Presto Automation, Inc.

Greetings and welcome to PRESTO First Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Chris Whitcomb, Vice President of Investor Relations. Thank you. You may begin.

Thank you. Good afternoon, everyone, and thanks for joining us today. My name is Chris Whitcomb, and I am Vice President of Investor Relations here at Presto. I am pleased to be joined on today's call by Presto's founder and CEO, Raj Siri, and CFO, Ashish Gupta. By now, everyone should have access to the company's first quarter 2023 earnings release issued this afternoon, which is also available on the investor relations section of our website. Please note that on today's call, management will refer to adjusted EBITDA, which is a non-GAAP financial measure. While the company believes this non-GAAP financial measure provides useful information for investors, the presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP. You are directed to our press release for a reconciliation of such measures to GAAP. Before we begin, please note that some of the remarks on this call will be forward-looking. Therefore, please refer to the cautionary statement in today's press release for additional details about these remarks. Also note that these forward-looking statements made during this conference call speak only as of today. Finally, please refer to today's press release and our filings with the SEC for a discussion of the risks that could cause actual results to differ materially from those expressed or implied in any forward-looking statements made today. Now, I will turn the call over to Raj Siri, founder and CEO of Presto. Raj?

Thank you, Chris, and thank you, everyone, for joining us on the first-ever earnings call for Presto Automation. We are delighted to share our business momentum and technology progress here with the financial community. Presto today is benefiting from macroeconomic conditions resulting in strong interest in our labor automation solutions across the restaurant industry. Labor cost and availability continue to be a major issue in the U.S., and physical industries like restaurants suffer the most because they need labor physically present. They can't just hire a remote worker to get the job done. The problem is acute, and the long-term trend suggests it will only get worse. This positions Presto ahead of a very large opportunity as one of the market leaders in labor automation for the massive restaurant industry. Presto has already won major rollout deals with some of the largest chains in the world, Checkers, Applebee's, Outback Steakhouse, Chili's, and more, which led to nearly 250% revenue growth since early 2019. The reason we win these deals is because no other player in the market has a platform like ours. The Presto automation platform combines voice AI, computer vision, and touch technologies. These help speed up service times, improve labor productivity, and enhance the customer experience, all the while capturing critical operational data that no other systems can easily capture. In addition, we make it easy to integrate our leading-edge technology with a restaurant's legacy systems, and our team is very experienced in implementing and installing solutions that meet the needs of large-scale restaurant brands. I'd like to explain each one of our products now in detail. First, Presto Voice is our automated AI-powered assistant that takes orders at restaurants. With a rollout of over 200 stores pioneering voice AI in checkers, we believe we possess the largest footprint of drive-through voice AI in the restaurant industry. When deployed in the drive-through, up to 95% of orders can be taken autonomously by our AI technology without staff intervention. Unlike a person, the system never forgets to upsell and consistently delivers the right language. Consider the simple line, would you like an ice cold drink with that? A human would find it awkward to say, would you like an ice cold drink? Because naturally, we just say, would you like a drink? But the AI does exactly what brands want to do every single time. Additionally, Presto Voice can save 5 to 10 labor hours a day, expanding restaurant operating margins by around 10%. Second, our proprietary Vision AI can instrument the drive-thru to surface many more critical operational data points than legacy systems. Presto Vision, in real time, identifies key gaps in the customer experience, as well as opportunities for operational improvements. For example, how many cars are leaving a drive-thru because the wait is too slow and the line is too long? Deployed in tandem with Presto Voice, Presto's Vision technology boosts upselling and enables Voice to deliver the right experience for the right moment for the right guest. We believe that together, Presto Vision and Presto Voice combine to form the most powerful product in the market for drive-through automation. Together, they deliver a highly personalized guest experience, enhance upselling, speed up service, improve labor productivity, and provide valuable analytics to restaurant brands. Finally, our legacy business involves touch products such as guest tablets and server handhelds. Our tablets allow guests the convenience of ordering food playing games, and paying for their time without having to wait for a server. This not only leads to a better guest experience, but it also frees up time for the servers, and therefore helps restaurants deal with the labor shortage. Restaurants have been able to double their front-of-house labor productivity with these solutions. Now let me explain our go-to-market sales motion. Presto's goal is to sign master services agreements with the top 50 restaurant brands. massive enterprises with global footprints representing well over 100,000 locations. To give you a sense of how large our customers are, the smallest brand we are currently engaged with for a high-potential pilot is over $1 billion in revenue. Our sales motion involves a pilot test in which the technology and business case are evaluated. Most of our customers have franchisees in addition to our corporate arm, And after a successful pilot, we would proceed to an MSA and then roll out with both franchisees and corporate stores. Our enterprise sales cycle from first conversation to MSA can be 6 to 12 months. Our rollout cycle can take another 12 to 24 months on top of that. So our revenue tends to crest in large successive cohorts as new brands are rolled out and different franchisees roll out their solution to their stores. Presto differentiates itself not only in our best-in-class solution, but also in the breadth and depth of our implementation and operating teams. Restaurants in the top 50 cannot afford to work with small startup companies who have never rolled out a solution at scale before. Top restaurant brands also struggle to work with larger technology companies who aren't able to deliver the highly customized solutions the restaurant brands need. Moving on to our recent GoPublic transaction. As many of you know, we recently completed our transaction with Ventu CCM Acquisition Corporation, which resulted in approximately $120 million of gross proceeds to fund expansion and product development across our platform from strategic investors like Cleveland Avenue, which is run by former McDonald's executives, as well as many others. This capital positions us very well to succeed in the public markets and move the company forward to take advantage of the robust macro tailwinds. Next, I'd like to talk about some highlights from our first fiscal quarter. Top line results, $7.8 million in Q1 revenue, $31 million in annual recurring revenue. And at the end of Q1, Presto had a handful of high potential pilots installed with top 50 brands. These pilots represent over 200 million in ARR on a fully converted basis. This does not include checkers, which is live and was rolled out to over 200 locations. At the end of Q1, Presto was live with each of these pilots and was demonstrating similar or better statistics than we are achieving at Checkers. In each case, the brand is saving on labor costs as the system is able to offload the order-taking work that was traditionally handled by staff members. In addition, Presto's voice AI system presents an upsell offer to the guest nearly 100% of the time. We've generated upsell acceptance rates between 25% and 70% of the time, depending on the location. In this fashion, Presto is able to generate material incremental revenue for each location. Based on the metrics we are seeing and the customer's need for this solution, we expect that the majority of these pilots will convert to rollouts in the coming quarters. On the product and technology front, we have implemented several enhancements to our voice AI product to increase the stability and performance of our solution in the drive-thru. We have now completed the integration of CyborgOps into our voice AI product. This was announced in our last filing and provides additional innovation and capabilities to help further differentiate us in the market. As far as our legacy touch product is concerned, our team has been working hard on the next generation platform called Presto Flex. This has successfully been deployed in test pilots in Q1, and we will continue to work out with our beta partners to strengthen the platform in Q2 before launching in Q3. Finally, in Q1, we also hired both the General Counsel, Susan Chinoff, and SVP of Sales, Justin Foster. In addition, we've added key AI talent with deep experience in natural language processing and computer vision. With that, I'd like to turn the call over to Ashish for a more detailed review over the financials.