Q2 2024 Urgent.ly Inc Earnings Call

August 12, 2024

Unknown Executive, Timothy Huffmyer

Operator: Welcome to Urgently's second 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 a listen-only mode.

Operator: to Urgently's second 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 a 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 star 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.

Speaker Change: Good afternoon, and welcome to Urgently's second quarter 2024 conference call.

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

Speaker Change: At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation.

Operator: A brief question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad.

Speaker Change: If anyone should require operator assistance during the conference, please press star zero on your telephone keypad.

Operator: With that, I would like to turn the call over to Jenny Mitchell, Vice President of Finance Strategy and Investor Relations. You may proceed.

Speaker Change: With that, I would like to turn the call over to Jenny Mitchell, Vice President of Finance Strategy and Investor Relations. You may proceed.

Jenny Mitchell: CEO, Matt Booth, and CFO, Tim Huffmyer Before we begin, I would 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. 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.

Jenny Mitchell: Thank you, operator. Good afternoon, everyone, and thank you for joining us for Urgently Financial Result conference call for the second quarter and the June 30th, 2024. On the call today, we have Urgently CEO Matt Booth and CFO Tim Huffmyer.

Operator: A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. With that, I would like to turn the call over to Jenny Mitchell, Vice President of Finance Strategy and Investor Relations. You may proceed. Thank you, Operator. Good afternoon, everyone, and thank you for joining us for Urgently's Financial Results conference call for the second quarter ended June 30th, 2024.

Jenny Mitchell: Thank you, Operator. Good afternoon, everyone, and thank you for joining us for Urgent Leads Financial Results conference call for the second quarter ended June 30, 2024.

Operator: On the call today, we have Urgently's CEO, Matt Booth, and CFO, Tim Huffmyer. Following Matt and Tim's prepared remarks, we will take your questions. Before we begin, I would 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. 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.

Speaker Change: On the call today, we have Urgently CEO Matt Booth and CFO Tim Huffmyer. Following Matt and Tim's prepared remarks, we will take your questions.

Jenny Mitchell: Following that, in Tim's prepared remarks, we will take your questions. Before we begin, I would 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. Did 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 filing, including our most recent annual report on Form 10-K for the year end of December 31, 2023, or quarterly reports on Form 10-Q and other filings and reports that we may file from time to time with the SEC.

Jenny Mitchell: Except as required by law, we do not undertake any responsibility to update these forward-looking statements. During today's call, we will also discuss certain non-GAAP financial measures. 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. With that, I'll now turn the call over to Matt.

Speaker Change: Before we begin, I would like to remind you that some of our comments today may contain forward-looking statements that are subject to risk.

Speaker Change: Uncertainties and assumptions which could change. Did any of these risks materialize or should our assumptions prove to be incorrect? Actual company results could differ materially from these forward-looking statements.

Operator: 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 obligation to update these forward-looking statements.

Speaker Change: A Description of these Risks, Uncertainties, and Assumptions, and Other Factors that Could Affect Our Financial Results.

Speaker Change: 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.

Jenny Mitchell: Except as required by law, we do not undertake any responsibility to update these forward-looking statements.

Speaker Change: Except 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.edu at urgently.com.

Jenny Mitchell: During today's call, we will also discuss certain non-GAAP financial measures. 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. With that, I'll now turn the call over to Matt. Thank you, Jenny. Good afternoon, everyone.

Speaker Change: 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.

Jenny Mitchell: A replay of today's call will also be posted on the website.

Matthew Booth: With that, I'll turn the call over to Matt. Thank you, Jenny. Good afternoon, everyone.

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

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

Matthew Booth: And thank you for joining us today for our second quarter 2024 earnings call. Overall, we are pleased with our second quarter results, which were in line with our revenue expectation. We remain focused on executing against our strategic initiatives to drive financial and operational improvements. Specifically, in the areas of providing exceptional customer experiences and eliminating the post-merger operating. In addition, and as we have highlighted in the last quarter, we have also shifted our focus to accelerating profitable growth.

Matthew Booth: And thank you for joining us today for our second quarter 2024 earnings call. Overall, we are pleased with our second quarter results, which were in line with our revenue expectations. We remain focused on executing against our strategic initiatives to drive financial and operational improvements, specifically in the areas of providing exceptional customer experience and eliminating the post-merger operating loss. In addition, and as we have highlighted in the last quarter, we have also shifted our focus to accelerating profitable growth. As a reminder, our group has historically been lumpy, driven by large enterprise contracts that drive additional revenue and growth once they are launched.

Matt Booth: Thank you, Jenny. Good afternoon, everyone, and thank you for joining us today for our second quarter 2024 earnings call. Overall, we are pleased with our second quarter results, which were in line with our revenue expectations.

Matt Booth: We remain focused on executing against our strategic initiatives to drive financial and operational improvements, specifically in the areas of providing exceptional customer experience and eliminating the post-merger operating loss.

Matt Booth: In addition, and as we have highlighted in the last quarter, we have also shifted our focus to accelerating profitable growth.

Matthew Booth: As a reminder, our group has historically been lumpy driven by large enterprise contracts that drive additional revenue and growth once they are launched. To that end, I am proud of the effort across the entire team to deliver renewals of all three customer partner contracts that were set to conclude and which collectively generated more than one-third of our revenue for the second quarter, which we reported at 34.5 million for the quarter. In addition, we secured new customer partners as well as a contract expansion with our existing customer partner portfolio, and we did not intentionally terminate any contracts.

Matthew Booth: As a reminder, our group has historically been lumpy, driven by large enterprise contracts that drive additional revenue and growth once they are launched. To that end, I am proud of the effort across the entire team to deliver renewals of all three customer partner contracts that were set to expire and which collectively generated more than one third of our revenue for the second quarter, which we reported at 34.5 million for the quarter. In addition, we secured new customer partners as well as a contract expansion with our existing customer partner portfolio. And we did not intentionally terminate any contracts.

Matt Booth: As a reminder, our group has historically been lumpy, driven by large enterprise contracts that drive additional revenue and growth once they are launched.

Matthew Booth: To that end, I am proud of the effort across the entire team to deliver renewals of all three customer partner contracts that were set to conclude, and which collectively generated more than one third of our revenue for the second quarter, which today we reported at 34.5 million for the quarter. In addition, we secured new customer partners as well as a contract expansion with our existing customer partner portfolio, and we could not intentionally terminate any contracts. We believe these renewals, expansions, and new customer wins. Our further validation of the significant value we deliver to our customer partners through the strength of our service and leading technology.

Matt Booth: To that end, I am proud of the effort across the entire team to deliver renewals of all three customer-partner contracts that were set to conclude.

Matt Booth: and which collectively generated more than one-third of our revenue for the second quarter, which today we reported at $34.5 million for the quarter. In addition, we secured new customer partners as well as a contract expansion with our existing customer partner portfolio.

Matthew Booth: We believe these renewals, expansions, and new customer wins are a further validation of the significant value we deliver to our customer partners through the strength of our service and leading technology. Now, let me spend a few minutes discussing our growth and business expansion efforts more broadly, as well as providing details on our customer partner renewals and expansions. As we have previously stated, the average length of a customer partner contract is about three years.

Matt Booth: and we did not intentionally terminate any contracts. We believe these renewals, expansions, and new customer wins.

Matt Booth: are a further validation of the significant value we deliver to our customer partners through the strength of our service and leading technology.

Matthew Booth: Now, let me spend a few minutes discussing our growth and business expansion efforts more broadly, as well as providing details on our customer partner renewals and expansions. As we have previously stated, the average length of a customer partner contract is about three years. So approximately one-third of our customer contracts come up for renewal each year. Renewals not only shore up our revenue forecast, but we believe they also demonstrate our commitment to long-term customer partner relationships and service proofpoints where our strength in the marketplace as an innovator in the roadside industry.

Matt Booth: Now let me spend a few minutes discussing our growth and business expansion efforts more broadly, as well as providing details on our customer partner renewals and expansions.

Matt Booth: As we have previously stated, the average length of a customer partner contract is about three years.

Matthew Booth: So approximately one third of our customer contracts come up for renewal each year. Renewals not only shore up our revenue forecast, but we believe they also demonstrate our commitment to long-term customer partner relationships, and Service Proof Points are our strength in the marketplace as an innovator in the roadside industry. During the second quarter, among our customer partner renewals, we renewed contracts with two of our global OEM customer partners, which we announced in a press release.

Matthew Booth: So, approximately one third of our customer contracts come up for renewal each year. Renewals not only shore up our revenue forecast, but we believe they also demonstrate our commitment to long-term customer partner relationships and service proof points for our strength in the marketplace as an innovator in the roadside industry. During the second quarter, among our customer partner renewals, we renewed contracts with two of our global OEM customer partners, which we announced in a press release.

Matt Booth: So, approximately one-third of our customer contracts come up for renewal each year. Renewals not only shore up our revenue forecast, but we believe they also demonstrate our commitment to long-term customer-partner relationships.

Matt Booth: and Service Proof Points were our strength in the marketplace as an innovator in the roadside industry.

Matthew Booth: During the second quarter, among our customer partner renewals, we renewed contracts with two of our global OEM customer partners, which we announced to be a press release. The first, a global automotive OEM known for its focus on safety, quality, and innovation, has extended our relationship for another two years. Under the contract renewal, we will continue to power their warranty-based roadside assistance program, as well as their post-warranty roadside assistance membership plans in the U.S., Canada, and Mexico. In addition, we also continue to provide assistance for operational, technical, and mechanical breakdowns, as well as accident-related towing services.

Matt Booth: During the second quarter, among our customer partner renewals, we renewed contracts with two of our global OEM customer partners, which we announced via press releases.

Matthew Booth: The first is a global automotive OEM known for its focus on safety, quality, and innovation has extended our relationship for another two years. Under the contract renewal, we will continue to power their warranty-based roadside assistance program, as well as their post-warranty roadside assistance membership plans in the US, Canada, and Mexico. In addition, we also continue to provide assistance for operational, technical, and mechanical breakdowns, as well as accident-related towing services. The OEM partner will continue to leverage our comprehensive technology stack, which includes full roadside assistance, customer relationship management, to support its outsourced call center operations and API-based integration into its customer-facing products.

Matthew Booth: The first, a global automotive OEM known for its focus on safety, quality, and innovation, has extended our relationship for another two years. Under the contract renewal, we will continue to power their warranty-based roadside assistance program, as well as their post-warranty roadside assistance membership plans in the US, Canada, and Mexico. In addition, we will also continue to provide assistance for operational, technical, and mechanical breakdowns, as well as accident-related towing services

Matt Booth: The FIRST, a global automotive OEM known for its focus on safety, quality, and innovation, has extended our relationship for another two years. Under the contract renewal, we will continue to power their warranty-based roadside assistance program.

Matt Booth: as well as their post-warranty roadside assistance membership plans in the U.S., Canada, and Mexico.

Matt Booth: In addition, we also continue to provide assistance for operational, technical, and mechanical breakdowns, as well as accident-related towing services.

Matthew Booth: The OEM partner will continue to leverage our comprehensive technology staff, which includes flow roadside assistance customer relationship management to support its outsourced call center operations and API-based integration into its customer-facing products. The second is also a two-year extension with a global OEM known for its precision engineering and commitment to delivering an unparalleled driving experience. Under the renewed contract, we will continue to power their warranty-based roadside assistance program, as well as its post-warranty roadside assistance membership plans in the United States. In addition to the two-year renewal, we also signed a new two-year agreement with this global OEM to expand geographically into Canada.

Matthew Booth: The OEM partner will continue to leverage our comprehensive technology stack, which includes full roadside assistance, customer relationship management, to support its outsourced call center operations and API-based integration into its customer-facing product. Under the renewed contract, we will continue to power their warranty-based roadside assistance program, as well as its post-warranty roadside assistance membership plans in the United States. In addition to the two-year renewal, we also signed a new two-year agreement with this global OEM to expand geographically into Canada. This expansion was recently launched on August 1.

Matt Booth: The OEM partner will continue to leverage our comprehensive technology stack, which includes full roadside assistance, customer relationship management.

Matt Booth: to support its outsourced call center operations and API-based integration into its customer-facing products.

Matthew Booth: The second is also a two-year extension with a global OEM known for its precision engineering and commitment to delivering an unparalleled driving experience. Under the renewed contract, we will continue to power their warranty-based roadside assistance program, as well as its post-warranty roadside assistance membership plans in the United States. In addition to the two-year renewal, we also signed a new two-year agreement with this global OEM to expand geographically into Canada. This expansion was recently launched on August 1st.

Matt Booth: The second is also a two-year extension with a global OEM known for its precision engineering and commitment to delivering an unparalleled driving experience.

Matt Booth: Under the renewed contract, we will continue to power their warranty-based roadside assistance program as well as its post-warranty roadside assistance membership plans in the United States.

Matt Booth: In addition to the two-year renewal, we also signed a new two-year agreement with this global OEM to expand geographically into Canada. This expansion recently launched on August 1st.

Matthew Booth: This expansion recently launched on August 1st.

Matthew Booth: In addition to our customer partner expansions and renewals this quarter, we have also signed a new customer partner agreement with a direct-to-consumer subscription and insurance aggregator, which we will launch later this year. All in all, it's been an extremely successful quarter in terms of renewals, expansion contracts, and new business. I'm very appreciative of the efforts of the team to deliver these results.

Matthew Booth: In addition to our customer partner expansions and renewals this quarter, we have also signed a new customer partner agreement with a direct-to-consumer subscription and insurance aggregator, which will launch later this year. All in all, it's been an extremely successful quarter in terms of renewals, expansion contracts, and new business. I'm very appreciative of the efforts of the team to deliver these results.

Matt Booth: In addition to our customer partner expansions and renewals this quarter, we have also signed a new customer partner agreement with a direct-to-consumer subscription and insurance aggregator, which will launch later this year.

Matt Booth: All in all, it's been an extremely successful quarter in terms of renewals, expansion contracts, and new business.

Matt Booth: I'm very appreciative of the efforts of the team to deliver these results.

Matthew Booth: We're always excited to talk about our initiatives to reaccelerate growth post-merger integration. As we see with our Q2 customer partner retention and expansions, we believe that delivering the best-in-class customer experience has historically been a primary differentiator for Urgent. This quarter, we remain focused on quality and delivering exceptional service at scale, which is reflected in the 4.5 customer satisfaction scores achieved during the second quarter and 4.6 satisfaction scores out of five for the year. Our data and engineering teams continue to look for ways to apply technology to advance the motorics experience. to further differentiate our customer experience, we recently announced the launch of the next generation yield-based pricing of the product across our service provider network.

Matthew Booth: We're always excited to talk about our initiatives to reaccelerate growth post merger integration, as we see with our Q2 Customer Partner Retention and Expansions. We believe that delivering the best in class customer experience has historically been a primary differentiator for Urgently. This quarter, we remain focused on quality and delivering exceptional service at scale, which is reflected in the 4.5 customer satisfaction scores achieved during the second quarter and 4.6 satisfaction scores out of five for the year. Our data and engineering teams continue to look for ways to apply technology to advance the MotorX experience.

Matt Booth: We're always excited to talk about our initiatives to reaccelerate growth post merger integration.

Matt Booth: As we see with our Q2 Customer Partner Retention and Expansions, we believe that delivering the best-in-class customer experience has historically been a primary differentiator for Urgently.

Matt Booth: This quarter, we remain focused on quality and delivering exceptional service at scale, which is reflected in the 4.5 customer satisfaction scores achieved during the second quarter and 4.6 satisfaction scores out of five for the year.

Matt Booth: Our data and engineering teams continue to look for ways to apply technology to advance the MotorX experience.

Matthew Booth: To further differentiate our customer experience, we recently announced the launch of next-generation yield-based pricing as a product across our service provider network. Much like other industries, we believe data and the analytics around pricing and performance are a competitive advantage to deliver higher quality customer outcomes and margin improvement. As a key feature of this product, Urgently now leverages micro-targeting, which is much smaller geographic areas than either a zip code or a rural service area, together with relevant historical data, make, model, time of day, population density, service quality, weather, and other location-based data, in our AI-driven dynamic pricing technology reliably predicts and optimizes job prices for roadside assistance.

Matthew Booth: To further differentiate our customer experience, we recently announced the launch of next-generation yield-based pricing as a product across our service provider network. Much like other industries, we believe that data and analytics around pricing and performance are a competitive advantage to deliver higher quality customer outcomes and margin improvement. As a key feature of this product, Urgently now leverages micro-targeting, which is much smaller geographic areas than either a zip code or a rural service area, together with relevant historical data, make, model, time of day, population density, service quality, weather, and other location-based data, in our AI-driven dynamic pricing technology reliably predicts and optimizes job prices for roadside assistance.

Matt Booth: To further differentiate our customer experience, we recently announced the launch of the next generation yield-based pricing as a product across our service provider network.

Matthew Booth: Much like other industries, we believe that data and analytics around pricing and performance are a competitive advantage to deliver higher quality customer outcomes and margin improvements. As a key feature of this product, we're doing now leverages micro-targeting, which are much smaller geographic areas than either a zip code or a rural service area, together with relevant historical data, make, model, time of day, population density, service quality, weather, and other location-based data. In our AI-driven dynamic pricing technology, reliably predicts and optimizes job prices for roadside assistance. We use this technology to better manage surges and roadside assistance demand, which we believe leads to faster job access acceptance by service providers, resulting in shorter wait times for the stranded driver and a higher quality outcome for our customer partners.

Matt Booth: Much like other industries, we believe that data and analytics around pricing and performance are a competitive advantage to deliver higher quality customer outcomes and margin improvements.

Matt Booth: As a key feature of this product, Ergoline now leverages micro-targeting.

Matt Booth: which are much smaller geographic areas than either a zip code or a rural service area together with relevant historical data, make, model, time of day, population density, service quality, weather, and other location-based data.

Matt Booth: NRAI driven dynamic pricing technology reliably predicts and optimizes job prices for roadside assistance.

Matthew Booth: We use this technology to better manage surges and roadside assistance demand, which we believe leads to faster job acceptance by service providers, resulting in shorter wait times for the stranded driver and a higher quality outcome for our customer partners. This all results in lower agent handle time, which we expect to continue to be reflected in our improved operational expenses, which Tim will review shortly. For our customer partners, these insights and predictive pricing also help empower them to develop roadside assistance programs that best fit their business goals.

Matt Booth: We use this technology to better manage surges in roadside assistance demand, which we believe leads to faster job acceptance by service providers.

Matt Booth: resulting in shorter wait times for the stranded driver and a higher quality outcome for our customer partners.

Matthew Booth: This all results in lower agent handle time, which we expect to continue to be reflected in our improved operational expenses, which 10 will review shortly. For our customer partners, these insights and predictive pricing also help empower them to develop roadside assistance programs that best fit their business goals. One example from a luxury OEM partner is to increase performance by market for specific makes and models to build a differentiated premium VIP program offering. More generally, it allows us to maximize service performance while maintaining a stable cost structure for our customer partners. We expect that future products will include the ability for customer partners to tailor the experience based on how they segment their customers.

Matt Booth: This all results in lower agent handle time, which we expect to continue to be reflected in our improved operational expenses, which Tim will review shortly.

Tim Huffmyer: For our customer partners, these insights and predictive pricing also help empower them to develop roadside assistance programs that best fit their business goals.

Matthew Booth: One example from a luxury OEM partner is to increase performance by market for specific makes and models to build a differentiated premium VIP program offering. More generally, it allows us to maximize service performance while maintaining a stable cost structure for our customer partner. We expect that future products will include the ability for customer partners to tailor the experience based on how they segment their customers. Finally, furthering our commitment to exceptional customer service, we reorganized the product and operations team under a single leadership structure into the customer experience team, which now reports to Gay Puerta, Urgently's chief product and technology officer.

Matthew Booth: One example from a luxury OEM partner is to increase performance by market for specific makes and models to build a differentiated premium VIP program offering. More generally, it allows us to maximize service performance while maintaining a stable cost structure for our customer partner. We expect that future products will include the ability for customer partners to tailor the experience based on how they segment their customers. Finally, furthering our commitment to exceptional customer service, we reorganized the product and operations team under a single leadership structure under the customer experience team, which now reports to Gate Querta, Urgently's chief product and technology officer. Our goal is to continue differentiating ourselves based on the customer journey, regardless of how motorists access the service.

Tim Huffmyer: One example from a luxury OEM partner is to increase performance by market for specific makes and models to build a differentiated premium VIP program offering.

Tim Huffmyer: More generally, it allows us to maximize service performance while maintaining a stable cost structure for our customer partners.

Tim Huffmyer: We expect that future products will include the ability for customer partners to tailor the experience based on how they segment their customers.

Matthew Booth: Finally, in furthering our commitment to exceptional customer service, we reorganize the product and operations team under a single leadership structure into the customer experience team, which now reports to Gapuerta, currently its chief product and technology officer. Our goal is to continue differentiating ourselves based on the customer journey, regardless of how motorists access the service. We believe that integrating our product and operations team will promote a singular vision and ownership in providing an unparalleled experience across all channels, both digital and human.

Tim Huffmyer: Finally...

Gay Puerta: Furthering our commitment to exceptional customer service, we reorganized the product and operations team under a single leadership structure into the customer experience team, which now reports in the Gay Puerta, Urgently's Chief Product and Technology Officer.

Matthew Booth: Our goal is to continue differentiating ourselves based on the customer journey, regardless of how motorists access the service. We believe that integrating our product and operations team will promote a singular vision and ownership and provide an unparalleled experience across all channels, both digital and human. Turning now to an update on gross margin, improving margin continues to be an ongoing priority. In the near term, we have maximized the margin improvements related to pricing changes and partner mix that we have outlined on previous calls. We expect additional margin improvement to be driven by creating further efficiencies in the marketplace. First,

Gay Puerta: Our goal is to continue differentiating ourselves based on the customer journey regardless of how motorists access the service.

Matthew Booth: We believe that integrating our product and operations team will promote a singular vision and ownership and provide an unparalleled experience across all channels, both digital and human. Turning now to an update on gross margin, improving margin continues to be an ongoing priority. In the near term, we have maximized the margin improvements related to pricing changes and partner mix that we have outlined on previous calls. We expect additional margin improvement to be driven by creating further efficiencies in the marketplace. First,

Gay Puerta: We believe that integrating our product and operations team will promote a singular vision and ownership in providing an unparalleled experience across all channels, both digital and human.

Matthew Booth: Turning now to an update on gross margin, improving margin continues to be an ongoing priority for us. In theory, term, we have maximized the margin improvements related to pricing changes and partner mix that we have outlined on previous calls. We expect additional margin improvement to be driven by creating further efficiencies in the marketplace. First, geographic areas, one of the primary drivers of service network costs. We believe the next generation yield-based pricing as a product initiative that we recently launched will positively impact our margins in the market that was once constrained by geographic or zip code boundaries.

Gay Puerta: Turning now to an update on gross margin, improving margin continues to be an ongoing priority for us.

Gay Puerta: In the near term, we have maximized the margin improvements related to pricing changes and partner mix that we have outlined on previous calls. We expect additional margin improvement to be driven by creating further efficiencies in the marketplace.

Matthew Booth: Geographic area is one of the primary drivers of service network costs. We believe the next generation yield-based pricing, as a product initiative that we recently launched, will positively impact our margins in the market that was once constrained by geographic or zip code boundaries. We have observed the successful implementation of similarly predictive, optimized pricing in other industries as well, and our initiative has so far performed very well. Our 21% gross margin for Q2-24 is consistent with that of Q2-23, and more notably, our June 2024 year-to-date margin of 22% is a 200 basis point increase over our June 2023 year-to-date margin of 20%.

Gay Puerta: First, geographic area is one of the primary drivers of service network costs.

Gay Puerta: We believe the next generation yield based pricing as a product initiative that we recently launched will positively impact our margins in the market that was once constrained by geographic or zip code boundaries.

Matthew Booth: We have observed the successful implementation of similarly predictive, optimized pricing in other industries as well. Our initiative so far has performed very well. Our 21 percent gross margin for Q2-24 is consistent with that of Q2-23, and more notably, our June 2024 year-to-date margin of 22 percent is a 200 basis point increase of our June 2023 year-to-date margin of 20 percent. While our OEM customer partner and non-renewal, which we announced this past January, has impacted revenue, we are continuing to bolster our potential future revenues through demonstrated wins, renewals, and expansions. Improving our gross margin and reducing our operational expenses is critical when achieving non-GAAP operating break-even and remain focused on this important milestone.

Gay Puerta: We have observed a successful implementation of similarly predictive optimized pricing in other industries as well

Matthew Booth: Our 21% gross margin for Q2-24 is consistent with that of Q2-23, and more notably, our June 2024 year-to-date margin of 22% is a 200 basis point increase over our June 2023 year-to-date margin of 20%. While our OEM customer partner non-renewal, which we announced this past January, has impacted revenue, we are continuing to bolster our potential future revenues through demonstrated wins, renewals, and expansion. Improving our gross margin and reducing our operational expenses is critical to achieving non-gap operating breakeven, and we remain focused on this important milestone.

Gay Puerta: Our initiatives so far have performed very well.

Gay Puerta: Our 21% gross margin for Q2-24 is consistent with that of Q2-23, and more notably, our June 2024 year-to-date margin of 22%

Gay Puerta: is a 200 basis point increase over our June 2023 year-to-date margin of 20 percent.

Matthew Booth: While our OEM customer partner non-renewal, which we announced this past January, has impacted revenue, we are continuing to bolster our potential future revenues through demonstrated wins, renewals, and expansion. Improving our gross margin and reducing our operational expenses is critical in achieving non-gap operating breakeven, and we remain focused on this important milestone. However, during the second quarter, we encountered several factors which have caused us to revise our outlook for targeting non-GAAP operating break-even to the first quarter of 2025, versus our earlier expectation for the beginning of the third quarter of 2024.

Gay Puerta: While our OEM customer partner, Non-Renewal, which we announced this past January, has impacted revenue, we are continuing to bolster our potential future revenues through demonstrated wins, renewals, and expansions.

Gay Puerta: Improving our gross margin and reducing our operational expenses is critical in achieving non-gap operating break-even and we remain focused on this important milestone.

Matthew Booth: However, during the second quarter, we encountered several factors which have caused us to revise our outlook for targeting non-GAAP operating break-even to the first quarter of 2025, versus our earlier expectation for the remaining third quarter of 2024. Having said that, we expect to be below 1 million of non-GAAP operating loss in the fourth quarter of 2024, which is down from 7.9 million in the fourth quarter of 2023. Let me walk through these factors in greater detail.

Matthew Booth: However, during the second quarter, we encountered several factors which have caused us to revise our outlook for targeting non-GAAP operating break-even to the first quarter of 2025, versus our earlier expectation for the beginning of the third quarter of 2024. Having said that, we expect to be below 1 million of non-GAAP operating loss in the fourth quarter of 2024, which is down from 7.9 million in the fourth quarter of 2023. Let me walk through these factors in greater detail.

Gay Puerta: However, during the second quarter, we encountered several factors which have caused us to revise our outlook for targeting non-GAAP operating breakeven to the first quarter of 2025.

Matthew Booth: Having said that, we expect to be below 1 million in non-GAAP operating loss in the fourth quarter of 2024, which is down from 7.9 million in the fourth quarter of 2023. Let me walk through these factors in greater detail.

Gay Puerta: versus our earlier expectation for the beginning of third quarter 2024. Having said that,

Gay Puerta: We expect to be below 1 million of non-gap operating loss in the fourth quarter of 2024, which is down from 7.9 million in the fourth quarter of 2023.

Matthew Booth: The first factor is a return to managed growth, given the length of contract cycles on the RFP process, and we wanted to prioritize our ability to capitalize on Q2 opportunities around renewals, expansions, and new business. This deliberate decision required us to move technology resources to focus on new launches, integration of expansions, instead of longer-term operating and marginic expense projects that we have planned. These large margin projects are wide in scope, and we expect to see improvements in one or two quarters after deployment after A/B testing is completed. We still intend to pursue these margin improvement projects by giving the importance of renewals and expansion contracts that made sense for us to push the expense reduction efforts back a quarter.

Matthew Booth: The first factor is a return to managed growth; given the length of contract cycles on the RFP process, we wanted to prioritize our ability to capitalize on Q2 opportunities around renewals, expansions, and new business. This deliberate decision required us to move technology resources to focus on new launches, integration, and expansion instead of longer-term operating and marginal expense projects that we have planned. These large margin projects are wide in scope, and we expect to see improvements in one or two quarters after deployment after ABA testing is completed.

Matthew Booth: The first factor is a return to managed growth. Given the length of contract cycles on the RFP process, we wanted to prioritize our ability to capitalize on Q2 opportunities around renewals, expansions, and new business. This deliberate decision required us to move technology resources to focus on new launches, integration, and expansion instead of longer-term operating and marginal expense projects that we have planned.

Gay Puerta: Let me walk through these factors in greater detail.

Gay Puerta: The first factor is a return to managed growth. Given the length of contract cycles on the RFP process, we wanted to prioritize our ability to capitalize on Q2 opportunities around renewals, expansions, and new business.

Gay Puerta: This deliberate decision required us to move technology resources to focus on new launches, integration, and expansions, instead of longer term operating and margin expense projects that we have planned.

Matthew Booth: These large margin projects are wide in scope, and we expect to see improvements in one or two quarters after deployment after ABA testing is completed. We still intend to pursue these margin improvement projects, but given the importance of renewals and expansion contracts, it made sense for us to push the expense reduction efforts back. The second factor is related to post-merger integration, including some international complexity.

Gay Puerta: These large margin projects are wide in scope and we expect to see improvements in one or two quarters after deployment after ABA testing is completed.

Matthew Booth: We still intend to pursue these margin improvement projects, but given the importance of renewals and expansion contracts, it made sense for us to push the expense reduction efforts back. The second factor is related to post-merger integration, including some international complexity. While the team swiftly acted to reduce redundant functions across the combined Autonomo and Urgently teams, the last phase is still under review as we look to continue strategic alternatives for certain autonomous assets.

Gay Puerta: We still intend to pursue these margin improvement projects, but given the importance of renewals and expansion contracts, it made sense for us to push the expense reduction efforts back a quarter.

Matthew Booth: The second factor is related to post-merger integration, including some international complexity, while the teams swiftly acted to reduce redundant functions across the combined autonomous urgently teams. The last phase is still under review, as we look to continue strategic alternatives of certain autonomous assets. And finally, given the nature of our transaction-based business, following him is dependent on several external factors. But we met our revenue guidance. We saw a change in service mix from our customer partners, with impact on our margins. External factors can be events ranging from fewer new vehicles produced by an LEM. Changes in coverage policies by our fleet providers, new routing schemas, or customer behavior trends related to miles traveled, just to name a few.

Matthew Booth: While the team swiftly acted to reduce redundant functions across the combined autonomal and urgent support team, the last phase is still under review as we look to continue strategic alternatives for certain autonomous assets. And finally, given the nature of our transaction-based business, volume is dependent on several external factors. When we met our revenue guidance, we saw a change in service mix from our customer partners, which impacted our margins. External factors can be events ranging from fewer new vehicles produced by an OEM to changes in coverage policies by our fleet providers. New routing schemas or customer behavior trends related to miles traveled, just to name a few.

Gay Puerta: The second factor is related to post-merger integration, including some international complexity. While the team swiftly acted to reduce redundant functions across the combined Autonomo and Urgently teams.

Gay Puerta: The last phase is still under review as we look to continue strategic alternatives of certain autonomous assets.

Matthew Booth: And finally, given the nature of our transaction-based business, volume is dependent on several external factors. For example, when we met our revenue guidance, we saw a change in service mix from our customer partners, which impacted our margins. External factors can be events ranging from fewer new vehicles produced by an OEM, Changes in coverage policies by our fleet providers, new routing schemas, or customer behavior trends related to miles traveled, just to name a few.

Gay Puerta: And finally, given the nature of our transaction-based business, volume is dependent on several external factors.

Gay Puerta: When we met our revenue guidance, we saw a change in service mix from our customer partners which impacted our margins. External factors can be events ranging from fewer new vehicles produced by an OEM.

Gay Puerta: changes in coverage policies by our fleet providers, new routing schemas, or customer behavior trends related to miles traveled, just to name a few.

Matthew Booth: And while no singular event contributed to the service mix changes, the collection of events has passed quarter-reduced Rx, reduced our expected pro-job revenue and margin. We saw higher volume from lower margin jobs and lower volume from higher margin jobs on a service mix basis.

Matthew Booth: And while no singular event contributed to the service mix changes, the collection of events this past quarter reduced our expected per job revenue and margin. We saw higher volume from lower margin jobs and lower volume from higher margin jobs on a service mix basis. Again, I'm very proud of our accomplishments during the second quarter, which included continued execution against our strategic priorities to optimize our business and financial operations while re-accelerating sustainable growth and profitable growth as evidenced by our exciting contract wins, renewals, and expansions.

Matthew Booth: And while no singular event contributed to the service of exchanges, the collection of events this past quarter reduced our expected per job revenue and margin. We saw higher volume from lower margin jobs and lower volume from higher margin jobs on a service mix basis. Again, I'm very proud of our accomplishments during the second quarter, which included continued execution against our strategic priorities to optimize our business and financial operations while re-accelerating sustainable growth and profitable growth as evidenced by our exciting contract wins, renewals, and expansions.

Gay Puerta: And while no singular event contributed to the service of exchanges, the collection of events this past quarter reduced our expected per job revenue and margin.

Gay Puerta: We saw higher volume from lower-margin jobs and lower volume from higher-margin jobs on a service-mix basis. Again,

Matthew Booth: Again, I'm very proud of our accomplishments during the second quarter, which included continued execution against our strategic priorities to optimize our business and financial operations, while re-accelerating sustainable growth and profitable growth, as evidenced by our exciting contract wins for renewals and expansions. The team is focused on achieving non-GAAP operating break events, and we look forward to capturing the near and long-term growth opportunities ahead.

Speaker Change: I'm very proud of our accomplishments during the second quarter which included continued execution against our strategic priorities to optimize our business and financial operations while re-accelerating sustainable growth and profitable growth as evidenced by our exciting contract wins, renewals and expansions.

Matthew Booth: The team is focused on achieving non-gap operating breakeven, and we look forward to capturing the near and long-term growth opportunities ahead. In closing, we remain focused on expanding our B2B incident business through securing renewals, expanding relationships with existing partners, developing new customer partnerships, Achieving non-gap operating break even for operational improvement, margin expansion, and managed growth, and continuing to provide innovative and differentiated services to our park. Thank you for your time and continued support. I'll now turn the call over to Tim to discuss our financial issues.

Matthew Booth: The team is focused on achieving non-gap operating breakeven, and we look forward to capturing the near and long-term growth opportunities ahead. In closing, we remain focused on expanding our B2B incident business through securing renewals, expanding relationships with existing partners, developing new customer partner offerings, and expanding our B2B business. Achieving non-gap operating break even for operational improvement, margin expansion, and managed growth, and continuing to provide innovative and differentiated services to our park. Thank you for your time and continued support.

Speaker Change: The team is focused on achieving non-gap operating break-even, and we look forward to capturing the near and long-term growth opportunities ahead.

Matthew Booth: In closing, we remain focused on expanding our B2B incident business through securing renewals, expanding relationships with existing partners, developing new customer partner roles. I'm not going to talk about that.

Speaker Change: In closing, we remain focused on expanding our B2B incident business through securing renewals, expanding relationships with existing partners, and developing new customer partner opportunities.

Speaker Change: Achieving non-GAAP operating break-even through our operational improvement, margin expansion, and managed growth.

Speaker Change: and continuing 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 discuss our financial results.

Timothy Huffmyer: I'll now turn the call over to Tim to discuss our financial results for the second quarter ended June 30, 2024. Thank you, Matt, and good afternoon, everyone. For the second quarter, revenues were $34.5 million, which was towards the upper end of our guidance range of $32 to $35 million and a decline of 21% or 9.4 million from the same quarter last year. The year-over-year revenue decline was in line with our expectations and was primarily driven by the reduction in dispatch volume from the customer partner non-renewal that we had previously announced in January of 2024.

Timothy Huffmyer: Thank you, Matt, and good afternoon, everyone. Today, I will discuss our results for the second quarter ended June 30, 2024. For the second quarter, revenues were $34.5 million, which was towards the upper end of our guidance range of $32 to $35 million and a decline of 21% or 9.4 million from the same quarter last year. The year-over-year revenue decline was in line with our expectations and was primarily driven by the reduction in dispatch volume from the customer partner non-renewal that we had previously announced in January of 2024.

Tim Huffmyer: Thank you, Matt. And good afternoon, everyone. Today, I will discuss our results for the second quarter ended June 30, 2024.

Timothy Huffmyer: This was partially offset by volume and rate increases from new and existing customer partners. For the second quarter, gross profit was $7.3 million compared to $9.3 million in the prior year period, again driven primarily by customer partner non-renewal. Gross margin for the second quarter was 21%, consistent with the prior year period.

Timothy Huffmyer: So the second quarter revenues were 34.5 million, which was towards the upper end of our guidance range of 32 to 35 million, and a decline of 21% or 9.4 million from the same quarter last year. The year-over-year revenue decline was in line with our expectations and was primarily driven by the reduction in dispatch volume from the customer partner, Non-Renoul, that we had previously announced in January of 2024. This was partially offset by volume and rate increases from new and existing customer partners. So the second quarter gross profit was 7.3 million compared to 9.3 million in the prior year period, again driven primarily by the customer partner, Non-Renoul.

Tim Huffmyer: For the second quarter, revenues were $34.5 million, which was towards the upper end of our guidance range of $32 to $35 million.

Tim Huffmyer: and a decline of 21% or 9.4 million from the same quarter last year.

Tim Huffmyer: The year-over-year revenue decline was in line with our expectations and was primarily driven by the reduction in dispatch volume from the customer partner non-renewal that we had previously announced in January of 2024.

Unknown Executive: Welcome to Urgently's second 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 a listen-only mode.

Tim Huffmyer: This was partially offset by volume and rate increases from new and existing customer partners.

Tim Huffmyer: For the second quarter gross profit was 7.3 million compared to 9.3 million in the prior year period, again driven primarily by the customer partner non-renewal.

Unknown Executive: A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad.

Timothy Huffmyer: Gross margin for the second quarter was 21%, consistent with the prior year period.

Tim Huffmyer: Gross margin for the second quarter was 21%, consistent with the prior year period.

Timothy Huffmyer: This is the fifth consecutive quarter of gross margins exceeding 20%, and it would remain focused on executing against our strategic initiatives to drive profitable growth and achieve our long-term gross margin targets of 25 to 30%.

Timothy Huffmyer: This is the fifth consecutive quarter of gross margins exceeding 20%, and we remain focused on executing against our strategic initiatives to drive profitable growth and achieve our long-term gross margin targets of 25 to 30%. Now, let's move on to operating expenses. Operating expenses for the second quarter were $15.7 million.

Jenny Mitchell: With that, I would like to turn the call over to Jenny Mitchell, Vice President of Finance Strategy and Investor Relations. You may proceed. Thank you, operator.

Tim Huffmyer: This is the fifth consecutive quarter of gross margins exceeding 20%, and we remain focused on executing against our strategic initiatives to drive profitable growth and achieve our long-term gross margin targets of 25 to 30%.

Jenny Mitchell: Good afternoon, everyone, and thank you for joining us for Urgently Financial Result conference call for the second quarter and the June 30th, 2024.

Timothy Huffmyer: Now let's move on to operating expenses. Operating expenses for the second quarter was 15.7 million, which was similar to the prior year period.

Jenny Mitchell: On the call today, we have Urgently CEO Matt Booth and CFO Tim Huffmyer. Following that, in Tim's prepared remarks, we will take your questions. Before we begin, I would 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. Did any of these risks materialize or should our assumptions prove to be incorrect, actual company results could differ materially from these forward looking statements?

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

Tim Huffmyer: Operating expenses for the second quarter was $15.7 million, which was similar to the prior year period.

Timothy Huffmyer: This was similar to the prior year period; the prior year included transaction costs and was part of the pre-merger urgently financial results. As Matt indicated, we continue to focus on operational improvements, which include changes in the business process to drive operational efficiency. As part of these improvements, we expect to continue eliminating redundancies within the organization and reduce operating expenses. As previously discussed, most of our operating expenses are headcount related, so we will focus on this initially.

Timothy Huffmyer: This was similar to the prior year period; the prior year included transaction costs and was part of the pre-merger urgently financial resolve. As Matt indicated, we continue to focus on operational improvements, which include changes in the business process to drive operational efficiency. As part of these improvements, we expect to continue eliminating redundancies within the organization and reduce operating expenses. As previously discussed, most of our operating expenses are headcount related, so we will focus on this initially.

Timothy Huffmyer: Prior year included transaction costs and was part of the pre-merger urgently financial results. As Matt indicated, we continue to focus on operational improvements, which include changes in the business process to drive operational efficiencies. As part of these improvements, we expect to continue eliminating redundancies within the organization and reduce operating expenses. As previously discussed, most of our operating expenses are headcount related, so we will focus on this initially. At the end of the second quarter of this year, we had 282 total employees, a reduction of 38% from the fourth quarter of last year.

Jenny Mitchell: A description of these risks uncertainties and assumptions and other factors that could affect our financial results is included in our SCC filing, including our most recent annual report on Form 10K for the year end of December 31, 2023, or quarterly reports on Form 10K and other filings and reports that we may file from time to time with the SCC. Except as required by law, we do not undertake any responsibility to update these forward looking statements. During today's call, we will also discuss certain non-gap financial measures. A reconciliation of gap to non-gap measures is included in our earnings materials and press release, which are available on our website at investors.edu at Urgently.com.

Tim Huffmyer: Prior year included transaction costs and was part of the pre-merger, urgently, financial results.

Matt Booth: As Matt indicated, we continue to focus on operational improvements, which include changes in the business process to drive operational efficiencies.

Matt Booth: As part of these improvements, we expect to continue eliminating redundancies within the organization and reduce operating expenses.

Matt Booth: As previously discussed, most of our operating expenses are headcount related, so we will focus on this initially.

Timothy Huffmyer: At the end of the second quarter of this year, we had 282 total employees, a reduction of 38% from the fourth quarter of last year when we completed our merger with Autonomo, in further support of driving operational efficiency. Operational and support costs during the second quarter of this year were $3.6 million, compared to $6 million during the same period last year, resulting in a decrease of $2.5 million, or 41%. We have also reduced our reliance on customer support representatives who are employed through our BPO partner.

Timothy Huffmyer: At the end of the second quarter of this year, we had 282 total employees, a reduction of 38% from the fourth quarter of last year when we completed our merger with Autonomous, in further support of driving operational efficiency. Operational and support costs during the second quarter of this year were $3.6 million, compared to $6 million during the same period last year, resulting in a decrease of $2.5 million or 41%. We also reduced our reliance on customer support representatives, who are employed through our BPO partner. In the second quarter of this year, we had 220 full-time customer support representatives compared to 457 during the same period last year, which is a reduction of 237 customer support representatives, or 52%.

Matt Booth: At the end of the second quarter of this year, we had 282 total employees.

Matt Booth: a reduction of 38% from the fourth quarter of last year when we completed our merger with AutonomOwl.

Timothy Huffmyer: When we completed our merger with the Tonamel. In further support of driving operational efficiencies, operational and support costs during the second quarter of this year were 3.6 million, compared to 6 million during the same period last year, resulting in a decrease of 2.5 million, or 41%. We also reduced our clients on customer support representatives who are employed through our BPO partners. In the second quarter of this year, we had 220 full-time customer support representatives, compared to 457 during the same period last year. which is a reduction of 237 customer support representatives, or 52%. These reductions are due to the hard work from the operational and technology teams to modify business processes and implement new technologies over the last several quarters, resulting in reduced operating expenses.

Matt Booth: in further support of driving operational efficiencies.

Matt Booth: Operational and support costs during the second quarter of this year were 3.6 million compared to 6 million during the same period last year, resulting in a decrease of 2.5 million or 41 percent.

Unknown Executive: A replay of today's call will also be posted on the website.

Matt Booth: We also reduced our reliance on customer service support representatives who are employed through our BPO partners.

Matthew Booth: With that, I'll turn the call over to Matt. Thank you, Jenny. Good afternoon, everyone.

Timothy Huffmyer: In the second quarter of this year, we had 220 full-time customer support representatives compared to 457 during the same period last year, which is a reduction of 237 customer support representatives, or 52%. These reductions are due to the hard work from the operational and technology teams to modify business processes and implement new technologies over the last several quarters, resulting in reduced operating expenses. Also, during the second quarter of this year, within our general and administrative expenses, we recorded bad debt expense of approximately $600,000.

Matt Booth: In the second quarter of this year, we had 220 full-time customer support representatives compared to 457 during the same period last year.

Matthew Booth: And thank you for joining us today for our second quarter, 2024 earnings call. Overall, we are pleased with our second quarter results, which were in line with our revenue expectations. We remain focused on executing against our strategic initiatives to drive financial and operational improvements, specifically in the areas of providing exceptional customer experience and eliminating the post-merger operating loss. In addition, and as we have highlighted in the last quarter, we have also shifted our focus to accelerating profitable growth.

Matt Booth: which is a reduction of 237 customer support representatives, or 52%.

Timothy Huffmyer: These reductions are due to the hard work from the operational and technology teams to modify business processes and implement new technologies over the last several quarters, resulting in reduced operating expenses. Also, during the second quarter of this year, within our general and administrative expenses, we recorded bad debt expense of approximately $600,000. Due to an EV customer partner that recently filed for bankruptcy, bringing our total bad debt expense related to this customer partner to $735,000 during this year.

Matt Booth: These reductions are due to the hard work from the operational and technology teams to modify business processes and implement new technologies over the last several quarters, resulting in reduced operating expenses.

Matthew Booth: As a reminder, our group has historically been lumpy driven by large enterprise contracts that drive additional revenue and growth once they are launched. To that end, I am proud of the effort across the entire team to deliver renewals of all three customer partner contracts that were set to conclude, and which collectively generated more than one third of our revenue for the second quarter, which today we reported at 34.5 million for the quarter.

Timothy Huffmyer: Also, during the second quarter of this year, within our general and administrative expenses, we've recorded bad debt expense of approximately 600,000 due to an EV customer partner that recently filed for bankruptcy, bringing our total bad debt expense related to this customer partner to 735,000 during this year. Overall, we continue to focus on our operating structure and doing more with less. We expect to further reduce our operating expense run rate in the back half of 2024. Gap operating loss for the second quarter was $8.3 million, an increase of $2.2 million during the prior year period. This increase is mostly due to the autonomous customer combined reporting this year compared to Urgently standalone last year.

Matt Booth: Also during the second quarter of this year, within our general and administrative expenses, we recorded bad debt expense of approximately $600,000.

Timothy Huffmyer: Due to an EV customer partner that recently filed for bankruptcy, bringing our total about that expense related to this customer partner to 735,000 during this year. Overall, we continue to focus on our operating structure and doing more with less; we expect to further reduce our operating expense run rate in the back half of 2024. Gap's operating loss for the second quarter was $8.3 million, an increase of $2.2 million during the prior year period.

Matt Booth: Due to an EV customer partner that recently filed for bankruptcy, bringing our total VAT debt expense related to this customer partner to $735,000 during this year.

Matthew Booth: In addition, we secured new customer partners as well as a contract expansion with our existing customer partner portfolio, and we could not intentionally terminate any contracts. We believe these renewals, expansions, and new customer wins. Our further validation of the significant value we deliver to our customer partners through the strength of our service and leading technology.

Timothy Huffmyer: Overall, we continue to focus on our operating structure and doing more with less; we expect to further reduce our operating expense run rate in the back half of 2024. Gap's operating loss for the second quarter was $8.3 million, an increase of $2.2 million during the prior year period. This increase is mostly due to the Autonomous Post-Murder Combined Reporting this year, compared to Urgently's standalone last year. We also reviewed non-GAAP operating loss, which is defined as GAAP operating loss plus depreciation and amortization expense, stock-based compensation expense, non-recurring transaction costs, and restructuring costs. Non-Gap Operating Loss for the second quarter was $6.2 million, an increase of $2 million from the prior year period.

Matt Booth: Overall, we continue to focus on our operating structure and doing more with less.

Matt Booth: We expect to further reduce our operating expense run rate in the back half of 2024.

Matt Booth: Gap operating loss for the second quarter was $8.3 million, an increase of $2.2 million during the prior year period. This increase is mostly due to the Autonomous Post-Merger combined reporting this year compared to urgently standalone last year.

Timothy Huffmyer: This increase is mostly due to the autonomous post-murder combined reporting this year compared to urgently stand-alone last year. We also reviewed non-GAAP operating loss, which is defined as GAAP operating loss plus depreciation and amortization expense, stock-based compensation expense, non-recurring transaction costs, and restructuring costs. Non-GAAP operating loss for the second quarter was $6.2 million, an increase of $2 million from the prior year period.

Timothy Huffmyer: We also reviewed non-GAAP operating loss, which is defined as GAAP operating loss, plus depreciation and amortization expense, stock-based compensation expense, non-recurring transaction costs, and restructuring costs. Non-GAAP operating loss for the second quarter was 6.2 million, an increase of 2 million from the prior year period. This increase is also primarily due to the combined reporting of autonomous this year compared to urgently standalone last year. We continue to drive operational improvement initiatives as we integrate autonomous and realign our corporate structure with our current market opportunities. Our efforts are reflected in the significant improvement of 38% in our second quarter non-GAAP operating loss when compared to the third quarter of 2023 combined company non-GAAP operating loss, including both Urgently and Autonomous, which was 9.9 million, and improvement of 22% when compared to the fourth quarter of 2023 non-GAAP operating loss, which was 7.9 million.

Matt Booth: We also reviewed non-GAAP operating loss, which is defined as GAAP operating loss plus depreciation and amortization expense, stock-based compensation expense, non-recurring transaction costs, and restructuring costs.

Matt Booth: Non-GAAP operating loss for the second quarter was $6.2 million, an increase of $2 million from the prior year period.

Timothy Huffmyer: This increase is also primarily due to the combined reporting of Autonomo this year compared to Urgently standalone last year. We continue to drive operational improvement initiatives as we integrate Autonomo and realign our corporate structure with our current market opportunities. Our efforts are reflected in a significant improvement of 38% in our second quarter non-GAAP operating loss when compared to the third quarter of 2023 combined company non-GAAP operating loss, including both Urgently and Autonomo, which was $9.9 million, and an improvement of 22% when compared to the fourth quarter of 2023 non-GAAP operating loss, which was $7.9 million.

Timothy Huffmyer: This increase is also primarily due to the combined reporting of Autonomo this year compared to Urgently standalone last year. We continue to drive operational improvement initiatives as we integrate AutonomO and realign our corporate structure with our current market opportunities. Our efforts are reflected in a significant improvement of 38% in our second quarter non-gap operating loss when compared to the third quarter of 2023 combined company non-gap operating loss, including both Urgently and Autonomo, which was $9.9 million, and improvement of 22% when compared to the fourth quarter of 2023 non-GAAP operating loss, which was $7.9 million.

Matt Booth: This increase is also primarily due to the combined reporting of Autonomo this year compared to urgently stand-alone last year.

Matthew Booth: During the second quarter, among our customer partner renewals, we renewed contracts with two of our global OEM customer partners which we announced to be a press releases. The first, a global automotive OEM known for its focus on safety, quality, and innovation as extended our relationship for another two years. Under the contract renewal, we will continue to power their warranty-based roadside assistance program, as well as their post-waranty roadside assistance membership plans in the U.S., Canada, and Mexico.

Matt Booth: We continue to drive operational improvement initiatives as we integrate Autonomo and realign our corporate structure with our current market opportunities.

Matt Booth: Our efforts are reflected in the significant improvement of 38% in our second quarter non-GAAP operating loss, when compared to the third quarter of 2023 combined company non-GAAP operating loss.

Matt Booth: including both Urgently and Autonomo, which was $9.9 million.

Matthew Booth: In addition, we also continue to provide assistance for operational technical and mechanical breakdowns, as well as accident-related telling services. The OEM partner will continue to leverage our comprehensive technology staff, which includes flow roadside assistance customer relationship management to support its outsourced call center operations and API-based integration into its customer-facing products. The second is also a two-year extension with a global OEM known for its precision engineering and commitment to delivering an unparalleled driving experience.

Matt Booth: and improvement of 22% when compared to the fourth quarter of 2023 non-gap operating loss, which was 7.9 million.

Timothy Huffmyer: Now a few comments on our balance sheet. As of June 30, 2024, Urgently had cash, cash equivalent, and short-term investment balance of 29.3 million, and a net principle debt balance of 54.3 million, with the maturities in January of 2025. During the second quarter, we capitalized approximately 1.5 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 functionalities which benefit all our customer partners. We expect this practice to continue during 2024, including approximately 1.4 million in the third quarter of 2024.

Timothy Huffmyer: Now a few comments on our balance sheet. As of June 30, 2024, Urgently had cash equivalents and a short-term investment balance of $29.3 million and a net principal debt balance of $54.3 million with maturities in January of 2025. During the second quarter, we capitalized approximately 1.5 million of internally developed software in support of launching the previously mentioned top five global OEMs and to make enhancements to our platform by adding features and functionalities which benefit all our customer partners.

Matt Booth: Now a few comments on our balance sheet.

Matt Booth: As of June 30, 2024, Urgently had cash, cash equivalents, and short-term investment balance of $29.3 million and a net principal debt balance of $54.3 million with maturities in January of 2025.

Matthew Booth: Under the renewed contract, we will continue to power their warranty-based roadside assistance program, as well as its post-waranty roadside assistance membership plans in the United States. In addition to the two-year renewal, we also signed a new two-year agreement with this global OEM to expand geographically into Canada. This expansion recently launched on August 1st.

Matt Booth: During the second quarter, we capitalized approximately 1.5 million of internally developed software activities.

Matt Booth: in support of launching the previously mentioned top five global OEM and to make enhancements to our platform by adding features and functionalities which benefit all our customer partners.

Timothy Huffmyer: We expect this practice to continue during 2024, including approximately 1.4 million in the third 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. We are taking further action with respect to maturities of our debt and expect measured results before our next earnings conference call. As of June 30, 2024, we had 13.4 million common stock shares outstanding.

Matt Booth: We expect this practice to continue during 2024, including approximately 1.4 million in the third quarter of 2024.

Matthew Booth: In addition to our customer partner expansions and renewals this quarter, we have also signed a new customer partner agreement with a direct-to-consumer subscription and insurance aggregator, which we will launch later this year. All in all, it's been an extremely successful quarter in terms of renewals, expansion contracts and new business. I'm very appreciative of the efforts of the team to deliver these results.

Timothy Huffmyer: We continue to take important proactive steps to address our capital structure, enhance our liquidity position, and provide the company with additional financial flexibility. We are taking further action with respect to the maturity of our debt and expect measured results before our next earnings conference call. As of June 30, 2024, we had 13.4 million common stock shares outstanding.

Matt Booth: We continue to take important proactive steps to address our capital structure.

Matt Booth: enhance our liquidity position and provide the company with additional financial flexibility. We are taking further action with respect to maturities of our debt and expect measured results before our next earnings conference call.

Matt Booth: As of June 30, 2024, we had 13.4 million common stock shares outstanding.

Timothy Huffmyer: Turning now to our outlook for the third quarter of 2024, we expect revenue in the range of 35 to 38 million. In addition, we expect to continue to make progress towards targeting non-GAAP operating break even during the first quarter of 2025, as Matt has previously highlighted. Our expected common stock shares outstanding at the end of the third quarter is 13.4 million.

Timothy Huffmyer: Turning now to our outlook for the third quarter of 2024, we expect revenue in the range of $35 to $38 billion. In addition, we expect to continue to make progress towards targeting non-GAAP operating break-even during the first quarter of 2025, as Matt has previously highlighted. Our expected number of common stock shares outstanding at the end of the third quarter is $13.4 million.

Timothy Huffmyer: Turning now to our outlook for the third quarter of 2024, we expect revenue in the range of $35 to $38 billion. In addition, we expect to continue to make progress towards targeting non-GAP operating break-even during the first quarter of 2025, as Matt has previously highlighted. Our expected number of common stock shares outstanding at the end of the third quarter is $13.4 million.

Matt Booth: Turning now to our outlook for the third quarter of 2024, we expect revenue in the range of $35 to $38 million.

Matt Booth: In addition, we expect to continue to make progress towards targeting non-GAAP operating break-even during the first quarter of 2025, as Matt has previously highlighted.

Matthew Booth: Our data and engineering teams continue to look for ways to apply technology to advance the motorics experience, to further differentiate our customer experience we recently announced the launch of the next generation yield-based pricing of the product across our service provider network. Much like other industries, we believe that data and analytics around pricing and performance are a competitive advantage to deliver higher quality customer outcomes and margin improvements. As a key feature of this product, we're doing now leverages micro-targeting which are much smaller geographic areas than either a zip code or a rural service area, together with relevant historical data, make, model, time of day, population density, service quality, weather, and other location-based data.

Matt Booth: Our expected common stock shares outstanding at the end of the third quarter is $13.4 million.

Operator: With that, we will open the call for questions. Operator, please open the line for Q&A. We will now begin the question and answer session. To ask a question, you may press star, then one on your telephone keypad. If you are using a speaker phone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then two.

Operator: With that, we will open the call for questions. Operator, please open the line for Q&A. We will now begin the question and answer session.

Speaker Change: With that, we will open the call for questions.

Operator: Operator, please open the line for Q&A.

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

Operator: To ask a question, you may press star then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the key. To withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster.

Speaker Change: To ask a question, you may press star then 1 on your telephone keypad.

Operator: If you are using a speakerphone, please pick up your handset before pressing the key to withdraw your question; then, press star, then two. At this time, we will pause momentarily to assemble our roster. The first question is from Chris Pierce with Needham. Please go ahead. Hey, good afternoon, everyone. How are you doing today?

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

Speaker Change: To withdraw your question, please press star then 2.

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

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

Timothy Huffmyer: Unknown Executive, Timothy Huffmyer

Christopher Pierce: The first question is from Chris Pierce with Needham. Please go ahead.

Timothy Huffmyer: Unknown Executive, Timothy Huffmyer

Speaker Change: The first question is from Chris Pierce with Needham. Please go ahead.

Matthew Booth: In our AI-driven dynamic pricing technology reliably predicts and optimizes job prices for roadside assistance. We use this technology to better manage surges and roadside assistance demand, which we believe leads to faster job access acceptance by service providers, resulting in shorter wait times for the stranded driver and a higher quality outcome for our customer partners. This all results in lower agent handle time, which we expect to continue to be reflected in our improved operational expenses, which 10 will review shortly.

Christopher Pierce: Hey, good afternoon, everyone. How are you doing today? It's no way to...

Unknown Executive: Hey, good afternoon, everyone. How are you doing today? Is there a way to- Chris? Oh hang on.

Christopher Pierce: Is there a way to think about, you know, when you guided Q2, you came in at the high end, but you cited higher revenue from low-margin jobs and lower revenue from high-margin jobs. Is that something that fluctuates on a quarterly basis and is largely out of your control? Or is there some seasonality to that? I just kind of want to think about how to think about that going forward. Do you want to take that one, Tim, or do you want me to take it?

Chris Pierce: Hey, good afternoon everyone. How are you doing today?

Speaker Change: Is there a way to think about

Chris Pierce: You know, when you guided Q2, you came in at the high end, but you cited higher revenue from low margin jobs and lower revenues from high margin jobs. Is that something that fluctuates on a quarterly basis and is largely out of your control or is there some seasonality to that? I just kind of want to think about how to think about that going forward.

Christopher Pierce: Is there something that fluctuates on a quarterly basis and is largely out of your control, or is there some seasonality to that? I just kind of want to think about that going forward.

Timothy Huffmyer: Do you want to take that one chair where you want me to take it? Yeah, I'll start, Matt. Chris, it does fluctuate, and as Matt highlighted in some of his prepared remarks, or all of it's out of our control, it just depends on how the jobs are rolling and the activity that's out there. So it's difficult to be able to predict that as a factor. We do our best to guide on the revenue side and directly on the margin side, but largely it's out of our control.

Unknown Executive: Do you want to take that one, Tim, or do you want me to take it?

Matthew Booth: For our customer partners, these insights and predictive pricing also help empower them to develop roadside assistance programs that best fit their business goals. One example from a luxury OEM partner is to increase performance by market for specific makes and models to build a differentiated premium VIP program offering. More generally, it allows us to maximize service performance while maintaining a stable cost structure for our customer partners. We expect that future products will include the ability for customer partners to tailor the experience based on how they segment their customers.

Timothy Huffmyer: Yeah, I'll start that. Chris, there it does fluctuate. And as Matt highlighted in some of his prepared remarks, you know, some of it's or all of it's out of our control. It just depends on how the jobs are rolling out and the activity that's out there. So, it's, it's difficult to be able to predict that as a factor. We do our best to guide on the revenue side and directionally on the margin side, but largely, it's out of our control. Um, Matt, you can add anything there. Yeah, I was gonna say that, you know.

Timothy Huffmyer: Yeah, I'll start that. Chris, that it does fluctuate. And as Matt highlighted in some of his prepared remarks, you know, some of it's, or all of it's out of our control. It just depends on how the jobs are rolling and, and the activity that's out there. So it's, it's difficult to be able to predict that as a factor.

Chris Pierce: You want to take that one, Tim, or do you want me to take it?

Tim Huffmyer: Yeah, I'll start that.

Chris Pierce: Um, Chris, there...

Tim Huffmyer: It does fluctuate. And as Matt highlighted in some of his prepared remarks, you know, some of it's or all of it's out of our control. It just depends on how the how the jobs are rolling and, and the activity that's out there.

Timothy Huffmyer: We do our best to, you know, guide on the revenue side and, and directionally on the margin side, but largely, it's out of our control. Matt, you can add anything there. Yeah, I was going to say that, you know, that's right. The next shift is. It's It's not below historical trends, but it's not something that we can control. Okay, and then I usually correct me if I'm wrong, but we see lower sequential gross margins in the third quarter because of summer travel. Is that something we should expect this year? Or do the unique factors in the second quarter kind of offset that? I mean, that's been the trend, you know, Chris.

Speaker Change: So it's, it's difficult to be able to predict that as a factor. We do our best to, you know, guide on the revenue side and, um, and directionally on the margin side, but, uh, largely it's out of our control.

Matthew Booth: Matt, you can add anything there. Yeah, that's going to say that that's right. The mixed shift is it's not below historical trends, but it's not something that we can control.

Speaker Change: Matt, you can add anything there. Yeah, I was going to say that, you know, that's right. The next shift is, it's not below historical trends, but it's not something that we can control.

Matthew Booth: Finally, in further our commitment to exceptional customer service, we reorganize the product and operations team under a single leadership structure into the customer experience team, which now reports in the Gapuerta, currently its chief product and technology officer. Our goal is to continue differentiating ourselves based on the customer journey regardless of how motorists access the service. We believe that integrating our product and operations team will promote a singular vision and ownership in providing an unparalleled experience across all channels, both digital and human.

Matthew Booth: That's right. The next shift is. It's not below historical trends, but it's not something that we can control. Okay.

Unknown Executive: And then I think usually, correct me if I'm wrong, but we see lower sequential gross margins in the third quarter because of summer travel. Is that something we should expect this year, or do the unique factors in the second quarter kind of offset that?

Christopher Pierce: And then I think usually correct me from around, but we see lower sequential growth margins in the third quarter because of summer travel. Is that something we should expect this year, or do the unique factors in the second quarter kind of offset that? I mean, that's been the trend, you know, Chris, so one could expect that trend to continue, just based on that activity and also based on our discussion around the push-off of some of the margin projects. Certainly, the team is constantly, you know, working on improving margins and making that better metric for us.

Speaker Change: Okay and then I think usually, correct me if I'm wrong, but we see lower sequential gross margins in the third quarter because of summer travel. Is that something we should expect this year or does the unique factors in the second quarter kind of offset that?

Unknown Executive: I mean, that's been the trend, you know, Chris. So one could expect that trend to continue just based on that activity and also based on our discussion around the push-off of some of the margin projects. Certainly, the team is constantly working on improving margins and making that a better metric for us. But, you know, from a modeling perspective, that isn't a bad way to look at it.

Timothy Huffmyer: So one could expect that trend to continue based on that activity and also based on our discussion around the pushing off of some of the margin projects. Certainly, the team is constantly working on improving margins and making that a better metric for us. But, you know, from a modeling perspective, that isn't a bad way to look at it.

Speaker Change: I mean, that's been the trend, you know, Chris, so one could expect that trend to continue just just based on that activity and also based on.

Matthew Booth: Turning now to an update on gross margin, improving margin continues to be an ongoing priority for us. In theory term, we have maximized the margin improvements related to pricing changes and partner mix that we have outlined on previous calls. We expect additional margin improvement to be driven by creating further efficiencies in the marketplace. First, geographic areas, one of the primary drivers of service network costs. We believe the next generation yield-based pricing as a product initiative that we recently launched will positively impact our margins in the market that was once constrained by geographic or zip code boundaries.

Chris Pierce: our discussion around the push off of some of the margin projects. Certainly, the team is constantly, you know, working on improving margins and making that better metric for us. But, you know, from a modeling perspective, that, you know, isn't a bad way to look at it.

Matthew Booth: But, you know, from a modeling perspective, that, you know, isn't a bad way to look at it.

Christopher Pierce: Okay, and then you talked about positive non-GAAP operating income in the first quarter of 25. It is the right assumption that you would, you know, if all goes according to plan, you would see that throughout the year or could there be some lumpiness based on seasonality and that type of thing, and you might see, you know, fluctuation in non-GAAP operating income between positive and negative or, you know, I just want to think about the right way to think about that as well. Yeah, good, good question. Once we achieve that, Chris, we feel pretty confident we'll be able to hold the line and improve on it, you know, from there.

Timothy Huffmyer: Okay. And then you talked about positive non-GAAP operating income in the first quarter of 2017. Is the right assumption that you would, you know, if all goes according to plan, you would see that throughout the year? Or could there be some lumpiness based on seasonality and that type of thing?

Unknown Executive: Okay. And then you talked about positive non-GAAP operating income in the first quarter of 25. Is the right assumption that you would, you know, if all goes according to plan, you would see that throughout the year? Or could there be some lumpiness based on seasonality and that type of thing? And you might see, you know, fluctuation in... Non-GAAP Operating Income between positive and negative, or, you know, I just want to think about the right way to think about that as well.

Chris Pierce: Okay, and then you talked about positive...

Speaker Change: non-GAAP operating income in the first quarter of 25. Is the right assumption that you would, you know, if all goes according to plan, you would see that throughout the year? Or could there be some lumpiness based on seasonality and?

Timothy Huffmyer: And you might see, you know, fluctuation in Non-GAAP Operating Income between positive and negative, or, you know, I just want to think about the right way to think about that as well. Yeah, good, good, good question. Once we achieve that, Chris, we feel pretty confident we'll be able to hold the line and improve on it, you know, from there. So I, you know, it could, you know, everything's not linear, right?

Speaker Change: that type of thing. And you might see, you know, fluctuation in

Matthew Booth: We have observed the successful implementation of similarly predictive, optimized pricing in other industries as well. Our initiative so far has performed very well. Our 21 percent gross margin for Q2-24 is consistent with that of Q2-23 and more notably, our June 2024 year-to-date margin of 22 percent is a 200 basis point increase of our June 2023 year-to-date margin of 20 percent. While our OEM customer partner and non-renewal, which we announced this past January, has impacted revenue, we are continuing to bolster our potential future revenues through demonstrated wins, renewals and expansions.

Speaker Change: non-GAAP operating income between positive and negative or, you know, I just want to think about the right way to think about that as well.

Timothy Huffmyer: Yeah, good, good question. Once we achieve that, Chris, we feel pretty confident we'll be able to hold the line and improve on it, you know, from there. So I, you know, everything's not linear, right? So it could, it could, you know, revert back to a loss here or there, but not, you know, our expectation is that wouldn't materially happen.

Speaker Change: Yeah, good, good, good question. Once we achieve that, Chris, we feel pretty confident we'll be able to hold the line and improve on it, you know, from there. So I, you know, it could, you know, everything's not linear, right? So it could.

Speaker Change: It could, you know, revert back to a loss here or there, but not, you know, our expectation is that wouldn't materially happen.

Unknown Executive: And then just last one for me, you talked about what kind of lining up the debt maturity on Jan 25 and the cash in the balance sheet message you'll have ahead of potentially the next earnings call. What's something we should think about? I know some of your debt holders or equity investors are like, what's the right way to think about it, or should we just expect a resolution? Within three months here, and then things sort of, there'll be a longer-dated debt or like, what's the right thing about the cash versus the debt, right?

Matthew Booth: Okay, and then just last one for me, you talked about looking at lining up the debt maturity in Jan 25 and the cash and the balance sheet and message you'll have ahead of potentially the next earnings call. Like, what's something we should think about? I know some of your debt holders or equity investors are like, what's the right way to think about? Or, I guess, should we just expect a resolution within three months here and then things sort of, they'll be a longer-dated debt or like, what's the right way to think about the cash risk that debt right now?

Timothy Huffmyer: So it could, it could, you know, revert back to a loss here or there, but not, you know, our expectation is that it wouldn't materially happen. Okay. And then just last one for me, you talked about what kind of lining up the debt maturity on Jan 25 and the cash in the balance sheet and message you'll have ahead of potentially on the next earnings call. Like, what's something we should think about? I know some of your debt part, the debt holders or equity investors are like, what's the right way to think about it, or I guess should we just expect a resolution? Within three months here, and then things sort of, there'll be a longer-dated debt or like, what's the right thing about the cash versus the debt, right?

Chris Pierce: Okay, and then just last one for me, you talked about what kind of lining up the debt maturity in Jan 25 and the cash in the balance sheet and message you'll have ahead of...

Matthew Booth: Improving our gross margin and reducing our operational expenses is critical when achieving non-gap operating break-even and remain focused on this important milestone. However, during the second quarter, we encountered several factors which have caused us to revise our outlook for targeting non-gap operating break-even to the first quarter of 2025, versus our earlier expectation for the remaining third quarter of 2024. Having said that, we expect to be below 1 million of non-gap operating loss in the fourth quarter of 2024, which is down from 7.9 million in the fourth quarter of 2023.

Speaker Change: on the next earnings call, like, what's something we should think about? I know some of your debt part, the debt holders or equity investors are like, what's the right way to think about? Or I guess, should we just expect a resolution?

Speaker Change: Within three months here. And then things sort of don't be a longer dated debt or like what's the right thing about the cash first the debt right now

Timothy Huffmyer: Well, as far as resolution goes, that's certainly our goal: to provide that resolution. You know, if we can do that before the next earnings call, it's certainly, you know, that's certainly what we hope to accomplish. The way we're I would definitely look at longer maturities. And we've talked, we didn't talk about it in these prepared remarks, but in the past, we've talked about, you know, maybe two tiers of debt activity, one related to more of a working capital line of credit, which allows us to kind of flex with some of the growth that we've talked about.

Matthew Booth: Well, as far as resolution goes, that's certainly our goal: is to provide that resolution. You know, if we can do that before the next earnings call, it's certainly, you know, that's certainly what we hope to accomplish. The way we're, I would definitely look at longer maturities, and we've talked, we didn't talk about it in these prepared remarks, but in the past we've talked about, you know, maybe two tiers of debt activity, one related to more of a working capital line of credit, which allows us to kind of flex with some of the growth that we've talked about and then maybe some, you know, terming out the rest.

Timothy Huffmyer: Well, as far as resolution goes, that's certainly our goal is to provide that resolution. You know, if we can do that before the next earnings call, it's certainly, you know, that's certainly what we hope to accomplish. The way we are, I would definitely look at longer maturities.

Speaker Change: Well, as far as resolution goes, that's that's certainly our goal is to provide that resolution. You know, if we can do that before the next earnings call, it's certainly you know, that's certainly what what we we hope to accomplish.

Speaker Change: The way we're, I would definitely look at.

Matthew Booth: Let me walk through these factors in greater detail. The first factor is a return to managed growth, given the length of contract cycles on the RFP process, and we wanted to prioritize our ability to capitalize on Q2 opportunities around renewals, expansions and new business. This deliberate decision required us to move technology resources to focus on new launches, integration of expansions, instead of longer-term operating and marginic expense projects that we have planned.

Speaker Change: longer maturities

Timothy Huffmyer: And we've talked, we didn't talk about it in these prepared remarks, but in the past, we've talked about, you know, maybe two tiers of debt activity, one related to more of a working capital line of credit, which allows us to kind of flex with some of the growth that we've talked about. And, and then maybe some, you know, term, you know, terming out the rest.

Speaker Change: We didn't talk about it in these prepared remarks, but in the past we've talked about maybe two tiers of debt activity, one related to more of a working capital line of credit, which allows us to kind of flex with some of the growth that we've talked about, and then maybe some terming out the rest.

Timothy Huffmyer: And then maybe some, you know, terming out the rest. But but thinking of it in those two pieces is something that we've consistently talked about previously, and we're consistently still thinking about today.

Timothy Huffmyer: But but thinking of it in those two pieces is something that we've, you know, consistently talked about previously, and we're still thinking about today. Okay, perfect. I appreciate your time. Thank you. Thanks, Chris.

Matthew Booth: But thinking of it in those two pieces is something that we've, you know, consistently talked about previously, and we're consistently still thinking about today.

Speaker Change: But thinking of it in those two pieces is something that we've, you know, consistently talked about previously and we're consistently still thinking about today.

Christopher Pierce: Okay. Perfect. Appreciate it. Thank you.

Unknown Executive: Okay. Perfect. I appreciate your time. Thank you.

Matthew Booth: These large margin projects are wide in scope, and we expect to see improvements in one or two quarters after deployment after AB testing is completed. We still intend to pursue these margin improvement projects by giving the importance of renewals and expansion contracts that made sense for us to push the expense reduction efforts back a quarter. The second factor is related to post-merger integration, including some international complexity, while the teams swiftly acted to reduce redundant functions across the combined autonomous urgently teams.

Unknown Executive: Thanks, Chris.

Christopher Pierce: Chris. Thanks, Chris.

Speaker Change: Okay, perfect. I appreciate the time.

Operator: This concludes our question and answer session.

Matthew Booth: This concludes our question and answer session. I would like to turn the conference back over to Matt Booth for any closing remarks.

Operator: This concludes our question and answer session. I would like to turn the conference back over to Matt Booth for any closing remarks. Thanks, everyone, for joining us. We're very proud of the significant progress that we've made to position the company for profitable, profitable growth.

Chris Pierce: Thanks, Chris.

Matthew Booth: I would like to turn the conference back over to Matt Booth for any closing remarks.

Chris Pierce: This concludes our question and answer session. I would like to turn the conference back over to Matt Booth for any closing remarks.

Matthew Booth: Thanks everyone for joining in closing. We're very proud of the significant progress that we've made to position the company for profitable growth, and we look forward to providing you with further updates on our progress on future calls. As a reminder, we'll be attending the Sedotti virtual microcap investor conference on August 14th and August 15th, and we're also scheduled to host a fireside chat at 10 a.m. Eastern on August 15th, which you can have access to live or as a replay via our Investor Relations website. If you're planning on attending and would like to have a one-on-one meeting with us, please contact your CIDOTI representative.

Matthew Booth: Thanks, everyone, for joining me in closing. We're very proud of the significant progress that we've made to position the company for profitable, profitable growth. And we look forward to providing you with further updates on our progress on future calls. As a reminder, we'll be attending the Sodati Virtual Microcap Investor Conference on August 14 and August 15. And we're also scheduled to host a fireside chat at 10am Eastern on August 15, which you can access live or as a replay via our investor relations website.

Matthew Booth: And we look forward to providing you with further updates on our progress on future calls. As a reminder, we'll be attending the Sadati virtual microcap investor conference on August 14 and August 15. And we're also scheduled to host a fireside chat at 10am Eastern on August 15, which you can access live or as a replay via our investor relations website. If you're planning on attending and would like to have a one-on-one meeting with us, please contact your Sudoti representative.

Matt Booth: Thanks everyone for joining in closing. We're very proud of the significant progress that we've made to position the company for profitable growth. And we look forward to providing you with further updates on our progress on future calls.

Matthew Booth: The last phase is still under review, as we look to continue strategic alternatives of certain autonomous assets. And finally, given the nature of our transaction-based business, following him is dependent on several external factors. But we met our revenue guidance. We saw a change in service mix from our customer partners with impact on our margins. External factors can be events ranging from fewer new vehicles produced by an LEM. Changes in coverage policies by our fleet providers, new routing schemas, or customer behavior trends related to miles travel, just to name a few.

Matthew Booth: If you're not planning on attending, and you'd like to meet with management, please reach out to us at investorrelationsatgeturgently.com, and we'll be happy to schedule a follow-up call. Thanks again for your interest in urgently and thanks for joining the call today. The conference is now concluded. Thank you for attending today's presentation.

Speaker Change: As a reminder, we'll be attending the Sedati Virtual Microcap Investor Conference on August 14th and August 15th. And we're also scheduled to host a fireside chat at 10 a.m. Eastern on August 15th, which you can have access to live or as a replay via our Investor Relations website.

Matthew Booth: If you're planning on attending and you'd like to have a one-on-one meeting with us, please contact your Sudoti representative. If you're not planning on attending, and you'd like to meet with management, please reach out to us at investorrelationsatgeturgently.com. We're happy to schedule a follow-up call. Thanks again for your interest in urgently and thanks for joining the call today.

Speaker Change: If you're planning on attending and like to have a one-on-one meeting with us, please contact your Sudoti representative. If you're not planning on attending and you'd like to meet with management, please reach out to us at Investor Relations.

Matthew Booth: If you're not planning on attending and you'd like to meet with management, please reach out to us at investorrelations@geturgently.com and we're happy this schedule will follow up call. Thanks again for interested in urgently and thanks for joining the call today.

Speaker Change: at GetUrgently.com, and we're happy to schedule a follow-up call. Thanks again for being interested in Urgently, and thanks for joining the call today.

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

Operator: The conference is now concluded. Thank you for attending today's presentation.

Speaker Change: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

Operator: You may now disconnect. Thank you.

Timothy Huffmyer: Again, I'm very proud of our accomplishments during the second quarter, which included continued execution against our strategic priorities to optimize our business and financial operations, while re-accelerating sustainable growth and profitable growth as evidence by our exciting contract wins for renewals and expansions. The team is focused on achieving non-gap operating break events, and we look forward to capturing the near and long-term growth opportunities ahead. In closing, we remain focused on expanding our B2B incident business through securing renewals, expanding relationship with existing partners, developing new customer partner roles.

Timothy Huffmyer: [inaudible] So the second quarter revenues were 34.5 million, which was towards the upper end of our guidance range of 32 to 35 million, and a decline of 21% or 9.4 million from the same quarter last year. The year-over-year revenue decline was in line with our expectations and was primarily driven by the reduction in dispatch volume from the customer partner, Non-Renoul, that we had previously announced in January of 2024. This was partially offset by volume and rate increases from new and existing customer partners.

Timothy Huffmyer: So the second quarter gross profit was 7.3 million compared to 9.3 million in the prior year period, again driven primarily by the customer partner, Non-Renoul. Gross margin for the second quarter was 21%, consistent with the prior year period. This is the fifth consecutive quarter of gross margins exceeding 20%, and it would remain focused on executing against our strategic initiatives to drive profitable growth and achieve our long-term gross margin targets of 25 to 30%.

Timothy Huffmyer: Now let's move on to operating expenses. Operating expenses for the second quarter was 15.7 million, which was similar to the prior year period. Prior year included transaction costs and was part of the pre-merger urgently financial results. As Matt indicated, we continue to focus on operational improvements, which include changes in the business process to drive operational efficiencies. As part of these improvements, we expect to continue eliminating redundancies within the organization and reduce operating expenses.

Timothy Huffmyer: As previously discussed, most of our operating expenses are headcount related, so we will focus on this initially. At the end of the second quarter of this year we had 282 total employees, a reduction of 38% from the fourth quarter of last year. When we completed our merger with the Tonamel. In further support of driving operational efficiencies, operational and support costs during the second quarter of this year were 3.6 million, compared to 6 million during the same period last year, resulting in a decrease of 2.5 million or 41%.

Timothy Huffmyer: We also reduced our clients on customer support representatives who are employed through our BPO partners. In the second quarter of this year we had 220 full-time customer support representatives, compared to 457 during the same period last year, which is a reduction of 237 customer support representatives or 52%. These reductions are due to the hard work from the operational and technology teams to modify business processes and implement new technologies over the last several quarters, resulting in reduced operating expenses.

Timothy Huffmyer: Gap operating loss for the second quarter was 8.3 million, an increase of 2.2 million during the prior year period. This increase is mostly due to the autonomous customer combined reporting this year compared to Urgently standalone last year. We also reviewed non-gap operating loss, which is defined as gap operating loss, plus depreciation and amortization expense, stock based compensation expense, non-recurring transaction costs, and restructuring costs. Non-gap operating loss for the second quarter was 6.2 million, an increase of 2 million from the prior year period.

Timothy Huffmyer: This increase is also primarily due to the combined reporting of autonomous this year compared to Urgently standalone last year. We continue to drive operational improvement initiatives as we integrate autonomous and realign our corporate structure with our current market opportunities. Our efforts are reflected in the significant improvement of 38% in our second quarter non-gap operating loss when compared to the third quarter of 2023 combined company non-gap operating loss, including both Urgently and Autonomous which was 9.9 million, and improvement of 22% when compared to the fourth quarter of 2023 non-gap operating loss, which was 7.9 million.

Timothy Huffmyer: Now a few comments on our balance sheet. As of June 30, 2024, Urgently had cash, cash equivalent and short-term investment balance of 29.3 million, and a net principle debt balance of 54.3 million, with the maturities in January of 2025. During the second quarter, we capitalized approximately 1.5 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 functionalities which benefit all our customer partners.

Timothy Huffmyer: We expect this practice to continue during 2024, including approximately 1.4 million in the third 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. We are taking further action with respect to the maturity of our debt and expect measured results before our next earnings conference call. As of June 30, 2024, we had 13.4 million common stock shares outstanding.

Timothy Huffmyer: Turning now to our outlook for the third quarter of 2024, we expect revenue in the range of 35 to 38 million. In addition, we expect to continue to make progress towards targeting non-gap operating break even during the first quarter of 2025, as Matt has previously highlighted. Our expected common stock shares outstanding at the end of the third quarter is 13.4 million.

Unknown Executive: With that, we will open the call for questions. Operator, please open the line for Q&A. We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you are using a speaker phone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster.

Christopher Pierce: [inaudible] Is there something that fluctuates on a quarterly basis and is largely out of your control, or is there some seasonality to that? I just kind of want to think about that going forward. Do you want to take that one chair where you want me to take it?

Matthew Booth: Yeah, I'll start, Matt. Chris, it does fluctuate, and as Matt highlighted in some of his prepared remarks, or all of its out of our control, it just depends on how the jobs are rolling and the activity that's out there. So it's difficult to be able to predict that as a factor. We do our best to guide on the revenue side and directly on the margin side, but largely it's out of our control.

Matthew Booth: Matt, you can add anything there. Yeah, that's going to say that that's right. The mixed shift is it's not below historical trends, but it's not something that we can control. And then I think usually correct me from around, but we see lower sequential growth margins in the third quarter because of summer travel. Is that something we should expect this year, or does the unique factors in the second quarter kind of offset that?

Matthew Booth: I mean, that's been the trend, you know, Chris, so one could expect that trend to continue, just based on that activity and also based on our discussion around the push-off of some of the margin projects. Certainly the team is constantly, you know, working on improving margins and making that better metric for us. But, you know, from a modeling perspective that, you know, isn't a bad way to look at it. Okay, and then you talked about positive non-gap operating income in the first quarter of 25.

Matthew Booth: It is the right assumption that you would, you know, if all goes according to plan, you would see that throughout the year or could there be some lumpiness based on seasonality and that type of thing and you might see, you know, fluctuation in non-gap operating income between positive and negative or, you know, I just want to think about the right way to think about that as well. Yeah, good, good question. Once we achieve that, Chris, we feel pretty confident we'll be able to hold the line and improve on it, you know, from there.

Matthew Booth: So, you know, it could, you know, everything's not linear, right? So it could, it could, you know, revert back to a loss here or there, but not, you know, our expectation is that wouldn't materially happen. Okay, and then just last one for me, you talked about, looking at lining up the debt maturity in Jan 25 and the cash and the balance sheet and message you'll have ahead of potentially the next earnings call.

Matthew Booth: Like, what's something we should think about? I know some of your debt holders or equity investors are like, what's the right way to think about? Or, I guess, should we just expect a resolution within three months here and then things sort of, they'll be a longer-dated debt or like, what's the right way to think about the cash risk that debt right now? Well, as far as resolution goes, that's certainly our goal is to provide that resolution.

Matthew Booth: You know, if we can do that before the next earnings call, it's certainly, you know, that's certainly what we hope to accomplish. The way we're, I would definitely look at longer maturities and we've talked, we didn't talk about it in these prepared remarks, but in the past we've talked about, you know, maybe two tiers of debt activity, one related to more of a working capital line of credit, which allows us to kind of flex with some of the growth that we've talked about and then maybe some, you know, terming out the rest. But thinking of it in those two pieces is something that we've, you know, consistently talked about previously and we're consistently still thinking about today. Okay. Perfect. Appreciate it. Thank you. Chris. Thanks, Chris.

Unknown Executive: This concludes our question and answer session.

Matthew Booth: I would like to turn to the conference back over to Matt Booth for any closing remarks. Thanks everyone for joining in closing. We're very proud of the significant progress that we've made to position the company for profitable growth and we look forward to providing you with further updates on our progress on future calls.

Matthew Booth: As a reminder, we'll be attending the Sedotti virtual microcap investor conference on August 14th and August 15th and we're also scheduled to host a fireside chat at 10 a.m. Eastern on August 15th, which you can have access to live or as a replay via our investor relations website. If you're planning on attending and would like to have a one-on-one meeting with us, please contact your CIDOTI representative. If you're not planning on attending and you'd like to meet with management, please reach out to us at investorrelationsatgeturgently.com and we're happy this schedule will follow up call. Thanks again for interested in urgently and thanks for joining the call today.

Unknown Executive: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect. Thank you.

Q2 2024 Urgent.ly Inc Earnings Call

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