Urgent.ly Inc.

Good afternoon and welcome to Urgently's second quarter 2024 conference call. As a reminder, today's call is being recorded and your participation implies consent to such recording. 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. With that, I would like to turn the call over to Jenny Mitchell, Vice President of Finance Strategy and Investor Relations. You may proceed.

Thank you, Operator. Good afternoon, everyone, and thank you for joining us for Urgently's Financial Results Conference Call for the second quarter ended June 30, 2024. On the call today, we have Urgently's CEO, Matt Booth, and CFO, Tim Huffmeyer. Following Matt and Tim's prepared remarks, we will take your questions. Before we begin, I would like to remind you that some of our comments today may contain forward-looking statements that are subject to risks, uncertainties, and assumptions which could change. Should any of these risks materialize or should our assumptions prove to be incorrect, actual company results could differ materially from these forward-looking statements. A description of these risks, uncertainties, and assumptions and other factors that could affect our financial results is included in our SEC filings including our most recent annual report on Form 10-K for the year ended December 31, 2023, our quarterly reports on Form 10-Q, and other filings and reports that we may file from time to time with the SEC. Except as required by law, we do not undertake any responsibility to update these forward-looking statements. During today's call, we will also discuss certain non-GAAP financial measures. A reconciliation of GAAP to non-GAAP measures is included in our earnings materials and press release, which are available on our website at investors.geturgently.com. A replay of today's call will also be posted on the website. With that, I'll now turn the call over to Matt.

Thank you, Jenny. Good afternoon, everyone, and thank you for joining us today for our second quarter 2024 earnings call. Overall, we are pleased with our second quarter results, which were in line with our revenue expectations. We remain focused on executing against our strategic initiatives to drive financial and operational improvements, specifically in the areas of providing exceptional customer experience and eliminating the post-merger operating costs. In addition, and as we have highlighted in the last quarter, we have also shifted our focus to accelerating profitable growth. As a reminder, our group has historically been lumpy, driven by large enterprise contracts that drive additional revenue and growth once they are launched. To that end, I am proud of the effort across the entire team to deliver renewals of all three customer partner contracts that we're set to conclude and which collectively generated more than one-third of our revenue for the second quarter, which today we reported at $34.5 million for the quarter. In addition, we secured new customer partners as well as a contract expansion with our existing customer partner portfolio, and we did not intentionally terminate any contracts. We believe these renewals, expansions, and new customer wins are a further validation of the significant value we deliver to our customer partners through the strength of our service and leading technology. Now, let me spend a few minutes discussing our growth and business expansion efforts more broadly, as well as providing details on our customer partner renewals and expansions. As we have previously stated, the average length of a customer partner contract is about three years. So, approximately one-third of our customer contracts come up for renewal each year. Renewals not only shore up our revenue forecasts, but we believe they also demonstrate our commitment to long-term customer partner relationships and serve as proof points for our strength in the marketplace as an innovator in the roadside industry. During the second quarter, among our customer partner renewals, we renewed contracts with two of our global OEM customer partners, which we announced via press releases. The first, a global automotive OEM known for its focus on safety, quality, and innovation, has extended our relationship for another two years. Under the contract renewal, we will continue to power their warranty-based roadside assistance program, as well as their post-warranty roadside assistance membership plans in the US, Canada, and Mexico. In addition, we also continue to provide assistance for operational, technical, and mechanical breakdowns, as well as accident-related towing services. The OEM partner will continue to leverage our comprehensive technology stack, which includes full roadside assistance customer relationship management to support its outsourced call center operations and API-based integration into its customer-facing products. The second is also a two-year extension with a global OEM known for its precision engineering and commitment to delivering an unparalleled driving experience. Under the renewed contract, we will continue to power their warranty-based roadside assistance program as well as its post-warranty roadside assistance membership plan in the United States. In addition to the two-year renewal, we also signed a new two-year agreement with this global OEM to expand geographically into Canada. This expansion recently launched on August 1st. In addition to our customer partner expansions and renewals this quarter, we have also signed a new customer partner agreement with a direct-to-consumer subscription and insurance aggregator, which will launch later this year. All in all, it's been an extremely successful quarter in terms of renewals, expansion contracts, and new business. I'm very appreciative of the efforts of the team to deliver these results. We're always excited to talk about our initiatives to reaccelerate growth post-merger integration. as we see with our Q2 customer partner retention and expansions. We believe that delivering the best-in-class customer experience has historically been a primary differentiator for Urgently. This quarter, we remain focused on quality and delivering exceptional service at scale, which is reflected in the 4.5 customer satisfaction scores achieved during the second quarter and 4.6 satisfaction scores out of five for the year. Our data and engineering teams continue to look for ways to apply technology to advance the Motorex experience. To further differentiate our customer experience, we recently announced the launch of the next generation yield-based pricing as a product across our service provider network. Much like other industries, we believe that data and analytics around pricing and performance are a competitive advantage to deliver higher quality customer outcomes and margin improvements. As a key feature of this product, Ergilling now leverages micro-targeting, which are much smaller geographic areas than either a zip code or a rural service area, together with relevant historical data, make, model, time of day, population density, service quality, weather, and other location-based data. And our AI-driven dynamic pricing technology reliably predicts and optimizes job prices for roadside assistance. We use this technology to better manage surges in roadside assistance demand, which we believe leads to faster job acceptance by service providers, resulting in shorter wait times for the stranded driver and a higher quality outcome for our customer partners. This all results in lower agent handle time, which we expect to continue to be reflected in our improved operational expenses, which Tim will review shortly. For our customer partners, these insights and predictive pricing also help empower them to develop roadside assistance programs that best fit their business goals. One example from a luxury OEM partner is to increase performance by market for specific makes and models to build a differentiated premium VIP program offering. More generally, It allows us to maximize service performance while maintaining a stable cost structure for our customer partners. We expect that future products will include the ability for customer partners to tailor the experience based on how they segment their customers. Finally, in furthering our commitment to exceptional customer service, we reorganized the product and operations team under a single leadership structure into the customer experience team which now reports in the Gay Puerta, urgently's chief product and technology officer. Our goal is to continue differentiating ourselves based on the customer journey, regardless of how motorists access the service. We believe that integrating our product and operations team will promote a singular vision and ownership in providing an unparalleled experience across all channels, both digital and human. Turning now to an update on gross margin, improving margin continues to be an ongoing priority for us. In the near term, we have maximized the margin improvements related to pricing changes and partner mix that we have outlined on previous calls. We expect additional margin improvement to be driven by creating further efficiencies in the marketplace. First, geographic area is one of the primary drivers of service network costs. We believe the next generation yield-based pricing as a product initiative that we recently launched will positively impact our margins in the market that was once constrained by geographic or zip code boundaries. We have observed a successful implementation of similarly predictive, optimized pricing in other industries as well. Our initiatives so far have performed very well. Our 21% gross margin for Q2 24 is consistent with that of Q2 23, and more notably, our June 2024 year-to-date margin of 22% is a 200 basis point increase over our June 2023 year-to-date margin of 20%. While our OEM customer partner non-renewal, which we announced this past January, has impacted revenue, we are continuing to bolster our potential future revenues through demonstrated wins renewals, and expansions. Improving our gross margin and reducing our operational expenses is critical in achieving non-GAAP operating breakeven, and we remain focused on this important milestone. However, during the second quarter, we encountered several factors which have caused us to revise our outlook for targeting non-GAAP operating breakeven, so the first quarter of 2025 versus our earlier expectation for the beginning of third quarter 2024. Having said that, we expect to be below 1 million of non-GAAP operating loss in the fourth quarter of 2024, which is down from 7.9 million in the fourth quarter of 2023. Let me walk through these factors in greater detail. The first factor is a return to managed growth. Given the length of contract cycles on the RFP process, we wanted to prioritize our ability to capitalize on Q2 opportunities around renewals, expansions, and new business. This deliberate decision required us to move technology resources to focus on new launches, integration, and expansions instead of longer-term operating and marginate expense projects that we have planned. These large margin projects are wide in scope, and we expect to see improvements in one or two quarters after deployment after ABE testing is completed. We still intend to pursue these margin improvement projects, but given the importance of renewals and expansion contracts, it made sense for us to push the expense reduction efforts back a quarter. The second factor is related to post-merger integration, including some international complexity. While the teams swiftly acted to reduce redundant functions across the combined Autonomo and Urgently teams, The last phase is still under review as we look to continue strategic alternatives of certain autonomous assets. And finally, given the nature of our transaction-based business, volume is dependent on several external factors. When we met our revenue guidance, we saw a change in service mix from our customer partners which impacted our margins. External factors can be events ranging from fewer new vehicles produced by an OEM, changes in coverage policies by our fleet providers, new routing schemas, or customer behavior trends related to miles traveled, just to name a few. And while no singular event contributed to the service mix changes, the collection of events this past quarter reduced our expected per job revenue and margin. We saw higher volume from lower margin jobs and lower volume from higher margin jobs on a service mix basis. Again, I'm very proud of our accomplishments during the second quarter, which included continued execution against our strategic priorities to optimize our business and financial operations, while re-accelerating sustainable growth and profitable growth as evidenced by our exciting contract wins, renewals, and expansions. The team is focused on achieving non-GAAP operating break-even, and we look forward to capturing the near and long-term growth opportunities ahead. In closing... We remain focused on expanding our B2B incident business through securing renewals, expanding relationships with existing partners, developing new customer partner opportunities, achieving non-GAAP operating break-even through our operational improvement, margin expansion, and managed growth, and continuing to provide innovative and differentiated services to our partners. Thank you for your time and continued support. I'll now turn the call over to Tim to discuss our financial results.