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spk01: Good morning, ladies and gentlemen. My name is Keith, and I will be your host operator on this call. Everybody, please note this event is being recorded. I would like to turn the meeting over to your host for today's call, Mary Segal, CEO of MSIR. Please go ahead, Mary.
spk00: Thank you, operator, and thank you all for joining us today. Welcome to Autonomous Third Quarter Financial Results Conference Call. Before we begin, I would like to remind you, that our discussions today will include forward-looking statements and are subject to risks and uncertainties relating to future events and the future financial performance of autonomous. Actual results could differ materially from those anticipated in the forward-looking statements. Forward-looking statements made today speak only to our expectations as of today and we undertake no obligations to publicly update or revise them. For a discussion of some of the important risk factors that could cause actual results to differ materially from any forward-looking statements, please see the Risk Factors section of Autonomous Form 20-F filed with the SEC and other documents filed by Autonomo from time to time with the SEC. If you have not received a copy of the earnings press release, please download one from the investor relations section of the company's website. Today's call will be accompanied by a PowerPoint presentation. You're welcome to view the presentation on Autonomous Investor Relations website. Following the call, a replay of this webcast will be available on the Autonomous Investor Relations website. Please also note that we will present non-GAAP operating loss on today's call, which is a historical non-GAAP financial measure. Because this financial measure is used in autonomous internal analysis of financial and operating performance, Autonomo believes that it provides increased transparency to investors of management's view of its economic performance. Autonomo also believes the presentation of this measure allows investors to more effectively evaluate and compare the performance of Autonomo to that of its peers. Although Autonomo's presentation of this non-GAAP measure may not be comparable to other similarly titled measures of other companies. A reconciliation of this measure to its most directly comparable GAAP financial measure is included in our earnings release. Today we are joined by Ben Volkow, CEO, Director, and Co-Founder of Autonomo, and Bonnie Moav, CFO of Autonomo. Ben will begin the discussion with an update on the current state of the market and the business. Next, Bonnie will share an overview of the company's financial results. We will then open the call for the live question and answer session. With that, I'd like to turn the call over to Ben Volko, Autonomous CEO. Ben, please go ahead.
spk04: Thank you, Miri. Hi, everyone, and thank you for joining Autonomous' third quarter 2022 financial results conference call. Q3 continued our run of strong quarters with all of our key performance indicators eating new high watermarks. We did see some softness in our top-line growth, primarily due to macro-related headwinds we encountered in the market, but we still saw positive growth on the quarter-over-quarter basis. Even as we continue to see growing demand across our focus areas in the mobility sector, we recognize that our rate of adoption in some segments and services we offer continues to be challenging. Accordingly, in Q3, we continue to evaluate and adjust our investments in line with our strategy. We will continue to be conservative in our cash management. Our highlights in Q3 include new product releases, customer adoption success, and key strategic alliance announcements. To start, we unveiled Flow Fusion, a breakthrough capability that marries the Flow's leading smartphone-based solution with connected vehicle data. We think that Flow Fusion will be a catalyst to accelerate the transformation underway in the insurance sector to meet growing demands for usage-based insurance. With Flow Fusion, insurance providers can easily leverage mobile and vehicle telematics data to create new connected insurance policy offerings, as well as bolster existing offerings with additional highly accurate data sources to deliver a competitive advantage. Since the announcement in September, we have received very positive market feedback. and have had a number of meaningful discussions with large insurance carriers that continue to progress. In Q3, we also saw significant progress in the fleet sector for autonomous. First, the number of fleet vehicles on the autonomous platform increased 4.5x In one particular example, we worked closely with a partner to onboard more than 10,000 vehicles to the Autonomo platform. This process would normally take thousands and thousands of hours using hardware-based telematics. However, our partner, through the use of our system, was able to onboard the vehicles in one day. all the while compiling with privacy regulations and achieving operational readiness. This is a fraction of the time and cost fleet operators currently have to set aside for other telematics installation and maintenance. This level of automation via software-defined telematics clearly demonstrates the economic value Autonomo can bring to the fleet sector and why we continue to see interest and demand from fleet operators. We also continue to develop and scale our go-to market in the fleet sector via our strategic partnerships. In July, we announced an update to the Autonomo app for Salesforce and provided key technology that is powering the new Salesforce AutoCloud product. As a Salesforce launch partner, we are providing the telematics layer to empower a Salesforce solution with connected car data. We are targeting dealerships, fleets, and the financial mobility ecosystem and are super excited about this close partnership. The latest version allows customers to build upon workflows trigger specific actions, access distance and dispatch data, execute geofencing, and enhance driver safety capabilities. The Autonomo app enables customers to extract rich vehicle data insights and monitor the location and status of entire fleets. Utilizing software-based telematics from OEM connected car data, Customers can enjoy a solution without costly and expensive hardware. Finally, we also recently announced the integration of our Autonomo Smart Mobility Data Platform with SAP's Digital Vehicle Hub. The integration will help enable clients to derive new insights for fleet management and maintenance. based on connected vehicle data and generate new value and revenue streams. The SAP Digital Vehicle Hub is a central cloud-based repository for vehicle-related data. The solution will help companies share vehicle data between relevant stakeholders and enables collaborative business models and value streams along the automotive and mobility value chain. By combining vehicle data with SAP Digital Vehicle Hub, we offer new insights for clients that in turn can create additional value or new revenue streams for their businesses. I will just close on Q3 highlights by mentioning that we continue to be active both on the OEM and Strategic Alliance fronts and hope to have exciting news in the coming weeks and months. As I indicated earlier, we continue to see momentum in attributes that are key to our business. Some of the highlights. Recurring revenues for the third quarter of 2022 grew by 24% quarter over quarter. and reflects 83% of autonomous revenues for the third quarter of 2022. Bookings for the third quarter grew to $2.2 million, of which 90% is generating recurring revenues. Backlog as of September 30, 2022, was $4.8 million, Annual recurring revenue was $6.7 million, an increase of 11% quarter over quarter. And we signed 19 new customer agreements in Q3. Those are remarkable results and show the strength of autonomous business and our continued growth in the markets. we had a record number of new customer agreements during the third quarter, as we continue to see interest and demand for our whole market of connected car use cases increase. For example, Mobility Thinking, a research and analytics firm that uses historical and current floating car data for modeling purposes, to understand the impact of infrastructure development in Sydney, Australia. JUA, an AI company developing weather prediction models, chose Autonomo as its sole connected vehicle data source due to the wide geographical coverage and GDPR compliance we provide. In addition, Yesterday, we announced our latest press release. Rumble, a global leading consultancy delivering integrated and sustainable solutions, is creating value for clients by using historical and real-time data from Autonomo to improve safety, accessibility, and efficiency for our users. In the fleet segment, we are seeing tremendous momentum with new customer agreements. Some of these include Legentic, a fraud detection company that shows Autonomo as its connected vehicle data platform provider to enable product offering such as vehicle recovery across the EU. M2M Apicestios, a fleet management provider that selected Autonomo to support its transition away from hardware-based telematics to better support hundreds of fleet customers using the power of software. And finally, GPS Trackit, a fleet and asset management company which turned to Autonomo for expertise in working with OEM and connected card data. As you can see, it was yet another strong quarter across product development, customer adoption, strategic alliances, and new customer wins. Now, for more detail on our Q3 financials, I'll hand it over to Autonomous CFO Bonnie Moab.
spk05: Thank you, Ben. Revenues for the third quarter 2022 reached $2 million compared to $162,000 for the third quarter of 2021. Growth was primarily driven by growth in our core connected vehicle data and contribution of the flow revenues. Before I move further into the numbers, I want to remind you that our non-GAAP item consists of stock rate compensation expenses, depreciation, amortization of acquired intangible assets, contingent liability income related to the flow acquisition, and impairment of intangible and goodwill. Non-GAAP information is presented excluding these items. Our GAAP financial results along with reconciliation between GAAP and non-GAAP results can be found in our earnings release. I will now turn to the detailed financial results for the quarter. Our GAAP operating loss for Q3 2022 was $37 million compared to $9.9 million in the third quarter of 2021. The operating loss includes $26.3 million in permanent charge of goodwill and intangible offset by a decrease in contingent liability, which created an income of $6.2 million. In addition, the increase in the GAAP operating loss was mainly driven by operational expansion, acquisition of new companies, and related amortization of new intangible assets. In the third quarter, non-GAAP operating loss was $13.4 million compared to $9.1 million for the third quarter of 2021, driven by operational expansion and acquisition. Our cloud infrastructure expenses consist primarily of costs related to third-party cloud services, which increased by 71% from 786,000 in Q3 2021 to 1.3 million in Q3 2022. The increase is attributed to our growth in the amount of data the company ingests, processes, and stores, and the amount of data used by our data customers In addition, the cost increased as a result of the acquisition of Neura and the Flow. Cost of revenues include purchasing of data of 0.6 million and increase of 168% year-over-year, which reflects the cost we pay to the OEMs and other data providers for their data use in our products. In addition, 0.4 million is related to the cost of services provided to the flow consumers. Our research and development expenses and our sales and marketing expenses for the third quarter of 2022 were $5.8 million and $5.4 million, which increased by 98% and 120%, respectively, year over year. mainly due to the workforce growth of 232% and 129%, respectively, including the acquisition of Neura in the flow. General and administrative expenses for the third quarter of 2022 were $4.4 million compared to $3.7 million in the same period a year ago, representing an increase of over 21%, mainly due to headcount increase. In Q3 2022, the company performed an interim goodwill and intangible impairment test, which was triggered by the recent decline in the market capitalization. Management considered this recent decline, along with other possible factors affecting the assessment of the company's reporting units. The outcome of the impairment test resulted in a non-cash charge of $26.3 million, which was recorded in the consolidated financial statement for Q3 2022. The non-cash charge completes a write-off of the full amount of the goodwill and intangible assets previously recorded in our balance sheet. Turning to the balance sheet, we ended the quarter with $155.5 million in cash, cash equivalent, short-term investment, restricted cash, and long-term deposits. A decrease of $52.5 million from year-end 2021. This was mainly driven by $11 million cash investment in the flow acquisition and $41.5 million cash used in operating activities. And now, I will turn it back over to Ben.
spk04: Thank you, Bonnie. As highlighted in today's call, Q3 was a strong quarter for autonomous, with continued growth despite larger economic headwinds in today, and the uncertain rate of adoption that comes with any new market creation or transformation. We continue to be prudent with expenses and expect that the actions taken this year to reduce costs will come into play over the course of 2023. Our acceleration in recurring revenues and bookings signal that we are poised to have continued strong growth in the coming quarters. In the last three quarters, we have accelerated from about 35% recurring revenues in the end of 2021 to more than 80% today. In the same period, we have grown revenues to 3x of 2021. We expect this momentum to continue and translate into a strong Q4. We are equally excited about the product development and go-to-market progress in the business and we see our focus strategy is beginning to pay off. In the insurance segment, with new products and a unique position as the main player onboarding connected car data, in the fleet segment, we grew up to 4.5x quarter over quarter in the number of cars connected. And in the broader connected vehicle data segment, where we see persistent demand for our correlated derived data sets ranging from traffic planning to road safety. Operator, now we are ready to take questions.
spk01: Thank you. At this time, we will begin the question and answer session. To ask a question, you may press star, then 1 on your touchtone phone. If you are using a speakerphone, 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 the roster. And the first question comes from Josh Nichols with B. Riley.
spk03: Yeah, thanks for taking my question. I was wondering if you could provide a little bit more detail, right? We're about halfway through. the fourth quarter on what the outlook was. I know at the beginning of the year you were targeting a higher level of revenue with the flow and that that was going to be back half-weighted, but clearly there's been some softening in the broader economy. Is 4Q expected to be up materially from 3Q, or I'm just curious what the cadence is expected to look like at this juncture?
spk04: Hi, Josh. It's a good question. We are not providing a forecast until the end of the year. Definitely, we see challenges in the markets, but in the same time, you know, we wrapped up a strong quarter. We just shared the stronger backlog and bookings that we have. So we are very encouraged of what we anticipate from Q4. But at this time, there won't be any forecast or numbers that we can share in terms of expectation how to finish the year. All I can add is we are very excited and we believe that we'll continue the strong growth that we had in previous quarters.
spk03: I guess while you're not willing to give guidance for the quarter, is it fair to say like first half of the quarter, is it like similar to last quarter or what we've at least seen like for quarter to date?
spk04: You're asking if the sales staff of quote Q4 was like Q3 or stronger or weaker? Yes. Is this the question? So again, you know, we are limited in what we can say. We're definitely very encouraged from what we see in the market. It's not that the macro is not affecting us like everyone else, but I think a lot of because of the work and the strategy of building recurring revenues, focusing not just on revenues but also on booking. We feel that we got the right ammunition in the Chamber to continue and provide growth. We cannot comment yet how strong the quarter will be compared to the previous ones, but we are very bullish on the quarter.
spk03: Fair enough. Right. So you are admittedly more focused on those KPIs like bookings that you've talked about previously as opposed to near term revenue. You talked a little bit about being more prudent about the cash balance. I think that's probably a good decision given the macro backdrop that we have. So the non-GAAP operating loss of like around 13 and a half million that we had for 3Q is Is that a good baseline to use as a go-forward basis? Is that going to come in a little bit, or what's the expectations in terms of the cash burn going forward?
spk05: Yes, so this is Bonnie. Hi, thank you for the question. So, yeah, you can see that this quarter we managed to decrease the burn rate. We always say that our non-GAAP is pretty good indicative for our cash burn rate. We did do some cost-cutting initiatives that started in Q3 and will start to play in the next quarter with additional infrastructure cutting that we are looking to save. Also, those will help us cut the cost in early 2023. We believe that the full impact of the reduction in force that we did in Q3, as well as some third-party labor cuts, will flow in in full early next year and not this year. And we will be saving some costs in the single-digit range of 5% to 8% per year. But... But the non-GAAP continues to be the indicative factor for cash burn rate.
spk03: Great. Thank you for providing the detail on the trajectory there. I guess with these new agreements that the company signed, are these kind of more exploratory earlier partnerships, or is there a real revenue opportunity for any of these? And if you could touch on the one or two agreements that you think provide the most near-term revenue opportunity over the, say, the next six to 12 months that would be helpful.
spk04: So this is Ben. I'll try to address it. The two partnerships that we covered in today's call with Salesforce and SAP are the real thing. The partnership with Salesforce is a new product that they announced in October that is addressed to the automotive industry. And Autonomo is really the software telematics partner inside, powering the platform with connected car data. I can share that there are pilots ongoing. I can share that we are very, very excited. And we definitely see real revenue opportunity within the six to 12 months. Similar feedback also on SAP. SAP with the newly announced DVH, Digital Vehicle Hub, is approaching organizations and enabling them to get better transparency and value out of their connected vehicles and connected vehicles data Also here, there are pilots ongoing, paid pilots ongoing, I should say, and here also we anticipate revenues in the timeframe discussed. So those are the real things. Not always all partnerships materialize to real business and revenues. In this case, This has started on the right foot, and we are very excited to what we predict that this will bring in terms of revenues in the coming year. I hope this answers the question.
spk03: Yep. I don't want to hog the Q&A, so just a final question for me. If you look at the company's revenue, but on a gross profit basis, once you're just for the cost revenue, but also those cloud infrastructure storage costs, you're getting close to being break-even. I think you were down negative $400,000 or so this year. I know that the cloud storage costs are going to continue to go up a little bit, but at what revenue level are you expected to be positive on a cost-of-goods sold adjusting for both, like I said, the COGs, but also the cloud storage basis, revenue, infrastructure costs.
spk05: So I think we've shared in the past that it will take us around two to three years to come break even. I think we can stand up behind this years as we grow. I can't share with you at what point revenues will, what is the number of revenues that will make us break even. Depends on a lot of other things and a lot of other products that we have on the roadmap. So I can't give you an accurate answer to that question.
spk03: Okay. Thank you. I'll hop back in the queue.
spk05: Thank you. Thank you.
spk01: Thank you. And once again, please press star, then 1 if you would like to ask a question. And the next question comes from Harry Wormwooding with Needham and Company.
spk02: Sorry, this is Ryan Coons with Needham. Can you hear me?
spk04: Hi, Ryan.
spk02: Hi, Ben. Yeah, I wanted to ask about the Salesforce relationship. Sounds like this is a new market for Salesforce to penetrate in terms of the dealerships. Is that correct?
spk04: I agree. I think they were doing some business there, but I think it was much more limited compared to what they are planning to get going in the next few months.
spk02: Got it. So hopefully your data gives them a much more powerful product to go after that market. That's great. And with regards, you know, I think it's not the big picture here and your kind of agreements and near term pipeline. I assume that fleet insurance remain your prime focus for the company. And between those two, which one do you think could be more material to kind of the next 12 months revenue as you look at your pipeline?
spk05: So the insurance segment obviously is more matured. You know, we acquired the flow. It's a more matured company that already have an existing and ongoing relationship with the insurance companies. So obviously this remains our most significant generating revenues in the coming year. And for the fleet, this is like a new market for us. We do see an increase in numbers of connected beans we have from fleets. And we will see them growing in very drastic percentage throughout Q4 and 2023. So it will continue to grow, but I think insurance continues to lead in 2023, and FLIP is definitely there to help. you know, to bring and generate the growth that we are anticipating in next year is hope.
spk02: Got it. That's helpful. And lastly, kind of circling back on your commentary around cloud costs there, I assume you're not keeping like a history of all the data you're ingesting. You're basically processing, you're focused on processing the data that your customers are paying for rather than collecting the history of all data on all cars, which really probably wouldn't be very financially advantageous for you. Is that correct?
spk04: No, that's not always the case. In some scenarios, we maintain the data for longer. Historical data for some use cases is more valued than real-time data. For example, cities or DOTs that want to understand what changes they need to do, they usually like to look not just in what happened today, but also what happened six months ago or nine months ago. Having said that, the historic data, we maintain a much lower cost archive in the cloud because it's not real-time. It's okay if the access to the data will take a couple of seconds and not milliseconds. So we maintain historic data in some cases, but we maintain it in a way that the cost associated to it is low and not impacting in a direct way our cloud costs. I hope it answers the question.
spk02: It does, very much so. That's it for me. Thank you.
spk01: Thank you. Thank you. And this concludes the question and answer session. I would like to return the floor to Ben Volkow, CEO, for any closing comments.
spk04: Thank you, everyone, for joining us today. We look forward to seeing you in our next course. Thank you.
spk01: Thank you. The conference has now concluded. Thank you for attending today's presentation. May now disconnect your lines.
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