Q1 2025 Urgently Inc Earnings Call
Speaker Change: Good afternoon and welcome to Urgent Lease first quarter 2025 conference call.
Speaker Change: 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 the pound, then zero on your telephone keypad.
Speaker Change: With that, I would like to turn the call over to Ms. Jenny Mitchell, Vice President of Finance, Strategy, and Investor Relations. You may proceed, ma'am.
[inaudible]
Speaker Change: Thank you, Operator. Good afternoon, everyone, and thank you for joining us for Urgently's Financial Resolve Conference call for the first quarter ended March 31st, 2025.
Speaker Change: Before we begin, I'd like to remind you that some of our comments today may contain forward-looking statements that are subject to risks uncertainties and assumptions which could change.
Speaker 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: A description of these risks on certain even 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 10K for the year end of December 31st, 2024. Our quarterly reports on Form 10Q and other filings and reports that we may have filed from time to time with the SEC.
Speaker Change: Acceptors are required by law. We do not undertake any responsibility to update these forward debugging statements.
Speaker Change: During today's call, we will also discuss certain non-GAAP financial measures. A reconciliation of gap to non-GAAP measures is included in our earnings materials and press release.
Speaker Change: 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'm now turning the call over to Matt.
Matt: Thanks, Jenny. Good afternoon, everyone, and thank you for joining us today. I'm very pleased with our performance during the first quarter, and I'm excited to provide an update on our recent progress.
Matt: Across many key metrics, our first quarter performance was our best quarter as a public company to date. We delivered revenue of 31.3 million, which is in line with our expectations and notably our seven consecutive quarter where we delivered on our revenue guidance commitment.
Matt: We achieved record gross margin of 25.5%, which is now within our midterm outlook for the 25-30% range that we established 18 months ago.
Matt: During the first quarter, we also made tremendous strides in reducing both non-GAAP operating expense and non-GAAP operating loss.
Matt: I'm elated to report that our non-GAAP operating loss for the quarter was approximately $400,000. The best ever reported to date, and will be well below our guidance of $1 million.
Matt: Urgently achieved non-GAAP operating break even during the month of March of this year. While we do not report monthly numbers, we wanted to celebrate this important milestone as it demonstrates our continued and positive momentum and the significant progress we have made today to deliver on our financial commitments.
Matt: This is a remarkable achievement for Urgently, and a direct result of the tireless work from the management team and every single one of our employees, sustaining non-GAAP operating loss break even and moving the company closer to Clashville positive will be an ongoing focus for us this year.
Now turning to grove [inaudible]
Matt: We expect to start reporting positive sequential revenue growth numbers in Q3 as new contracts come online and we finish cycling through our non-comparable quarters due to the autonomous acquisition and other factors where we focused on unit economics and profitability over top-line revenue growth.
First, let me discuss our core revenue.
Matt: Given the nature of our customer partner contracts, the average three-year duration and the length of the RFP process, a portion of our annual capacity and effort will always be dedicated to securing our revenue through renewals.
Matt: With that, I'm happy to announce that we secured our first renewal for 2025 with one of our largest fleet management companies, which is the largest global fleet in terms of vehicles managed. This has been a great partnership for us over the years and we look forward to continuing and expanding this relationship into the future.
Matt: The second area of focus is working with our existing customer partner base to expand our services and offerings within an account.
Matt: This is where our product and technology team shines. Last year we discussed some of the great innovations from our product and technology team as previously mentioned an important differentiator.
Matt: We continue to be well-positioned to service our fleet partners and their aging fleets with our foothold and connective vehicle data. Urgently can activate unpredictable and preventative maintenance solutions to help our fleet partners maximize their vehicle uptime.
Matt: Working together with our customer partners, we will work to drive value in our relationship by solving real pain points.
Matt: Recently, we worked together with one of our fleet management companies to define new processes and data gathering in the call center which had a direct impact on reducing the number of their missing units and unfortunate issue experienced by rental car companies.
Matt: As another example, we are working with one of our OEM partners to offer an expanded network in their top markets to drive a measurable lift in their customer satisfaction scores.
Matt: We are having great outcomes from our VIP programs for our luxury OEM brands.
Matt: These solutions have contributed to some of the highest customer satisfaction ratings we have seen, and we believe these efforts not only drive incremental revenue, but further integrate Urgently offerings and create stickiness within our customer partners.
Matt: In addition, there are some new industry-specific dynamics that we believe will offer growth opportunities in other areas. Today, most insurance providers currently have a single source roadside solution.
Matt: which we believe will change as insurance providers reevaluate their contracts and partnerships.
Matt: We believe that most of the single-source roadside contracts will have two providers in the future.
Matt: The Champion Challenger model is shown to produce better results for partners. We expect this trend to start in the near term. We believe this shift could be a growth driver for Urgently as we re-enter the insurance vertical as the dual-source provider.
Matt: He has 15 years of experience in relationships within this market segment. As for the rest of urgently, over the last 12 months, we've made significant progress in right-sizing our organization, and post our merger with Atonimo.
Matt: We reduced our total head count by 50% in the last 12 months and looked across all functions of the business to improve procedures and processes.
Matt: As part of this process, we are also cultivating a culture where employees are encouraged to ask questions and propose ideas for improvement.
Matt: We believe we have a team in place that has the capacity to scale for growth and maintain urgently standard of delivering exceptional service, visibility and transparency to our customers.
Matt: On that front, we are proud to have again achieved a customer service score of 4.6 out of five stars in Q1 2025.
Matt: As we looked ahead in 2025, our core priority is remain one, return to growth by expanding our B2B incident business through securing renewals, expanding relationships with existing partners and developing new customer partner opportunities too.
Matt: and improve our margin and provide exceptional experiences for our customer partners and drivers.
Matt: I am proud of the progress we have made this past quarter. The momentum is strong, and I look forward to the remainder of the year ahead. Thank you for your time and continued support. I'll now turn the color over to Tim to discuss our financial results.
Tim: Thank you, Matt, and good afternoon everyone. Today I will discuss our results for the first quarter ended March 31, 2025.
Tim: For the first quarter, revenues were $31.3 million, which was within our guidance range of $30 to $33 million, and a decline of 22% or $9 million from the same quarter last year.
Tim: This was partially offset by volume and rate increases from new and existing customer partners.
Tim: For the first quarter, gross profit was 8 million, down 1.4 million compared to the same period last year. Again, driven primarily by the customer partner non-renewal we previously
Tim: Chris Margin for the first quarter was 25.5% compared to 23% for the same period last year.
Tim: The increase in gross margin is primarily related to the mix of service dispatches and our continued technology optimizations, allowing us to better manage our service provider costs.
Tim: We remain focused on executing against our strategic initiatives to drive profitable growth and continue to make steady progress to maintain our long-term gross margin target of 25 to 30%.
John , John , John , John , John
Now let's move on to operating expenses.
Tim: Operating expenses for the first quarter were $10.4 million, a decrease of $7.3 million or an improvement of 41% from the same period last year. We are proud of this reduction, so let's break that down further.
Tim: Research and Development expense during the first quarter of this year were 2 million compared to 4.2 million during the same period last year, resulting in a decrease of 2.3 million or 54%
Tim: The Decrease was mostly related to the reduction in the autonomous related research and development
Tim: Sales and marketing expenses during the first quarter of this year were $700,000, compared to $2 million during the same period last year, resulting in a decrease of $1.3 million, or $65%. The decrease was mostly related to the reduction in the autonomous-related sales and marketing expenses.
Tim: Operations and support cost during the first quarter of this year were $2.4 million, compared to $4.3 million during the same period last year, resulting in a decrease of $1.9 million or $44%. This decrease is mostly related to the continued optimization of a customer support representatives.
and operational processes.
Tim: General and administrative expenses during the first quarter of this year were 4.4 million compared to 6 million during the same period last year, resulting in a decrease of 1.6 million or 27%. The decrease was mostly related to the reduction in the autonomous related general and administrative expenses, along with continued cost optimization.
Tim: We remain focused on driving operational improvements which include continued optimization of business processes to drive operational efficiencies.
Tim: We also reviewed non-GAAP operating expenses, which is defined as gap operating expenses plus depreciation, amortization expense, stock-based compensation expense, non-recurring transaction costs, and restructuring costs.
Tim: Nonga operating expenses for the first quarter were 8.4 million and improved in a 42% from 14.5 million in the prior period.
Tim: This non-gab operating expense reduction is in line with our expectations and clearly shows the results of the operational efficiencies and leverage we've achieved.
Tim: Overall, we remain focused on optimizing our operational structure to drive further improvements in this metric.
Tim: Gap operating loss for the first quarter was 2.4 million, a decrease of 5.9 million or an improvement of 71% from the prior period.
Tim: We also review non-GAAP 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.
Tim: non-GAAP operating loss for the first quarter was 374,000, an improvement of 93% compared to 5.1 million in the prior year period.
Tim: Now a few comments on the balance sheet. As of March 31st, 2025, Urgently had cashed equivalents of 6.4 million and a net principle debt balance of 56.7 million.
Tim: which was used to repay existing indebtedness to our first lean lender and will support the business as we continue to transform the legacy roadside assistance market.
Tim: The facility also provides for an additional 5 million of barring as the accounts receivable barring base increases.
Tim: In addition, also on February 26, we ascended our credit agreement with high-bridge capital management for 17 months through July 31, 2026.
Tim: Hybrid agreed to delay the repayment of certain back-end fees under the company's second lean agreements in exchange for the issuance of approximately 225,000 shares of Urgently Common Stock and in extension of its second lean term loans until July 31, 2026.
Tim: also part of the extension includes quarterly pick interest or quarterly cash interest payments based on certain financial measurements at the end of each
Tim: During the first quarter, we capitalized approximately 1.1 million in software.
Tim: Mostly to make enhancements to our platform by adding features and functionalities which benefits our customer partners.
Tim: We expect this practice to continue with approximately the same to be capitalized in the second quarter of 2025.
Tim: As of March 31, 2025, we had 1.2 million shares of common stock outstanding.
Turning now to the outlook.
Tim: for the second quarter of 2025 we expect revenues to be between 30 to 33 million and our non-GAAP operating loss to be less than 500,000.
Tim: Additionally, we continue to target maintaining non-GAAP operating brake even in mid 2025.
Tim: Our expected common stock shares outstanding at the end of the second quarter is 1.3 million.
Tim: With that, we're not happy to open the call for questions.
Operator, please open the line for Q&A.
Tim: Thank you. We will now begin the question and answer session. To ask a question, you may press star than one on your telephone keypad. If you're using a speaker phone, please pick up your handset before pressing the keys.
Tim: If at any time your question has been addressed and you would like to withdraw your question, please trust Star, then too. And at this time, we'll pause momentarily to assemble roster.
Speaker Change: And the first question will come from Chris Pierce with Needham, please go ahead.
Hey, good afternoon, everyone. How have you been doing?
Speaker Change: Can you just kind of, you went into a little detail, but I'd love to hear more about the new OEA party you signed last year, how the things are progressing there, and then a little bit on the mid-market insurance opportunity that you're tacking through a champion challenger model, and sort of how those relate to the gross margin path. If they do it all, as you move more back and see the insurance business.
Okay.
Speaker Change: Yeah, so I think, thanks Chris, it's a good question. So the client that we mentioned is a rental renewal, which was greater fleet renewal.
Speaker Change: Which we're excited about this year, it should help us expand the business quite a bit because we kind of as we move forward in terms of like the targeting of mid market insurance. We spent the last 18 months fairly rationalizing the business and working on you to the economics. So now we're pretty ready with the technology and to reenter the market and provide the service that we've brought at scale for those kind of clients.
Speaker Change: So it's a little bit different, like we were a little bit early in the market before, now I think we're ready to go and think the improvements in the hidden economics you see show that.
Yeah, thanks, Chris.
Speaker Change: Unknown Speaker Hey, everyone. Thanks for joining us. I'm Matthew Huffmyer.
and
Speaker Change: and we do expect a continuation of cost rationalization through 2025 although not at the scale.
Speaker Change: Obviously that we saw in 2024 but we do think there's still a little bit of room to go related to further efficiencies.
Speaker Change: Okay, and then back to Matt, can you just walk me through the timing of the insurance, like the appetite and the industry for a challenger champion type model, and how has that model been employed in the past, and how does the challenger show that they're sort of outperforming the champion, or what does it look like in terms of boots on the ground performance and things like that?
Matt: Yeah, so some of our contracts that we have are actually dual sourced, where we started off as a provider, where we may have started with, you know, 10 or 15% and then we worked our way up over time to, you know, 50% to 60-70%
It's really the really large accounts that...
Matt: I have really shown an interest in being dual-sourced, and if you're a really big account, you really need more than one.
Matt: You know, vendor for something like this, something that we've been talking about to folks for, you know, quite some time I think now folks realize that number one we have enough scale and enough technology underneath to fulfill what they need from a service perspective.
Matt: and then number two, there's just a lot of volume and just because of how this market works, folks want a backup vendor for something like for something like this, so I'd expect that trend to kind of accelerate over time.
Okay, okay, that's everything from here. Thank you
Speaker Change: Again, if you have a question, please press star then one. Our next question will come from Jim McIlree with Chardon. Please go ahead.
John , John , John , John .
Jim McIlwray: Thank you, good evening. Tim, can you help me understand operating expenses? I know that you're trying to reduce further, but it seems like you're going to require some increases by
with the mid-market entries.
Jim McIlwray: or is it still down on an absolute basis for the next couple quarters?
Jim McIlwray: Yeah, I would expect it to be slightly down on an absolute basis, Jim.
You know, as we...
Jim McIlwray: We've changed the model quite a bit over the last couple of years as, you know, related to startup costs, related to launching new contracts.
Jim McIlwray: and being able to support that, being able to support new business.
Jim McIlwray: So, I wouldn't expect anything significant related to that ramp up. Obviously, if we have a very, very large contract, we may see and we would guide to additional costs there. But for the most part, I would expect...
Um...
Jim McIlwray: We could see additional costs running through our margin and we would just have to balance that out so that would be if the insurance company these mid-level insurance companies required us to, quote unquote, take that first.
Jim McIlwray: on the cost of revenue side related to that, but overall, we do think our metrics have improved and we believe we can hold those metrics as we enter this new space.
Great. That's helpful. Thank you. And, um...
Speaker Change: The cash went down 7.7 million or so and it looks like a big chunk of that was a reduction in accrued expenses which has been going down for half a quarter in a row. Can you help me understand what's going on there?
Speaker Change: Yeah, good question. In early first quarter, we did a debt repayment and some of the fees related to the debt were accrued fees. They were back end accrued fees to our then first lender. So most of that reduction, Jim, it was a little over $3 million was related to those back end debt fees that we paid.
in January of 2025.
So, Russ is working out of pages.
Speaker Change: Okay, and so it's reasonable to think we're at kind of normal loss levels now.
Speaker Change: That's correct. I mean, let's call it working capital excasion debt. It's we're kind of normal here.
That's right. That's what I think that's a good description.
Speaker Change: Okay, great, and then Matt, you talked about an increase in sequential growth, beginning in Q3.
Speaker Change: And as we think about that and as we model the second half of this year and into 2026, when you talk about an increase in sequential growth.
Speaker Change: I'm assuming it's modest, and we hope for better as time goes on, but that turn is a modest turn. Is that right or is it something more dramatic?
Speaker Change: You know, that's correct. That's the best way to think about it for this year.
Okay.
Speaker Change: and Jim, just to add onto that, anything material, there would be a release and some guidance on as well, but you're thinking about it right.
Speaker Change: Yeah, yeah, that's how I'm taking effect. If you get a big if you get a big win then then the ballgame changes, but as of now.
It's more of a steady-ish increase. Okay.
That's great. That's it for me. Thanks for watching.
Thanks, Jim.
Speaker Change: This concludes our question and answer session. I would like to turn the conference back over to Mr. Matt Booth for any closing remarks. Please go ahead.
Transcription by CastingWords
Speaker Change: Great. Thanks, everyone. In closing, I'm proud of the significant progress 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 will be participating in the CIDOTE Virtual MicroCAP Investor Conference on May 21st.
Speaker Change: and we're scheduled to host a fire site chat at 10.45 a.m. Eastern time. You can access live or as a replay via our investor relations website. We'll also be attending the Jeff Rees Automotive aftermarket, aftermarket.
Speaker Change: and Public Company Investor Conference. Excuse me on May 22nd, New York. If you're attending and you want to meet with us on one, please contact your respective conference representative. If you're not attending and you'd like to meet with management, please reach out to us at investor relations at www.gethergently.com. We can schedule a call.
Speaker Change: Thanks again for your interest and for joining the call today. Very much appreciate it.
Speaker Change: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.