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spk_0: good afternoon ladies and gentlemen and welcome to fun where's fourth quarter and full year twenty twenty two investor conference call currently all participants are in a listen only mode joining me today or russell base chief executive officer bundle crowder chief operating officer a mass only chief financial officer the format today will include prepared remarks blame ross mass and randall followed by a question and answer session as a reminder today's discussion willing to forward looking statements these forward looking statements reflect current views as of today and are based on various assumptions that are subject to risks and uncertainties disclosed in the risk factor section of our as he sees science actual results may differ materially and undue reliance should not be placed on them additionally the mothers' been discussed the a main to non gaap financial measures reconciliation of got to non gaap financial information is set forth in the earnings press release which is available on investor relations section of fun where's website as investors does fun where dot com i encourage you to visit investors that fun were dot com to access not only the earnings press release but also the current investor presentation se si filings an additional collateral on somewhere at this time i would like to turn things over to from seal russell base sir please proceed
spk_1: thank you very much welcome to our fourth quarter and so you're twenty twenty two investor call my first as fun where ceo fun were has been on my radar for quite some time as i admired the company going back a decade when i was see alone at mutual mobile this organization has always been known for it's great talent top customer brands and it's great work as the company recently transitioned it's business model from custom app development to assess product model it's a the stage where i can be the most affected and elevating our corporate trajectory to the next year with my product orientation and operational circus i would steal met standard by going to be twenty twenty two numbers saw talk about where we are and where we're going to twenty twenty three to start off it's safe to say we're still in the early stages of enterprises adopting solutions to drive contextual engagement as they wrestle with digital transformation strategies find were sits at the cross section of three important markets to help them first the one hundred and eighty seven billion dollar mobile application market and is fairly mature but still going at a thirteen point four percent kadar second the twenty eight billion dollar location based services lds market is growing at a twenty three point five percent geiger as technology improvements as help customers finally realize it's true promise this is a nasa industry that remains an early innings due to to tough years in a pandemic the gradual unlocking afterward and then the economic uncertainty that arose during the past year the third market is often referred to as integration platform as a service i passed but a three point seven billion dollars and a thirty percent gallagher it's becoming increasingly important as companies demand interoperability print desperate third party systems although the pandemic delayed our market penetration we have a robust product with immense upside potential which is one of the key reasons i was drawn to leading fun were as it's new ceo are sas products and the user experience by providing consumer grade can it be aren't mapping and way finding and mobile engagement to help brands reach customers were they are when they are most willing to engage in profitable behavior this could be an opportunity to spend money or it may be an opportunity to take advantage of cell service tools that can significantly reduce operational costs where enhancing us products to provide more capabilities to consumers love reading revving up uplift and expanding the reach of brands to improve as the total experience in particular these provide a strong or ally to customers in the hospitality and healthcare verticals with lighthouse brands guiding the way and beyond those articles we have convention centers smart workplaces multi dwelling units and to use sporting events retail entertainment and more that all struggled to manage complex user journeys while still delivering best in class consumer engagement for our go to market strategy were strengthening our marketing efforts to drive awareness and accelerating sales to additional channel partners to compliment or direct sales force with simplify pricing it packaging for customers by bundling modules into industry specific solutions and going to software services beacons and implementation into one sad price this makes it easier for them to say yes while retaining healthy margins over three to five year agreements i deployment with gaylord hotels by mary out has just finished the author land texan and rockies properties had been fully operational and the gaylord palms and national are now live more than a week ahead of schedule another when we're proud of is the atlantis resort in the bahamas which is notably healthy the organization taken one point two million dollars through the act in less than a year and was recently recognized by hs and may ai at the adrian awards on the block chain side of the idea behind fun coin and find token is really astounding a marketplace between brands and consumers were brands can rewards consumers for the right to engage them brands benefit by being able to identify gauge more effectively whereas consumers benefits through the token all mix of the market place this is a far superior model compared to the web to economy where users data is someone elses product and it doesn't belong to them our objective with the block chain initiative is do dis intermediate that outdated web to surveillance model that said we're taking a slow and steady approach on this given the current crypto winter and regulatory headwinds or offerings will be privacy preserving and fully compliant the first steps with made our with the fun wallet app and we've recently added the phone box game in person one dot side where you there's skin on and spend fun token this proof of concept has consumers earning and spending crypto with a wallet fun while that one that stakes introduces videos and an offer while allowing brands to reach him reward consumers for their participation eventually we see this as part of our service offerings for brains to engage with their customers will be able to include ads and offers as a module in our industry solutions that will lead branch reached the audiences they want on the hardware side or like business unit equips consumers with the gear they need providing cost effective high end pcs to gamers now that the team has relocated it's facility in round rock texas and implemented a new earpiece system we expect profitable operations and growth going forward light have several key priorities for twenty twenty three we're introducing workstations to the product makes extending our reach the power business users were also optimizing lights unit economics with from targets for cost for acquisition cp eight and cost per build tpp that will ensure profitable go ralph
spk_2: and now are cfl matt on a will cover our financial performance thanks for at a good afternoon everyone like the becky off the joining us today or if you have a or year only twenty two and it's performing and our progress against key strategic initiatives for clarity i'll be describing got a little years and let otherwise specifically noted i press release ak website provide a reconciliation of all got the non gaap and it's a result net revenues for the whole year twenty two totaled twenty one point eight know which represent the hundred accurate and great year every year
spk_3: a plot or revenue represented thirty percent the net revenues or six point five million of have your regular you are like that unaware that is seventy percent in that red meat told fifteen point three million gross margin is twenty three point three percent compared to thirty three point nine percent last year on a lot gotta get the basic gross margin twenty four point three person had already three point nine percent austria part of the is fifty three point eight percent compared to forty six point eight percent last year
spk_2: we're encouraged to see platform gross margin eateries year over year as we continue on our long term goal to achieve seventy five percent was gross margin for but on reddit
spk_3: secondly or new bit lime light by phone work a different gross margin profiled and we have had in the past we have done a lot to fully integrate live in the unaware of the past year we're pleased to see gross margin dollars injuries nearly seven x and keyboard or twenty twenty one queue for twenty twenty two
spk_2: as expected when all your like that on your operation was and twenty twenty two are such as que four and twenty twenty one we did it get get good treat and operational expenses cattle operating expense with thirty four point six million up from twenty point five million last year
spk_3: other non cash operating a bad and was stock based compensation
spk_2: and irritation of intangible and impairment of goodwill it will be fully to making at the combine by point six million this year compared to four point one million in the prior year excluding at one time and noncash charges adjusted operating to twenty nine million compared to sixty point three million last year non get a job could even a lot with twenty three point five million code eleven point seven million last year
spk_3: net loss was fifty point nine million or fifty one cents per share compared to fifty three point five million that lot or seventy one cents per share last year shares used to calculate earnings per share or ninety nine million this year or two seventy five point four million last year a backlog inferred revenue and of a quarter total eight million little about you because the quarter with two million in cash and nine point seven million and that
spk_2: he currently whole approximately six million in cash and digital asset based on today's prices we are actively working on several option to expand or operational runway and i've recently agreed to terms with street or real capital to the for our final card debt repayment the second half of twenty twenty three it will enable us to further evaluate various debt and equity option for fun operation as we continue to push towards cash neutrality
spk_3: we will remain active about financial carpenters and investor meeting and our effort to tell our story and further strengthen our corporate profile and the capital market the next major financial conference will be attending as the eighteenth and you'll meet him technology and media coverage made sixty to eighty look for too many one on one conversation and meeting with high class institutional investors at the alive
spk_4: and other financial competent of opportunities for them them thought that that are like a turn the call with the randall
spk_5: thanks matt alpha want to thank the analysts and shareholders who continue to support fun were despite what feels like one market catastrophe after another from the pandemic to the war in ukraine to inflation and possible recession we've weathered the storm of course rather not did warn a smooth see never made a skilled sailor i i assure you we are skilled resolved and charting the right course as i mentioned last november i intend to folks my comments around five core objective first improving the features and scale ability of fun were to not only drive adoption and shorten our cell cycle but also enhance our margin profile what excites me most is we now have notable reference customers in three of the largest markets where solution can solve the biggest pain points healthcare hospitality and the workplace digital transformation help her alone is a half a trillion dollar market with the largest driver being a health do that ability to increase patient satisfaction and reduce operational costs while our feature rich digital front door in an industry leader scale ability will rely on our ability to measure and justify am or definitive return on investment to address this had on we've engaged and expert third party to help analyze and define the financial impact of our digital front door as well as or l be a solution we expect to begin sharing a result of this study by the end of que to while the global market for smart hospitality is projected to reach sixty billion by twenty two eight it's growing at nearly double the rate of health care and we're seeing analogous interest across our pipeline as rough highlighted earlier are smart hospitality solution at atlantis bahamas generated over one point two million and twenty twenty two but over half of that was prior to guests arrival guess we're downloading yeah ap exploring all one hundred and forty acres of paradise island planning their experiences and spending money all from the comfort of home this kind of success is how we sold gaylord hotel by marissa and six months we've deployed are smart hospitality solution across the entire gaylord hotels portfolio which it over twelve million square feet represents five of the top ten largest non gaming convention center hotel in the united states however what i'm most proud of with his deployment is it required no new code which is a testament to our engineers and the investment we made in our platform during the pandemic going forward little greatly improve our margin profile as well as helpless scale more strategic accounts i'm also proud to announce we have begun rolling out a configurable l be a solution to specifically target convention centers this dynamic mapping and away finding capability will help and then attendees route to the right exhibits while and organizers can message attendees based on proximity or persona or going either than venues can seamlessly reconfigure convention center space and are routes will adjust to account for any new layout without additional hardware finger printing lafley on the product front we recently announced the availability of our experience optimize her this feature enables a single mobile application to autonomy flee deliver any number of experiences by seamlessly configuring and launching a unique javascript object notation that contain specific information on layout features themes content integrations and matt although each experiences launch from a single mobile application every experience can load and function like it's own native mobile application based on building persona or even sub brand of course no amount of features will matter if we don't solve for a second core objective of scaling revenue as well as activating indirect channels by ensuring our partners have the training collateral and proper incentive structures and place to be successful we recently executed partner agreements with diversified ingram micro and theme and that are considerably more coordinated and directive than past relationships for example ingram micro it already committed upwards of five qualified leads per quarter while diversified hosted company wide training on fun were for all of it's representative this month we believe this kind of channel partner by an engagement will be critical to scaling revenue this year however given the nature of the health care and hospitality industry and particular some of our customers may ultimately represent our most important channels to that end we're in the process of deploying another a property while a a beach resort and mali but that new customer has led to strategic discussions with mary out about how to more effectively of partner going forward to support the failed efforts and with the help of a third party expert we are in the process of auditing our entire sales process along with associated collateral expect to see tighter language around our fundamental value propositions with objective our ally justification to help us not only prospect but offer shorten our cell cycle another important change with made a short in our cell cycle is streamlining our contracts and pricing our new approach to felling at an all and methodology that accounts for software licenses hardware professional services and support at one easy to understand price per year despite this purposeful focus on our sas solutions we remain committed to our third core objective of launching a compliant block chain ecosystem that better incentivize as and authenticates consumer engagement we don't believe block chain of the pivot or a distraction but rather a natural extension of our sas offerings that seeks to we imagine how brand engage with consumers imagine resort rewarding you for following a treasure hunt to exciting new amenities just as easily the hospital rewarding you for showing up on time as rough already highlighted we have made significant advances the phone wallet that will help us better integrate this kind of functionality and generate revenue while offering consumers additional opportunity to engage in earn fun token and parallel we're excited to announce that we are working closely with securitize to target the first half of this year for an initial issuance of approximately twenty five percent of fun coins maxim supply with regulated trading to follow shortly thereafter we also remain committed or fourth core objective of ramping failed improving margins of life by streamlining operations of being more disappointed with our marketing efforts by targeting a cough for acquisition of one hundred and twenty dollars and it costs for build of twenty dollars we are confident in our ability to now in drive light to break even but also position the business a scale profitably and que to we also plan to launch new lines such as workstations to increase the sidebar serviceable market and take advantage of are growing brand awareness last but certainly not least the ongoing transition to receive leadership has further are fit core objective to engage more investors with a focus on institutions to drive awareness volume and stronger price appreciation we will continue work closely with gateway roth capital and hc wainwright to attend conferences and participate in non deal roadshows to share the fun were story more broadly we have also been given great opportunity to engage new shareholders through partnerships with industry luminary like john the darien and mark the press to at monette advisers and clothing i want to personally thank all one hundred and six have been worse employees and reiterate our ten operational goal this year foster teamwork and minimize distraction be more disciplined and the allocation of resources a line resources with core competencies focus on ideal customers and partners update positioning and marketing to better sell or core value proposition
spk_1: product ties internal tools identify in organic target to accelerate commercialization of key capabilities launch fun coin reduce cash burn and minimize dilution door closing remarks i'd like to turn things back over to rough thanks randall i've been aboard about three months now and i can confidently say i'm excited for the progress we've made in my short tenure and the trajectory more positioning ourselves for we started the year with a renewed focus of marketing and sales execution in this unpredictable kind of me we are working to aggressively grow our platform bookings to improve overall go and that margins as we transition the majority of our energy the platform sales we expect overall net revenues to be relatively flat year over year while expecting quarter over quarter growth and improvements to both are backlog and adjusted ebitda that said we also expect to cut year over year lot and as as we continue to push toward cash neutrality finally we're encouraged that the emin a market has become more attractive for buyers we're excited to announce that our board of directors has created a strategic transactions committee met by stephen chance to enhance our efforts to creatively grow the business through inorganic transactions i want to thank all of the fun where employees customers and shareholders for the opportunity and the honor to lead the next chapter of this emerging success story we may not always get everything right but we will be bold and put the full weight of our effort into maximizing shareholder value as we reimagine how brands engage consumers in a mobile first world
spk_0: i would like to open up the call house or questions to the operator operator please go ahead thankyou at this time we'll be conducting a question and answer session if you would like to ask a question please press star one on your telephone keypad a confirmation tone will indicate your lane is in the question keep you may press start to if you would like to remove your question from the key for participants using speaker equipment it may be necessary to pick up your handset before pressing the staircase
spk_6: one moment where we pull for questions
spk_0: thank you
spk_7: the first question comes from darren after he with roth i'm can please go ahead thought hey guys and they think my question
spk_1: i recite it gets the with you to he goes the pillow a lot of was repaid of the the part it it seems like either a minute know that that he said
spk_3: with your math platform ah is hospitality and healthcare as a bigger think would like
spk_7: the back to work debate continually i'm curious like we think about you take objectives rights for the math flat were very top three going forward i guess what really are the and then maybe one for you and randall it's it's good to see their gross margin of the the math
spk_1: they may grow how stood up on a calculus they did do you kind of funnel down improvement in operation down to that thirty five percent target next thanks for the question as a top three priorities set for them as platform i would say as bookings growth that's number one we have a good young working solution very solid product and very happy customers with it the second would be product mode matt progress which is further enhancements development on the platform self to make a more compelling and provide higher value add functionality to customers to give them greater revenue up and list and a better are why are the third prior to for that for that line of business i would say would be to strengthen our marketing and sales execution so to increase our i fucked went there on there's a little bit of customers occasion mark and education here and we want to be the thought leader in the space oh and by the way it randall is sad is not available for q and a ah
spk_2: it's baby time for him so what's worse shared daddy some good like him and the new mommy here too they ate there and i'm all about aggro largely by soon as well as a year for as it's
spk_3: improve the margins about the line
spk_2: we need to your have work and of local it know code deployments and that's really like what we did with mary out where
spk_3: we're able to quickly to play all the location without a lot of digital code which means essentially we're not doing services about the line and so that's kind of first and foremost what does it on the other day is gonna back to rest the first point is we gotta get more boogie that he had more deals we got a great support organization that
spk_7: the are mostly is is charge above the wind and they can scale up a lot more exotic as we get more deals they're going to be able to scale up more on without adding a ton of resources that it does your kind of two ways that we're privileged martins the maybe if i get screwed were more and so on the know coach die late
spk_1: is that a clickable for any vertical at this point and you think ah you know i of agreement to deployment psycho as short as a result that word that it is gaylord little bit of a lot
spk_7: we actually expect more engagements and future look like gaylord where it's it's out of the box it's an industry template solution and there's no custom code is just a configuration the solution in their environment and because we've also previously built integrations to say electronic health health record systems in healthcare
spk_0: there and and callers and hospitality we don't think there as much more to do their there maybe some in a some customers may have specific systems they want custom integrations form to expect that represent the minority of work departing is impaired margins
spk_8: the toppled i said panky or next question is coming from scott book with katie wainwright please go ahead
spk_1: i get up to didn't get thanks for taking my question first one yeah you had to live there was a customer when he over the last few months between gaylord and dad expansion of the age they are but i'm curious what the current selling environment apply for them a larger deal if given the you know it seems like in every thing level of macro and seventy well we've seen know continued evolution as in our pipeline opportunities made they've not changed their pace
spk_9: as a result of that and into the bank takeovers and other reason uncertainty so we've not seen any impact their as far as our process in sales
spk_2: in further in on just on a map amazes me that hospitality industry to grow six seven percent this year said israel there's really no good reason for them slow down added by that that's helpful and they can you remind us that the the now the of the light business i get them a bit the pride that the am the a relatively flat revenue versus the third quarter despite the holiday season yeah i to a typically we're going to see more are going to be more bulky the queue for on the out
spk_3: the backlog will drive up you typically week for you wanna be the bigger quarters
spk_9: i will say you more specifically what would lie and you can kind of the a dig what's if allocator as well we did out a little more focus on profitability into for this year i'm sorry last year for similar prior quarter so on
spk_2: yeah of course or drive as much top line but we're also trying to get to see the a costs down and so that might have had some it back there but at the end of the day we are able to or your drive that are margin but by doing that said
spk_3: hey matt that helpful in and last one for me though that a bit of recovery with that on the did your current devaluation damned curious gonna let the planet with remaining had to go out the jab on the balance sheets
spk_2: yes sir so we still do have some your bitcoin very much about see ya dig our approach right now well i that on the off with we've got the runway eric that gonna figure out what we're going to do with and next absolute terms of of that are equity by the out essentially friday our point of view and and talking to investors and in the board i think it's important for us to know if we if we need to use digital out that they will liquidate than the that property that
spk_3: obviously the a lawyers ajantha diluting people further or are taking additional that the right now are focused on kind of magic not as close as possible certainly as goes up that benefits us on and ill kind candidates evaluate on our day to day weekly basis in terms of how we liquidate utter or along we keep it
spk_8: but certainly not part of our strategy going forward and and we'll see
spk_6: the on the next couple months what are our longer term strategy will go to school the a letter but really now
spk_0: great diversity didn't know how that thank you very much
spk_10: thank you
spk_1: our next question is coming from a room with sunday and capital please go ahead l welcome rough my question is on emanate you mentioned that yeah they're gonna evaluating yet have you seen significant improvement and are depressed pricing for emanate target and what water any particular of focus on up targets together kristin well what we thought i can't speak as pricing at this point but i can tell you they're more people who are willing to have conversations given market conditions and them and their prospects to on forward on you were looking for companies that are get a line with our core strategy around the enterprise sounds awesome so either companies with a complimentary
spk_2: offering are you know in a complimentary market to us or a piece of technology that would help us accelerate product moment and of course not can describe bobby mcgee and looking for from financial criteria to whatever extent he wishes yeah the yeah like ross real a we're not down the road far not foreseen yeah pricey in terms of the more depressed pricing and any we all expect that
spk_10: yeah and i think can person for most obviously in the company the type can be like an accurate explain but yeah certainly we're not like and to to add a more burn right onto the cat beer or breed any company that are knock at least a creative and on cash a break even at a minimum so how does your kind of criteria and and we'll see him in our expectation of it will be a league
spk_0: get a better deal you know now second half of year the way it and we may have the out in the middle of point twenty or twenty twenty one
spk_11: right off as far as or my question then i wish guys go look at it like that banking or next question is coming from howard halpern with toxic brothers please go ahead
spk_1: lock afternoon guys are welcome russ ah the ice in terms of in a potential bookings growth are you seeing you know maybe some flow from eat
spk_12: yeah miller ah you know integrators or new a partner is rather than some of them they have been around a long period of time
spk_1: we are definitely seen act active interest in movement from our new are partners
spk_13: i'm i'm and was randomly here to field your question about tennis umpire longstanding partners as well as and little bit less acquainted with their activity and of we are definitely saying excitement an interest from our new partner and of course supplements or current partners and or direct sales effort at any get a potentially this in our
spk_1: may be smaller deal that can get done quicker and that build into larger deals is that is that may maybe part of the game clinton basically get in and then move within an organization i definitely saw one of the things that that we've done like randall talked about simplified packaging and pricing we also want to be you know competitors in the pricing area and lot the ways that we're also trying to do that because our product works so solemnly is do a proof of concept of were that's appropriate or
spk_12: is it say
spk_14: a customer who has multiple locations to do a pilot and one of those locations to show them how well it works
spk_15: because emerged quite confident in any kind of a trial we're going to come out as the winner
spk_0: okay okay guys keep it and everything else was asked and answered so the thanks and keep up the good work
spk_1: thinking they cloud thank you
spk_15: we have reached the end of the question and answer session so i know turned to call back over to mr base for closing remarks
spk_0: well i just like to thank you all for coming to learn to be session today this is my first and sales and for the grace here as i yeah as i get used to this cycle
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