Phunware, Inc.

and fully compliant offering will include ads and offers to help brands reach audiences they want, and it will complement our industry solutions to give our customers greater power to reach their existing and prospective users. On the hardware side, our light business unit faced the same headwinds affecting the whole PC market in Q1. However, we managed to outperform the industry averages while maintaining discipline on customer acquisition and materials costs. And now our CFO, Matt Downey, will cover our financial performance.

Thanks, Russ, and good afternoon, everyone. I'd like to thank you all for joining us today for a review of our first quarter 2023 financial performance, and our progress on key strategic initiatives. For clarity, I'll be discussing GAAP financial measures unless otherwise specifically noted. Our press release, 8K, and website provide a reconciliation of all GAAP to non-GAAP financial results. Net revenues for the first quarter, 2023, totaled $4.7 million, of which our platform revenue represented 28% of net revenues, or $1.3 million. Our hardware revenue, or Lite by Funware, represented 72% of net revenues, totaling $3.4 million. Gross margin was 7.6% compared to 26.1% last year. On a non-GAAP adjusted basis, gross margin was 12.9% compared to 26.8% last year. Platform gross margin was 5.5% compared to 57.2% last year. On a non-GAAP adjusted basis, platform gross margin was 23.4%, compared to 58.9% last year. The cost for the year-over-year drop can be primarily attributable to a mismatch of cost of goods sold and the revenue associated with it. As previously mentioned, we are extremely excited to have completed the Gaylord deployment in Q1. However, GAAP revenue recognition for this project requires that the revenue be taken over the five-year life of the contract, which means all the costs associated with deploying the multiple locations in Q1 are not offset by revenue in Q1. If we were to be able to match the revenue, our non-GAAP gross margin for software would be much closer to last year. This will happen from time to time as we continue to build up a bigger base of SaaS revenue that ultimately we will be able to absorb the shift in margins from a single project during the quarter. Our hardware business, Light by Funware, continues to show operational improvement by trimming the business units adjusted EBITDA loss by 46% quarter over quarter. with a target of reaching profitability in the next one to two quarters. Total operating expense was 7.6 million, up from 6.8 million last year. Other non-cash operating expense items were stock-based compensation and amortization of intangibles, making up a combined 1.3 million this year, compared to 0.7 million in the prior year. By excluding these non-cash charges, adjusted operating expense was 6.3 million, compared to 6.1 million last year. We are pleased to see that our non-GAAP operating expense was dropped quarter over quarter for the third consecutive quarter. Non-GAAP adjusted EBITDA loss was 5.6 million compared to 4.2 million last year. Adjusted EBITDA loss was narrowed for the second consecutive quarter as we continue on the path to break even. We still have a ways to go to get to break even, but we are committed to showing improvement in this metric and look forward to sharing long-term break even plans in the future. Net loss was 4.3 million or $0.04 per share compared to $14.9 million net loss or $0.15 per share last year. Weighted average shares used to calculate earnings per share were $103.2 million versus $96.8 million last year. Backlog and deferred revenue at the end of the quarter totaled $5.7 million. As Russ mentioned, we have several large yields at a late stage in the pipeline and expect the Q1 backlog and deferred revenue number to be a low point for the year. Moving to the balance sheet, We closed the quarter with 0.7 million in cash and 5.7 million in debt. We currently hold approximately 2.8 million of cash and digital assets based on today's prices. We are actively evaluating various debt and equity options to fund operations as we continue to push towards cash neutrality. We will remain active with both financial conferences and investor meetings in our efforts to tell our story and further strengthen our corporate profile in the capital markets. The next major financial conference we'll be attending is the 18th Annual Needham Technology and Media Conference, May 16th through the 18th, and the 2023 Cantor Fitzgerald Tech Conference, June 14th through the 15th. We look forward to many one-on-one conversations and meetings with high-class institutional investors at those events and other financial conferences as opportunities present themselves. With that, I'd like to turn the call over to Randall.

Thanks, Matt. During the quarter, we took great strides to streamline how we price, contract, and bundle our core offerings. For a simple annual license, any enterprise can launch a branded mobile application that is configurable, scalable, and capable of any number of integrations with third-party point solutions to include our very own best-in-class location-based services that delivers real-time blue dot and advanced wayfinding. At Funware, we can now take care of everything from any required hardware, to professional services, to maintenance, so our customers are only responsible for a straightforward software license. This is actually an important change that has been very well received by our prospects. In the past, we still sold like a custom development shop that resulted in overly complicated contracts and sometimes sticker shock, but now we are offering simplified SaaS pricing we believe will drastically improve our sales cycle and close rate. Enterprise customers don't need to settle for low code templated apps that will not scale and are limited in both features and functionality. They can now launch an enterprise grade mobile application on our proven platform for less than $5,000 a month. Our platform approach is important because our customers benefit from all the product improvements we are making. For example, We successfully tested our configurable location-based services solution at Gaylord Opryland Resort and Convention Center in Nashville. This is something that many vendors have tried but failed to deliver and was something of a unicorn in the conference industry. However, Funware has made the impossible possible. Our platform can finally help event attendees optimize their time and route to the right exhibits while giving organizers the ability to personalize attendee engagements. Conference organizers and venues can seamlessly reconfigure convention center space, and our routes will adjust to account for any new layouts without additional hardware or fingerprinting. We are thrilled to be working closely with several strategic partners who will be reviewing our solution live next month. These partners are able to open significant doors across the hospitality industry, both locally and abroad. Speaking of conferences, we were thrilled to partner with TD Cenex at HIMSS in Chicago this year and showcase our digital front door to numerous healthcare prospects. We also made great connections at VIVE in Nashville, and next month we'll be at BITAC in Las Vegas for casino resorts, as well as HITECH in Toronto, which remains the premier hospitality conference each year, where we'll be showcasing our amazing work for Atlantis Bahamas and Gaylord Hotels by Marriott. Regarding blockchain, we are still on track to issue approximately 25% of Funcoin's maximum supply for Securitize this summer, with regulated trading to follow thereafter. At this time, we are working to ensure all rightful holders have been notified and given time to properly set up their accounts. With a successful test of FundBlocks via FundWallet, we are also looking at new ways to drive fund token utility and leverage its functionality within third-party applications. Switching gears to Lite, we are excited to announce our new workstation line will be available this summer as well. which will increase the size of our serviceable market and take advantage of our growing brand awareness despite headwinds in the industry due to macroeconomic trends. For closing remarks, I'd like to turn things back over to Russ.