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spk07: Ladies and gentlemen, thank you for standing by. Good afternoon and welcome to the Funware second quarter conference call. All participants are in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one, on your telephone keypad. Two, withdraw your question. Press star and one again. Participants of this call are advised that the audio of this conference call is being broadcast live over the internet and is also being recorded for playback purposes. A webcast replay of the call will be available approximately one hour after the end of the call through August 8, 2025. I would now like to turn the call over to Joey Delahousie of CoreIR, the company's investor relations firm. Please go ahead, sir.
spk03: Thank you, operator.
spk02: Good afternoon, and thank you for participating in today's conference call. Earlier this afternoon, the company released its financial results for the quarter ended June 30, 2024. A copy of that press release can be found on the company's website at www.fundware.com. by selecting Investors under the About tab on the corporate homepage. Joining me on today's earnings call from FundWare's management team are Mike Snavely, Chief Executive Officer, and Troy Reisner, Chief Financial Officer. During this call, management will be making forward-looking statements, including statements that address FundWare's expectations for future performance or operational results. Forward-looking statements involve risks and other factors that may cause actual results to differ materially from those statements. For more information about these risks, please refer to the risk factors described in FundWare's most recently filed annual report on Form 10-K and subsequent periodic reports filed with the SEC and FundWare's press release that accompanies this call, particularly the cautionary statements in it. The content of this call contains time-sensitive information that is accurate only as of today, August 8, 2024. Except as required by law, FundWare disclaims any obligation to publicly update or provide any information to reflect events or circumstances that occur after this call. It is now my pleasure to turn the call over to CEO Mike Snavely.
spk03: Thanks, Joey, and good afternoon to everyone on the call.
spk04: During the second quarter of 2024, we've continued building upon the momentum begun during our first quarter. In quarter two, we delivered 100% customer retention, strengthened our bench of advisors within the hospitality sector, and most recently became part of the FTSE Russell micro-cap index. In the first half of 2024, our customer bookings, which are signed contracts with clients that generate revenues over the course of the multi-year contract period, have already exceeded bookings for all of 2023. even as we preserve cash by reducing our team. This is a testament to the effectiveness and efficiency of our revamped sales team and our evolved sales model, which continues to drive a strong and consistent pipeline, including over $7 million in new pipeline identified so far in the third quarter. As leaders in the mobile applications platform industry, I think it's valuable to take a moment and review what sets us apart. We provide location-based services, content management, mobile engagement, audience monetization, and application analytics that help our clients at every stage of mobile application lifecycle management. We help businesses create their ideal mobile app, monetize their audiences, and create hyper-personalized mobile experiences, all in the interest of ensuring our clients' customers fully utilize their offerings through mobile interactions. We've been in this business for about 15 years, and we are its pioneers. The Funware platform is a fully integrated enterprise cloud for mobile devices that provides our clients with products, solutions, data, and services necessary to engage with their audiences globally and manage and monetize their mobile app portfolios globally and at scale. Our model provides a faster time to market, requires less investment of resources and technical expertise, and does not require customer management integrations. We create a white-label product that is fully brandable, industry-specific, configurable, and with reusable modules that offer over-the-air app updates for continuous learning and testing without App Store approvals. Unlike other white-label application services, the Funware Application Framework creates native applications that leverage device-specific capabilities such as location technologies, sensors, and operating system-specific design patterns and guidelines. Because of the depth and scalability of our platform, we believe there are many other industries that we can serve. During the second quarter, we plan to begin executing on elements of our go-forward strategies to continue our growth and diversify our opportunities matrix. In our core markets, hospitality and healthcare, we will prudently increase marketing spend and build innovative programs to derive awareness and revenue. We are also focused on hiring and making productive new account executives and while also partnering with industry leaders to reach additional opportunities and to make the fun wear the top of our prospects list. Our solution delivers strong ROI, which is driving new sales conversions and cementing the relationships with existing customers, which leads to that 100% customer retention stat I mentioned earlier. We're also seeing interest from the operators of multi-property portfolios, from regional resort destinations to some of the largest hospitality flags in the world. In addition to the organic growth strategies mentioned above, we also intend to grow in hospitality and elsewhere by investing in M&A. We are actively evaluating several potential transactions and may have announcements shortly. To identify the next growth markets, we are investing in research and development and expect to reclaim our crown as an innovation leader. This will result in enhancements to and additional uses for our core product offerings. We envision building more innovation capacity around our team of talented engineers and product managers by utilizing near and offshore engineering resources as needed. We expect this focus to bring forth new and differentiated products to serve markets beyond hospitality and healthcare. Now I'd like to turn the call over to Troy, who will review our financial results in more detail.
spk05: Troy? Thanks, Mike, and good afternoon, everyone. I'd like to thank you for joining us today for a review of our second quarter of 2024 financial performance. As usual, 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. As Mike indicated, a particular note is our bookings growth. Bookings is a forward-looking metric that reflects the commitment from our customers to pay Fundware money for subscriptions and services that we provide over time. When we use the term bookings, it will reflect the total contract value with the customer that was executed within the period defined. Software bookings in 2024 have increased approximately 623% and 939% for the second quarter of 2024 and the six-month period then ended respectively as compared to the 2023 prior periods. Revenues for the second quarter of 2024 were $1 million, nearly a 10% increase over the first quarter of 2024. And for the six-month period into June 30, 2024, revenues were $1.9 million. The decrease of approximately $0.7 million, or 26.8% for the six months into June 30, 2024, compared to the corresponding period in 2023, was primarily due to a customer breakage fee in 2023. Gross profit for the three months into June 30th, 2024 was 470,000, which is consistent with the prior year period. Gross profit for the six months into June 30th, 2024 was 994,000, an increase of approximately 400,000 or 63% compared to the corresponding period in 2023. Total operating expenses for the three months into June 30th, 2024 were 3.4 million, which represents a decrease of over 3.2 million or 48.6% from the same period one year ago. For the six months ended June 30th, 2024, operating expenses were 6.8 million, which is a decrease of 6.5 million or 49.2% from the same period ended June 30th, 2023. On previous calls, I've shared the nature of our focus areas and these operating expense reductions have resulted from the new management team's execution of doing what we said we would do, Excluding non-cash stock-based compensation of approximately $1.3 million from the six-month period in 2024, our monthly operating expense run rate was approximately $930,000 per month as compared to approximately $1.8 million per month for the prior year six-month period. As Mike noted above, we plan to begin investing in sales and marketing, so we do expect a modest increase in this run rate over the back half of 2024. Net loss for the second quarter of 2024 was 2.6 million or a per share loss of 32 cents as compared to 6.5 million or a per share loss of $3.10 in the year-ago quarter. The net loss for the six months into June 30th, 2024 was 4.9 million or a per share loss of 65 cents as compared to a net loss of 10.8 million or a per share loss of $5.18 from the same period in 2023. Our balance sheet remains strong, and as of June 30th, we had cash of $20.4 million. In addition, during July, we opportunistically added approximately $16.2 million of cash through net proceeds from selling approximately 2.7 million shares via our ATM. Our cash position now provides the certainty and stability we need to navigate our path to profitability and to make the investments necessary to accelerate and sustain our growth. That concludes my prepared remarks, and I'd like to turn the call back over to Mike for any remaining comments. Mike?
spk04: Thank you, Troy. As these numbers demonstrate, we're diligently working on increasing our foothold within the hospitality and healthcare markets while consciously controlling costs. I want to take a moment to acknowledge the tremendous work of management and the great team members who have helped to turn around the future of Funware. We now look forward to scaling the core of Funware and reaching new markets, creating new solutions, and continuing to innovate. I also wish to acknowledge and thank our loyal shareholders who have entrusted us with the mantle to drive Fundware forward. Thank you for your trust. We are honored by it and are dedicated to delivering lasting shareholder value. Now I'd like to turn the call over to the operator so that we can begin the question and answer session. Operator?
spk07: Thank you. As a reminder, if you'd like to ask a question, please press star and the number one on your telephone keypad. We will begin the question and answer session. Your first question comes from the line of Darren Aftahi of Roth Capital. The line is open.
spk00: Hi, this is going on for Darren. Thanks for taking my questions. To start, Mike, when we talk about investing in R&D and some new products for other markets, could you maybe Talk about what exactly you need in terms of technology-wise and why those other markets might be different from the hospitality and resort style that you're going after right now.
spk04: Yeah, excuse me. Sure enough, we have built, I mean, over the last 15 years, really an enormous capacity to deliver mobile applications at scale globally. And, you know, we have had that scale to 25 million concurrent users and a video on demand streaming context and otherwise throughout the history of the company. What we're looking to do is to really point that terrific technology asset toward continually larger markets. So hospitality is a terrific market. We like it. We are really making some progress in that market, as you can see from the numbers that we've just shown. But we believe that there are other and additional and substantially larger markets that we can point our technology stack at. So R&D is going to be more about identifying those additional larger markets that we can go point our tech at, and then probably some evolution and modification of the platform to meet the unique needs of those markets.
spk00: Got it. Thank you. And then in terms of bookings, like obviously another really strong quarter, I guess like when you're looking at three of your largest customers renewing, is that accounting for most of the strength you're seeing so far or how much is coming from new customers as well and what you need to do to get those across the finish line into sort of top line revenue?
spk04: Yeah, I don't have the specific breakdown in front of me, but what I'll say is that we have, excuse me, we're continually identifying new opportunities and moving them down the sales pipeline. I think we've identified, last quarter I think we identified something like $5.5 million in total contract value. This quarter we've already identified approximately $7 million on top of that. And we expect to liquidate, you know, a reasonable percentage of those over a period of time. So, you know, I think the sales machine is really starting to work.
spk00: Great. Thank you. I'll pass it on.
spk07: Thank you. Your next question comes from the line of Howard Halpern from Taglish Brothers. The line is open.
spk06: Congratulations. Great quarter. In terms of implementing those customers, Can you talk a little bit about the implementation cycle and what you expect in the second half in terms of deployments?
spk04: Yeah, you bet. We have, I would say, if you think about the happy path for an implementation, it's about a 30-day process. Now, that assumes that customer dependencies are fulfilled timely. It assumes that we have the delivery capacity available to deliver those applications. But don't forget that our platform is mostly a configuration engine. So we ingest customer content. We work with the customer to ensure that the content meets brand standards and is the correct description of the things that they want to display in the application. And so for that, we are substantially relying upon the customer. We've seen implementations go as quickly as a week. We've seen other implementations take six months. So I would say that our average is in that 30 to 45-day range, probably shading a little closer to the 45. Okay.
spk06: I believe in the previous call this year, you talked about, you know, seeking, I guess, customers within the hospitality vertical, but in events, customers for conventions and such. Have you had any success in that area yet, or is it – coming in the pipeline?
spk04: Yeah, it's coming in the pipeline. And so let me speak about that. So the bullseye of our hospitality market is really going to be a destination property. Now, it could be a destination property for a couple of reasons. Reason number one could be that it's a beautiful beach resort. Reason number two could be that it's a convention property. And so our relationship with Gaylord Hotels, for example, kind of falls into more of the convention category than And we're actually expanding our relationship with those guys to accommodate certain of their convention-related facilities and activities. And we are also partnering with a couple of major players in the hosting of conventions to really penetrate that market. And the convention market is actually really interesting for us. And I'd say that we're making good progress, and we'll certainly keep you apprised of that progress as those customer wins come in.
spk06: Okay, well, thanks and keep up the great work.
spk04: Thanks, sir.
spk07: Thank you. Again, if you'd like to ask a question, press star one on your telephone keypad. And our next question comes from, oh, all right, I apologize. Our next question comes from the line of Ed Wu from Ascendant Capital. The line is open. Yes, sir.
spk01: Congratulations on the progress. My question is, have you seen any changes in the sales cycle, whether customers have been more cautious or has it been about the same in the past quarter?
spk04: It's really about the same. I mean, we're looking at a roughly speaking 90-day sales cycle. Sometimes it's shorter, sometimes it's faster. And we continue to work on our sales process to see if we can reduce cycle time now notably we are also highly focused on identifying one-to-many relationships and here's what I mean by that so it's one thing to sell an individual property that's terrific and we and we love our customers it's another thing altogether to approach management companies property portfolio owners and others in such a way as to penetrate multiple properties at once and so we have some very interesting conversations going on right now with such groups where we could potentially spend a similar amount of time on the sales cycle but pick up five properties, ten properties at a time. So that's where I think that you're going to see what I would characterize as the pace of rooftop wins increasing because we're looking at those one-to-many relationships.
spk01: Great. Well, thank you for answering my questions, and I wish you guys good luck. Thank you.
spk04: Thanks very much, Ed.
spk07: Thank you. Seeing as there are no more questions in the queue, that concludes our question and answer session. I will now turn the call back over to Mike Snavely for closing remarks.
spk04: Yeah, and I wanted to do these closing remarks live. I want to acknowledge that we've had a tough 21 through 23, and we've had to batten down the hatches. We had to shed cost, and we had to buy time for the company. As you can see, we're off to a good start here in 2024. We've delivered a couple of successive quarters of growth and improvement to our bottom line, particularly when you look at it comparable to the previous year. We've soared up our balance sheet, and we've gotten our sales rhythm down. Now we have the benefit of time, capital, and great interest amongst our loyal investors, along with a seasoned management team and a board with a big vision. We also have a track record of value delivery to the best brands in the world. including Fox, NBC, the Dallas Cowboys Stadium, along with more recent customers like Ryman Entertainment and various Marriott properties. From this platform, we could not be more excited about what markets we can tackle and the plays that we can run in software, innovation, crypto, and AI. We intend to turn the attentions of tens of millions of eyes back on Funware and our solutions and to make Funware great again. Thanks a lot, everybody.
spk07: ladies and gentlemen that concludes today's call thank you all for joining you may now disconnect
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