Presto Automation, Inc.

Greetings and welcome to PRESTO second quarter 2023 earnings call. At this time, all participants are in a listen-only mode. A brief question and answer sessions 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, Chris Whitcomb, VP, and of investors' relations. Sir, you may begin.

Thank you. Good afternoon, everyone, and thanks for joining us today. My name is Chris Whitcomb, and I'm Vice President of Investor Relations here at Presto. I'm pleased to be joined on today's call by Presto's founder and CEO, Raj Siri, and CFO, Ashish Gupta. Just as an announcement, the filing and the press release have both been issued, so they should hit the wire at any minute. With that, 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 reconciliation of such measures to GAAP. Before we begin, please note that some of our 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. Please note that these forward-looking statements made during this conference call speak only as of today. Please refer to today's press release and filings with the SEC for a discussion of the risk that could cause actual results to differ materially from those expressed or implied in any forward-looking statements made today. Now I will turn it over to Raj Siri, founder and CEO of Presto. Go ahead, Raj.

Thank you, Chris, and thank you, everyone, for joining us today for our fiscal second quarter earnings call. 2023 has brought a lot of exciting new developments for Presto automation. On the macroeconomic side, thanks to ChatGPT and OpenAI, there is now mainstream interest in artificial intelligence, and everyone can see what we all have known at Presto for many years, that AI is a transformational technology that will dramatically increase productivity in a wide variety of applications and industries. Presto actually has been developing AI applications since 2018 and has leveraged GPT-3 for several of these applications. One of our early investors in 2014 was Sam Altman, the CEO of OpenAI. We've always believed in the power of AI to enhance traditional industries and take great pride in our position, not just as a market leader, for drive-through voice AI, but also a technology leader. Large language models help to make sense of the intricacies of human speech and are here to stay. We believe several of our other cutting-edge products currently under development will gain mainstream adoption over the next few years. In addition, labor issues have recently improved, but AI in the drive-through sector has shown benefits beyond solving labor challenges. Those at the drive-thru wanting food and those taking the order have seen that upsells have greatly increased with voice AI assistance. The food ordering guests, when given a choice, will often opt into additional choices, although they are never pressured to do so. On the microeconomic front, Presto started 2023 with a major customer announcement, the signing of another enterprise voice AI contract with a national rollout with Del Taco. the second largest Mexican fast food chain nationwide. The total opportunity at 600 stores is worth over $10 million in annual recurring revenue to Presto. Additionally, Del Taco is owned by Jack in the Box, which has another 2,200 stores and shares the same visionary management team that chose to sign Voice AI with us. And we have begun conversations as well with this group. The Del Taco win represents the rapid growth of the voice AI market. Presto has grown its install base and voice AI cash collections by 50% sequentially quarter over quarter, and now has over 300 locations implemented. Our rollout with checkers has been so successful that they recently named us supplier of the year in their innovation efforts. Voice AI for Presto has represented over 30% of our customer cash collections the past quarter. The combination of interest in AI, operational efficiencies, and Del Taco announcement has led to a spike of interest in Presto's voice solutions. We have signed and begun to implement promising pilots with several new brands that we hope to convert to MSAs during calendar 2023. The logos we currently have partnerships with and live pilots, they represent 15,000 drive-throughs totaling over 200 million in potential ARR fully expanded. We are progressing to late stages with several of these customers and we hope to have more partnership announcements in 2023. Our legacy touch business continues across all primary logos, albeit with contracted revenue organically declining as existing contracts maturing and legacy deferred revenue being fully amortized. Transaction revenue was up 25% versus prior year Q2. Several of our enterprise partners are now in the process of testing a world-class Presto Flex product, which operates in six different modes, including tabletop, kiosk, handheld, curbside, and drive-thru line buster. Should these customers upgrade to Presto Flex, we expect to see an uptake in platform revenue. Most of our customers have also renewed existing contracts through the end of 2023. Finally, Presto has also taken steps to streamline operations and reduce recurring operating burn by rationalizing headcount and vendor spent. This enables us to operate more efficiently on our path to profitability, which we hope to achieve at around 100 million ARR. We had a higher than normal cash burn last quarter, but we expect this to normalize at a much lower level going forward as one-off expenses from our public transition are resolved. And now I'd like to hand it over to Ashish Gupta, our CFO.