Phunware, Inc.

fourth quarter and full year 2023 investor conference call. Currently, all participants run a listen-only mode. Joining me today are Mike Snavely, Chief Executive Officer, and Troy Reisner, Chief Financial Officer. The format today will include prepared remarks by Mike and Troy, followed by a question and answer session. As a reminder, today's discussion will include 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 Factors section of our SEC filings. Action results may differ materially, and undue reliance should not be placed on them. Additionally, the matters being discussed today may include non-GAAP financial measures. Reconciliation of GAAP to non-GAAP financial information is set forth in the earnings press release, which is available on the Investor Relations section of Fundware's website at investors.fundware.com. I further encourage you to visit investors.fundware.com to access not only the earnings press release, but also the current investor presentation, SEC filings, and additional collateral on Fundware. At this time, I'd like to turn things over to Fundware CEO, Mike Snavely. Please proceed.

Thank you, and we welcome our fellow shareholders to our fourth quarter and full year 2023 investor call. We're glad you've joined. Last time I spoke with you was a couple of weeks after the board asked me to step into the role of CEO. In the 90 days or so since that earnings release, we've reshaped nearly every aspect of the company with an eye toward delivering predictable, sustainable, and profitable growth for our shareholders. Troy will run through the details of those actions here shortly. When I took over this role, there was a fair bit of cleanup that needed to be done. Our balance sheet was burdened with debt obligations, we had litigation exposure in various places, and we were burning too much cash both in the core software business and in the ancillary light business. Most importantly, we lack strategic focus. Most of these problems are solved and all are well understood as we speak to you today. We built our go-forward plan on a number of bright spots in the business. a highly satisfied and referenceable customer base, clear ROI that our customers are achieving with our solutions, and a talented and experienced product engineering team. From this strengthened foundation, we are on a new trajectory for 2024 and are bullish on Funware's future. I will turn it over to Troy to talk about our financial performance. After his remarks, I'll return to talk about our vision for the future of Funware.

Thanks Mike, and good afternoon everyone. I'd like to add my thank you for joining us today for a review of our full year 2023 financial performance and our progress against key cost reduction initiatives. For clarity, I'll be discussing GAAP financial measures unless otherwise specifically noted. Our press release, AK, and website provide a reconciliation of all GAAP to non-GAAP financial results. In addition, I will provide insight into our operating expense run rate and how we have strengthened our balance sheet in early 2024. As a reminder, in November, we made the decision to shut down our hardware business, Light Technologies, and in accordance with generally accepted accounting principles, Light is presented as a discontinued operation in the financial statements. The shutdown of Light was substantially completed in December. Net revenues from continuing operations for the full year of 2023 totaled $4.8 million as compared to $6.5 million in the prior year. The decline in revenue is due to the sale of $1.5 million of fund token in the prior year. First margin from continuing operations was approximately 34.9% compared to approximately 53.8% last year, with the prior year margin again benefiting from the sale of fund tokens. Operating expenses from continuing operations inclusive of goodwill impairment of $25.8 million were approximately $47.4 million this year compared to approximately $27.5 million last year. Excluding the goodwill impairment, operating expenses from continuing operations were $21.6 million for 2023 compared to $27.5 million last year. which reflects the significant process we've made late in 2023 to reshape our cost structure. For a better picture of the impact of our cost reductions, we note that the average monthly operating expense from continuing operations for Q4 of 2023 was approximately $1.1 million, as compared to an average of $2 million for the previous nine months of 2023. Other non-cash operating expense items related to Continuing operations in 2023 were stock-based compensation and impairment of goodwill, which totaled approximately $30 million this year compared to approximately $3.1 million in the prior year. By excluding these non-cash charges, adjusted operating expense was approximately $17.9 million this year compared to approximately $24.3 million last year. Our loss from discontinued operations for 2023 was approximately $10.9 million and $5.5 million in the prior year, which encompasses all the revenues and costs of life. Non-GAAP adjusted EBITDA loss from continuing operations was $15.5 million this year compared to $20.8 million last year, which reflects a 25.5% improvement. In late February, we executed a 50 to 1 reverse stock split, which under GAAP, all share information has been recast. Shares used to calculate earnings per share were approximately $2.4 million this year versus approximately $2 million last year. So net loss from continuing operations was $41.9 million, or $17.62 per share this year, compared to $45.4 million, or $22.95 per share last year. Our backlog and deferred revenue at the end of the quarter totaled approximately $4.7 million. Moving to the balance sheet, we closed the fourth quarter with $3.9 million in cash and $4.9 million in debt, which was down from the $9.7 million in debt at the end of the prior year. So with our historical numbers covered, I want to highlight other recent accomplishments. First, we reduced monthly cash burn by prudently restructuring operations. Here are some examples. Compensation expense. We retained key talent to support existing customers and initial growth projects, which resulted in reduced compensation-related costs, so salaries, payroll taxes, and benefits, by approximately 55%. At the end of 2023, our total headcount was 25, and we're currently at 27 today. Rent expense. During 2023, we negotiated the termination of three of our five existing office space leases. We expect 2024 monthly lease expense, net of sublease income, to approximately $50,000 a month. We continue to pursue the sublease or early termination of our Austin lease. Beyond compensation and facilities costs, our Q4 run rate for other expenses has decreased more than 50% compared to the beginning of 2023. Secondly, strong improvement in our balance sheet. Beginning with a small equity raise in December, followed by others in January, we were able to stabilize our financial position and fund our runway for the foreseeable future. For somatic context, in early March, we now have approximately $17 million of cash on hand, zero debt, nearly $2 million of future lease obligations eliminated, approximately $4 million of current liabilities paid, We've settled a significant pending lawsuit, which was fully accrued in prior years, and we have a clean capital stack consisting of just common stock. We will remain active with both financial conferences and investor meetings in our efforts to share our story and further strengthen our corporate profile in the capital markets. The next major financial conference we will be attending is the 36th Annual Roth Conference on March 17th through the 19th. We look forward to many one-on-one conversations and meetings with long-term-minded institutional investors at the event and other financial conferences as opportunities present themselves. So with that, I want to turn the call back over to Mike for his discussion of our forward-looking strategy. Mike?