driven by rate increases applied to customer partners and a decrease in first call costs.

Tim Hoffmeyer: The first quarter revenue of $40 1 million exceeded our guidance range announced last quarter.

Tim Hoffmeyer: For the first quarter gross profit was $9 4 million.

Tim Hoffmeyer: Up approximately 100000 compared to the same period last year, and notably when taking into account a revenue decline of 19% in the first quarter to the same period last year.

Tim Hoffmeyer: The increase in gross profit was primarily driven by rate increases applied to customer partners and the decrease in first call Cos.

Tim Hofmeyer: Gross margin for the first quarter was 23%, compared to 19% for the same period last year. This is the fourth consecutive quarter of gross margins exceeding 20%, including growth in the last two quarters. As a reminder, our long-term gross margin target is 25% to 30%, and we continue to work towards these goals.

Tim Hoffmeyer: Gross margin for the first quarter was 23% compared to 19% for the same period last year.

Tim Hoffmeyer: This is the fourth consecutive quarter of gross margins exceeding 20%, including growth in the last two quarters.

Tim Hoffmeyer: As a reminder, our long term gross margin target is 25% to 30% and we continue to work towards the schools.

Tim Hofmeyer: Now let's move on to operating expenses. Operating expenses for the first quarter were $17.7 million, a decrease of $1.9 million or 10% from the same period last year. Most of our operating expenses are employee-related, so let's focus on that. At the end of the first quarter of this year, we had 330 total employees, or 241 Urgently employees, and 89 Autonomous employees. For the Urgently employee count, when compared to the first quarter of last year, we have decreased the number of Urgently employees by 12%, and when compared to the fourth quarter of last year, we have remained flat.

Tim Hoffmeyer: Now, let's move on to operating expenses.

Tim Hoffmeyer: Operating expenses for the first quarter was $17 7 million a decrease of $1 9 million or 10% from the same period last year.

Tim Hoffmeyer: Most of our operating expenses are employee related so let's focus there.

Tim Hoffmeyer: At the end of the first quarter of this year, we had 330 total employees or 241 urgently employees and 89 autonomy employees.

Tim Hoffmeyer: For the urgently employee count when comparing to the first quarter of last year, we have decreased the number of urgently employees by 12% and when comparing to the fourth quarter of last year, we have remained flat.

Tim Hofmeyer: For the autonomous employee count, when compared to the fourth quarter of last year, we have decreased the number of autonomous employees by 18%. Also, just last month, we took actions to further decrease the number of employees, primarily in Israel and the U.S., which resulted in an additional decrease of 38 employees, or 12 percent, which included 22 Urgently employees and 16 Autonomo employees. This action includes consolidation of the technology teams and transferring nearly all responsibilities from Israel to the United States.

Tim Hoffmeyer: For the autonomy of employee count when comparing to the fourth quarter of last year, we have decreased the number of autonomy employees by 18%.

Tim Hoffmeyer: Also just last month, we took actions to further decrease employees, primarily in Israel and the U S, which resulted in an additional decrease of 38 employees or 12% switching.

Tim Hoffmeyer: Which included 22 urgently employees and 16 autonomy of employees.

Tim Hoffmeyer: This action includes consolidation of the technology teams transferring nearly all responsibilities from Israel to the United States.

Tim Hofmeyer: To summarize, our April 30th employee count is now 292 total employees, which includes 219 Urgently employees and 73 Autonomo employees. Gap's operating loss for the first quarter was $8.3 million, an improvement of $2 million or 19% from the same period last year. We also review non-GAAP operating loss, which is defined as GAAP operating loss plus depreciation and amortization expense, stock-based compensation expense, nonrecurring transaction costs, and restructuring costs. Non-GAAP operating loss for the first quarter was $5.1 million, an improvement of approximately $300,000 or 6% from the previous year.

Tim Hoffmeyer: To summarize our April 30th employee Count is now 292 total employees, which includes 219 urgently employees and 73 autonomy employees.

Tim Hoffmeyer: GAAP operating loss for the first quarter was $8 3 million, an improvement of 2 million or 19% from the same period last year.

Tim Hoffmeyer: We also review non-GAAP operating loss, which is defined as GAAP operating loss, plus depreciation and amortization expense stock based compensation expense nonrecurring transaction costs and restructuring costs.

Tim Hoffmeyer: non-GAAP operating loss for the first quarter was $5 1 million an improvement of approximately 300000 or 6% from the previous year.

Tim Hofmeyer: Most notably, though, and as discussed during our last few calls, our non-GAAP operating loss for the first quarter of 2024 of $5.1 million was an improvement of 48% when compared to the third quarter of 2023 combined company non-GAAP operating loss, including both Urgently and Autonomo, which was $9.9 million. Further, these same results were also an improvement of 35% when compared to the fourth quarter of 2023 non-GAAP operating loss, which was $7.9 million.

Tim Hoffmeyer: Most notably, though and as discussed during our last few calls our non-GAAP operating loss for the first quarter of 2024 of $5 1 million was an improvement of 48% when compared to the third quarter of 2023 combined company non-GAAP operating loss, including both the urge.

And autonomy.

Tim Hoffmeyer: Which was $9 9 million.

Tim Hoffmeyer: Further these same results were also an improvement of 35% when compared to the fourth quarter of 2023, non-GAAP operating loss, which was $7 9 million.

Tim Hofmeyer: These results are aligned with the operational improvement activities that Matt previously outlined and are in line with our expectations and comments over the last six months. We are proud of these improvements and all the hard work from the team.

Tim Hoffmeyer: These results are aligned with the operational improvement activities that Matt previously outlined and are in line with our expectations and comments over the last six months.

Tim Hoffmeyer: We are proud of these improvements and all the hard work from the team.

Tim Hofmeyer: Now a few comments on our balance sheet. As of March 31, 2024, Urgently had cash, cash equivalents, and short-term investments of $40.7 million and a net principal debt balance of $54.3 million, with a maturity in January 2025. As we discussed previously, in January of 2024, we took steps to enhance our capital structure by using cash on hand to repay $17.5 million in net principal debt and $6 million of banking fees under the Structural Loan Agreement while also extending the maturity date to January of 2025.

Tim Hoffmeyer: Now a few comments on our balance sheet.

Tim Hoffmeyer: As of March 31, 2024, urgently had cash cash equivalents and short term investments of $40 7 million and a net principal debt balance of $54 $3 million with a maturity in January of 2025.

Tim Hoffmeyer: As we had previously discussed in January of 2024, we took steps to enhance our capital structure by using cash on hand to repay $17 5 million and net principal debt and $6 million of banking fees under the structural loan agreement, while also extending the maturity.

Tim Hoffmeyer: <unk> to January of 2025.

Tim Hofmeyer: During the first quarter, we capitalized approximately 1.6 million in internally developed software activities in support of launching the previously mentioned Top 5 Global OEM and to make enhancements to our platform by adding features and functionality, which benefit all our customer partners. We expect this practice to continue during 2024, including approximately 1.4 million in the second quarter of 2024. We continue to take important, proactive steps to address our capital structure, enhance our liquidity position, and provide the company with additional financial flexibility.

Tim Hoffmeyer: During the first quarter, we capitalized approximately $1 6 million of internally developed software activities in support of launching the previously mentioned top five global OEM and to make enhancements to our platform by adding features and functionality, which benefit all our.

Tim Hoffmeyer: From our partners. We expect this practice to continue during 2024, including approximately $1 4 million in the second quarter of 2024.

Tim Hoffmeyer: We continue to take important proactive steps to address our capital structure enhanced our liquidity position and provide the company with additional financial flexibility.

Tim Hofmeyer: We are taking further actions with respect to maturities of our debt and expect those results by the end of the third quarter. As of March 31st, 2024, we had 13.4 million common stock shares outstanding. For the second quarter of 2024, we expect revenue to be between $32 to $35 million. Additionally, we remain on track to achieve non-GAAP operating breakeven by the beginning of the third quarter of 2024. Our expected number of common stock shares outstanding at the end of the second quarter is $13.4 million. With that, we're now happy to open the call for questions. Operator, will you please open the line for Q&A?

We are taking further actions with respect to maturities of our debt and expect those results by the end of the third quarter.

Tim Hoffmeyer: As of March 31, 2024, we had $13 4 million common stock.

Tim Hoffmeyer: <unk> shares outstanding.

Tim Hoffmeyer: For the second quarter of 2024, we expect revenue to be between $32 million to $35 million.

Tim Hoffmeyer: Additionally, we remain on track to achieve non-GAAP operating breakeven by the beginning of the third quarter of 2024.

Tim Hoffmeyer: Our expected common stock shares outstanding at the end of the second quarter is $13 4 million.

Speaker Change: With that we're now happy to open the call for questions. Operator will you. Please open the line for Q&A.

Operator: We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw from the question queue, please press star then 2. At this time, we will pause momentarily to assemble our roster. Our first question will come from Chris Pierce, who says, "Need Him." You may now go ahead.

Speaker Change: We will now begin the question and answer session.

Speaker Change: I'll ask a question you May press Star then one on your telephone keypad.

Speaker Change: If you're using a speakerphone please pick up your handset before pressing the keys.

Speaker Change: To withdraw from the question queue. Please press Star then two.

At this time, we will pause momentarily to assemble our roster.

Speaker Change: Our first question will come from Chris peers with Needham you May now go ahead.

Chris Pierce: Hey, good afternoon everybody. I just had a few questions. You spoke of higher than expected volumes in Q1. Is there a way to kind of, you know, what drove that? Was it weather-related events, or was it sharing games with your partners? Like, what's the right way to think about that, and how repeatable is something like that?

Chris Peers: Hey, good afternoon, everybody I just had a couple of questions do you spoke to higher than expected volumes. In Q1 is there a way to kind of what drove that is it weather type of events or was it share gains with your partners like what's the right way to kind of think about that and how repeatable is something like that.

Matt Booth: Yeah, hey Chris, it's Matt. Two answers to that. The first one is weather-related, and the second one is additional share from our partners that was above and beyond what we anticipated. So it was a growth in the book of business and then some, a handful of weather-related.

Chris Peers: Yeah, Hey, Chris its Matt.

Chris Peers: Two.

Matt: Two answers to that the first one is weather related and the second one is additional share from our partners that was above and beyond what we anticipated. So it was a growing in the book of business and then some a handful of weather related events.

Tim Hofmeyer: And I'll add to that, Chris. Chris, just as far as that being repeatable, you know, we do the best we can to, you know, provide responsible guidance, but the volumes do drive it. As you know, we get paid on every dispatch, so the volume level does matter, but we try to do our best to estimate that.

Speaker Change: Yeah, and I'll add to that Chris Chris.

Speaker Change: As far as that being repeatable, we do the best we can.

Speaker Change: Provide responsible guidance.

Speaker Change: But the volumes do drive it as you as you know we get paid on every dispatch so.

Speaker Change: The volumes level do matter, but we tried to do our best estimate that.

Matt Booth: When you say you're taking share, is that because there's an incident and your competitors are unable to get a service provider there in a reasonable period of time; you're taking share in that moment, or these are longer-term decisions that your partners are making based on your longer-term performance with them?

Speaker Change: Okay, and when you say, you're taking share or is that because there's an incident and your partners or your competitors are unable to get a service provider there in a reasonable.

Speaker Change: A reasonable period of time, you are taking share in that moment or are these are longer term decisions that your partners are making based on your longer term performance with them.

Matt Booth: It's mostly the latter; it's longer-term performance from partners and them shifting volume to us from other competitors.

Speaker Change: It's mostly the latter it's longer term performance from partners I'm shifting volume to us from other from other competitors.

Chris Pierce: Got it, so that's sort of a continuous share gain over time is the right way to think about that, okay? And you talked about a decrease in first call cost. Is it right that that's a human calling in from you know one of your partners into your helpdesk, and you kind of talk about further room for a decrease in first call cost, like is this something where you're in the early innings or not? What's

Speaker Change: Got it so that's sort of a continuous share gain over time is the right way to think about that okay. Okay and you talked about a decrease in first call. It cost is it right that that is human calling in from one of your partners do your help desk and you know.

Speaker Change: You can kind of talk about further room in decrease in first call costs. Like is this something where you are in the early innings or like what's the right way to think about this.

Tim Hofmeyer: You are thinking about it the right way. So let's say a customer partner would transfer one of their customers to us on the phone, and we would have a live agent answer the call. There's probably room there. There's a bunch of technology and innovations that we're working on, around IVR and AI and chat,

Speaker Change: You are thinking about the right way, so I would say customer what the customer partner would transfer one of their customers to us on the phone and we would have a live agent answer the call.

Probably room, there, there's a bunch of technology innovations that we're working on.

Speaker Change: Around IV or Nai and chat.

Speaker Change: To bring those costs down theres more room, there if we're super focused on how do we expand the share of wallet that we have with our partners and how do we expand the business overall, we feel like this line item is pretty tight there is a little bit more room, we can do on it but overall, we're pretty pleased with where we are today.

Chris Pierce: Okay. And then kind of going along that theme, can you talk about share expansion and potential new customer wins and kind of loop in, you know, renewals that might be upcoming on the horizon?

Speaker Change: Okay, and then kind of going along that theme. There can you talk about share expansion and potential new customer wins and kind of looping.

Speaker Change: Renewals that might be upcoming on the horizon.

Matt Booth: Yeah, we have a handful of renewals that are coming up on the horizon, and we're very positive about where we sit with them. We expect to have a lot more to say about that in the next earnings call in terms of both partner renewals and then also some new customer wins that are on the road.

Speaker Change: Yes, we have a handful of renewals that are coming out on the horizon.

Speaker Change: Feel.

Speaker Change: Very positive about where we sit with them.

Speaker Change: We expect to have a lot more to say about that in the next earnings call in terms of both partner renewals and then also some new customer wins that are on the horizon.

Chris Pierce: Okay, okay. And then can you just remind us of seasonality? I know summer might have the most driving, but you've got drivers kind of far away from your service providers, kind of on, you know, more far-flung vacations. Is winter the best time of year for you guys from a mixed perspective since you've got incidents and people are traveling less? Or what is the right way to think about seasonality of incidents throughout the year?

Speaker Change: Okay. Okay.

Speaker Change: And then can you just remind us on seasonality I know someone who might have the most driving but you've got drivers kind of far away from your service providers.

Speaker Change: On no more far flung vacation is winter the best time of year for you guys from a mixed perspective since you've got incidents and.

Speaker Change: People are traveling less or what's the right way to think about seasonality throughout the year.

Speaker Change: Yeah.

Tim Hofmeyer: Chris, so winter events definitely drive some things, but the summer vacation months are popular. That's when there's a lot of traffic on the road, a lot of volume, so that's the better time of year for us. So that's the late June, July, and August time period.

Speaker Change: Chris So so winter events definitely drive something but the summer vacation months R. R.

Speaker Change: Our our popular that's when there is a lot of traffic on the road a lot of volume. So that's that's the better time of year for us. So that's the that's the late June July August time period.

Chris Pierce: Okay, perfect. Okay, and then can you just talk about, I know you talked about the third quarter might be something where you'll talk about what you're gonna do with the debt, but you've got it all, you know, in current liabilities now due in less than a year versus the 40, you know, the 40 million in cash, and 41 million in cash. So, how should investors think about the balance between those two and the kind of options that you have for the 52 million in debt?

Speaker Change: Okay perfect. Okay, and then he can you just talk about I know you talked about the third quarter might be something where you talk about what are you going to do with the debt, but you've got it all you know in current liabilities now due in less than a year versus the 40.

Speaker Change: $40 million in cash $41 million in cash.

Speaker Change: How should investors think about the balance between those two and kind of the options that you have for the $52 million in debt.

Tim Hofmeyer: Yeah. So, we're in active collaboration with existing lenders and looking at outreach to other lenders to find the best solution there for the company. We're confident we can get through that here in the next couple of months, with our goal being to have that done in the third quarter. So, we'll definitely need to align some of that maturity with the future projected cash flows of the company. But given the fact that we're holding and expect to achieve the third quarter non-gap operating breakeven, we feel pretty comfortable with that as we think about our options to extend the maturity.

Speaker Change: Yeah. So we're we're.

Speaker Change: We're in active.

Speaker Change: Collaboration with.

Speaker Change: Existing lenders and in looking at Outreached other lenders to find the best solution there for the company.

Speaker Change: We're confident we can get through that here in the next couple of months with our goal being to have that done in the third quarter.

Speaker Change: So we will definitely need to align that some of that maturity with the future projected cash flows of the company, but given the fact that we're holding and expect to achieve the third quarter.

Speaker Change: Operating non-GAAP operating breakeven, we feel pretty comfortable with that as we think about our options to extend the maturity.

Chris Pierce: Okay, perfect. And then, not quite to split hairs, but I just want to make sure that I'm modeling the company correctly. The second half of 24 is when you sort of get to the growth numbers and the gross margin numbers that you're speaking of, or is that more of a 25 event in terms of kind of repositioning the company for growth after kind of the integration?

Speaker Change: Okay, perfect and then just to not quite to split hairs, but I just want to make sure I'm modeling the company correctly.

Speaker Change: The second half of 'twenty four is when you sort of get to the growth remember that in the gross margin numbers that youre speaking up or is that more of a 25 events in <unk>.

Terms of kind of repositioning the company for growth after kind of the integration.

Tim Hofmeyer: Yeah, great question and a good follow-up from the last call. When you look at the model, you know, we've been modeling and we've been talking about the non-GAAP operating breakeven, and really, there are two major levers there. One is operating expenses, and I think we've done a good job as a team demonstrating our ability to leverage existing and even reduce operating expenses. And that trend should continue, and it should be expected to continue. Again, we've proven that.

Speaker Change: Yeah, Great Great question and a good follow up from the last call.

Speaker Change: When you when you look at the model.

Speaker Change: We've been modeling and we've been talking about the non-GAAP operating breakeven in and really Theres two major levers. There one is operating expenses and I think we've done a good job as a team demonstrating our ability to.

Speaker Change: Leverage our existing end and even reduce operating expenses and that trend should continue should be expected to continue again, we've proven that on the margin side.

Tim Hofmeyer: On the margin side, you absolutely would expect that we're working very hard on the tech side to put margin inside that range that we've been guiding to for the back two quarters of the year. So, that is our goal, and when you combine those two elements, you know, that is part of the formula to get to the non-GAAP operating breakeven.

Speaker Change: Yeah, absolutely we would expect that that work that we're working very hard on the tech side to put margin inside that range that we've been guiding to in.

Speaker Change: In the in the back two quarters of the year. So that is our goal and when you when you combine those two elements.

Speaker Change: That is a.

Speaker Change: That is part of the formula to get to the non-GAAP operating breakeven.

Chris Pierce: Okay, perfect. And then just lastly, I know there's been a lot, I apologize, but on the OEM telematics that you kind of spoke to, how does that show up in the model when you're able to get vehicle information sooner or without having to speak to the driver? Like how does that sort of help in the

Speaker Change: Okay Perfect and then just lastly, I know there's been a bunch I apologize, but on the OEM telematics that you kind of spoke to how does that show up in the model when you're able to get vehicle information sooner or without having to speak to the driver like how does that sort of kind of helping them.

Speaker Change: That's our model.

Tim Hofmeyer: It improves the gross margin because we don't have to deploy an agent to answer the phone; it's all taken in algorithmically. Perfect. Okay. I'll turn it over. Okay. Okay. I appreciate the time. Thanks, Chris.

Speaker Change: It improves the gross margin because we don't have to deploy an agent answers the phone its all taken in algorithmically.

Speaker Change: Oh, Okay all right.

Speaker Change: Turnover.

Speaker Change: Okay I appreciate the time.

Speaker Change: Thanks, Chris Thanks, Chris.

Operator: Our next question will come from Brian Dobson with Chardon Capital Markets. You may now go ahead.

Speaker Change: Our next question will come from Brian Dobson with Chardan capital markets. You May now go ahead.

Brian Dobson: Hi, thanks for taking my question this evening. Do you think you could speak a little bit about your strategic investors and the relationships you have with those companies and how they've, I suppose, helped you to perhaps find new OEMs as you're looking to gain additional contracts?

Brian Dobson: Hi, Thanks for taking my questions. This evening.

Brian Dobson: So do you think you could speak a little bit about your strategic investors in the relationships you have with those companies and how they are.

Brian Dobson: Those helped you to perhaps find new yeah.

Brian Dobson: Okay.

Speaker Change: I'm sorry.

Speaker Change: Yeah.

Matt Booth: That's a good question. So just for reminder, strategic investors in the company that we've named BMW, Porsche, Inmotion, which is Jaguar, Land Rover, Enterprise, and rental cars. I'd say that, you know, in general, we have a collaborative relationship with all of them. We talk to all of them often, um, do not outwardly call people on our behalf, but they, like anyone that they're happy with, do take reference calls from time to time.

Speaker Change: It's a good question. So just works for reminder of strategic investors in the company that we've named BMW, Porsche and motion, which is Jaguar land Rover and enterprise.

Speaker Change: Rental cars I would say that in general there we have a collaborative relationship with all of them when we talked to all of them often.

Speaker Change:

Speaker Change: Hey.

Speaker Change: Do not outwardly call people on our behalf, but they like anyone that they're happy with did you take reference calls from time to time.

Matt Booth: I should mention, at least one of those is not a current partner today, but we're hoping in the near future, we'll be able to add them to the partner portfolio. But they're really helpful, like telling us when we're doing a great job, they tell us where we need to work, and in a lot of cases, we're pretty ingrained in some long-term planning, so we can really sit down and think about how to improve both their business performance and our business performance at the same time.

Speaker Change: I should mention at least one of those is not a current partner today, but we're hoping in the near future, we'll be able to add them to the partner portfolio, but they're really helpful. Like they tell us where we're doing a great job they tell us where we need to do work.

Speaker Change: And then a lot of cases, we're pretty ingrained in some long term planning. So we can really sit down and think about how to improve their business performance and our business performance at the same time.

Brian Dobson: Yeah, great. Thanks very much. I suppose, turning to your fleet clients, as I recall, you have fairly high penetration rates within the fleet. Is that right? That's crap. And I suppose, as you're looking to add additional fleet clients, what kind of feedback have you received from potential clients as they consider bringing the service on?

Speaker Change: Great. Thanks, very much I guess turning to your to your fleet clients. The third call you have.

Speaker Change: Fairly high penetration rates within the fleet.

Speaker Change: Is that right.

Speaker Change: That's correct.

Speaker Change: Yeah.

Speaker Change: <unk> as you are looking to add.

Speaker Change: Add additional people fleet clients, what kind of feedback have you received from potential clients.

Speaker Change: Interbrain service on.

Matt Booth: I think the feedback we get is pretty consistent. It's twofold. One, they want to diversify where they're the sole source. So in the case of large companies, they might want to have a dual source relationship. And number two, they're increasingly focused on quality and then technology. How can we use technology to increase quality? of the dual relationships for the OEM side and then with other partners like fleets, how can we use technology to make sure that we decrease the amount of time it takes to get someone out to service them? So it's really, really relying on the technology that we build and improving the performance of their overall programs.

I think the feedback we get is pretty consistent there.

Speaker Change: Twofold, one they want to diversify where they're sole sourced so in the cases large companies they might want to do a dual source relationship and number two.

Speaker Change: Theyre very focused increasingly on quality and then technology, how can we use technology to increase the quality.

Speaker Change: The dealer relationships for the OEM side, and then those other partners they fleets.

Speaker Change: How can we use technology to make sure that we decreased the amount of time it takes to get someone out of service. So it's really.

Speaker Change: Really reliant on the technology that we build and improving the performance of their overall program.

Brian Dobson: And just as a final question for me, and I know that you alluded to this in your prepared remarks, but could you maybe just give a little color on how the collection of real-time data helps to kind of build a moat around your business?

Speaker Change: And just a final question for me I know that you alluded to this in your prepared remarks, but could you maybe just give a little color on how the collection of real time data helps to kind of build a moat around your business.

Matt Booth: Yeah, sure. So we've spent a lot of time in the last kind of year and a half or so taking the data that we have historically in the business and really drilling down on a geospatial basis. So we can say within a very specific defined geography, smaller than a zip code, what it will take and what it will cost in any given geography, in any given day part about what the job will cost and given the kind of quality you want to get.

Speaker Change: Yeah sure so.

Speaker Change: We spent a lot of time in the last kind of year and a half or so taking the data that we have historically in the business and really drilling down on like a geospatial basis. So we can say within a very specific defined geography smaller than a zip code.

Speaker Change: We're sorry smaller than our business trade area down to the ZIP code level like what is the right pricing given the time of day and how do we use real time events like weather traffic and other things to really isolate what's going on with the job and we can were pretty good now at predicting.

Speaker Change: What it will take and what it will cost in any given geography in any given day part.

Speaker Change: What the job will cost and given the kind of quality you want again, I think what Youll hear us talk about more in the future is if a customer wants to start two of the service and say Hey, we want it we want this customer set who is our call. It our VIP customers to get a very specific kind of experience. We can tailor the experience around that versus some other kind of experience.

Matt Booth: I think what you'll hear us talk about more in the future is if a customer wants to start to tier the service and say, hey, we want this customer set, who we call our VIP customers, to get a very specific kind of experience; we can tailor the experience around that versus some other kind of experience that they may want. So it's really what we're starting to do is break down, you'll hear more about this in future calls, creating a VIP level, if you will, so we can create an exceptional quality experience where price isn't really the issue, and then start to tier it. And we'll be able to roll that out algorithmically and share that with partners. And you'll start to hear more about that on the next couple of calls. Well, we look forward to hearing from you.

Brian Dobson: Well, we look forward to that. Thanks Thank you for your time. Thanks, Brian.

Speaker Change: They may want so it's really what we're starting to do is break down and you'll hear more about this in future calls, creating a VIP level. If you will so we can create exceptional an exceptional quality experience our price isn't really the issue and then start to tear it on their own.

Speaker Change: We'll be able to roll that out algorithmically ensure that with partners and you'll start to hear more about that in the next kind of next couple of calls.

Speaker Change: Well, we look forward to that thanks very much thanks for your time.

Speaker Change: Thanks, Brian.

Operator: Again, if you have a question, please press star then 1. It appears there are no further questions. This concludes our question and answer session. I would like to turn the conference back over to Matt Booth for any closing remarks. All right. Thanks, everyone, for your time.

Speaker Change: Again, if you have a question. Please press Star then one.

Speaker Change: Yeah.

Speaker Change: It appears there are no further questions. This concludes our question and answer session.

Speaker Change: Ill turn the conference back over to Matt Booth for any closing remarks.

Matt Booth: Great, thanks everyone for your time. As a reminder, we'll be attending the Needham Technology Media and Consumer Conference on May 15th and also the B. Reilly Institutional Investor Conference on May 22nd and 23rd. If you're attending either of these and you'd like to have a one-on-one meeting, please contact the conference desk. If you're not attending and you want to meet with management, please reach out to us at InvestorRelations at GetUrgently.com, and we're happy to schedule a time for a call. Thanks again for your interest in Urgently, and thanks again for joining the call. Have a great evening.

Matt Booth: Great. Thanks, everyone for your time as a reminder, we will be attending the Needham technology and media and consumer conference on May 15th.

Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Matt Booth: And also the B Riley institutional Investor Conference on May 2023, if you are attending either of these and you'd like to have a one on one meeting. Please contact the conference desk. If you are not attending and you want to meet with management and please reach out to us in Investor Relations at get urgently Dot Com and we're happy to schedule time for our call. Thanks again for your.

Matt Booth: Interest and urgently and thanks again for joining the call have a great evening.

Matt Booth: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.