Wejo Group Limited

Good morning, everyone, and thank you for joining WeJo's Business Update call to discuss our second quarter business and financial results. With me on the call today are Richard Barlow, our founder and CEO, and John Maxwell, our CFO. As a preliminary matter, please note that this call may not be transcribed, recorded, or broadcast without our express written consent. We take no responsibility for any inaccuracies that may appear in the transcripts of this call by third parties. Our remarks and the Q&A that follow are copyrighted by Wejo Group Limited. Remarks made today on this call about future expectations, events, strategies, objectives, trends, or projected financial results and other similar items are forward-looking. Forward-looking statements are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not guarantees of future performance and as such should be taken in the context of the risks and uncertainties that are outlined in the SEC filings of WeJo, including our annual report on Form 10-K recently filed with the SEC, as well as other documents filed with the SEC. Forward-looking statements speak only as if the date made and the company undertakes no obligation to update such statements in the future. In addition, during this call, we will be discussing certain financial metrics that do not conform to generally accepted accounting principles in the U.S., better known as GAAP. For a reconciliation of these financial metrics to GAAP, please refer to our annual report on Form 10-K filed with the SEC. And now, I'd like to turn the call over to our founder and CEO, Richard Barlow.

Thank you for joining us on Wejo's second quarter 2022 business update. I'm proud that Wejo continues the progress of building a market-leading business that is well-positioned to dominate the smart mobility sector. An idea which is validated by our number one ranking in the Frost & Sullivan Research Report, Strategic Overview of Startups Disrupting the Global Connected Car Market. Our efforts to build a sustainable pipeline of revenue is reflecting our strong customer and partner activity during the quarter, which included 90 deals closed to date and continual contractual agreements with premier global companies. We also had additional customers in a wide range of sectors including automotive, insurance, audience and media measurement, retail and departments of transportation. The companies within these sectors are significant names and part of our expanding customer relationships and increasing revenue per contract. We have also signed numerous contractual arrangements with a wide range of smaller players who have realised the value of our SaaS products and services to enhance their business. As a result of these wins, big and small, our total numbers of customers doubled and net revenue increased by nearly 200%. But we're not just focused on revenue, we've also taken aggressive actions to reduce our cost structure and to accelerate our path to profitability. Using adjusted EBITDA as a proxy for cash, we believe these actions will reduce our monthly cash burn rate from 10 million to 5 to 6 million by Q4. We're focusing our spending and efforts on revenue generation, and these actions are part of a broader effort to position the company to deliver on our financial objectives for 2022 and beyond. We recently announced that we've raised $15.9 million through a pipe process with our existing supporting investors and some new investors, all of whom are excited by our business and the opportunity ahead of us. This raise strengthens our capital position and provides additional liquidity for the company. We are proud to be able to raise these funds in this challenging environment, which is testament to the value our investors see in our business. The combination of our cash and pipe proceeds, lower spending levels, and access to capital through our cancer, CEF, and Apollo facilities ensures that we have the funding we need through to late 2023. Our Chief Financial Officer, John Maxwell, will delve deeper into the company's financial details, but I wanted to highlight a few of our strong KPIs. Total contract value, or TCV, total customers, are up over 100% in the quarter versus the same period last year, while gross bookings and gross billings are both up approximately 125% in the quarter, demonstrating the continuing progress of our business. And we've accomplished all this despite the diverse array of challenges most companies are facing in the current economic and market environment. We expect the positive trajectory of our KPIs to continue as we demonstrate that connected vehicle data can impact customers and drivers in meaningful ways today. For example, our recently announced partnership with RoadMedic allows 911 first responders to access real-time, comprehensive traffic data from millions of connected vehicles using our real-time traffic solutions, or RTTI. First responders and emergency roadside assistance providers can utilise our RTTI solution to find the fastest and safest route to the scene of an incident to assist any injured motorists, passengers and bystanders as quickly as possible. RoadMedic, which is embedded in the operating systems of connected and autonomous vehicles, provides first responders with instant crash detection. This, combined with intelligent crash data that RTTI solution provides, will enhance the capabilities of this technology. This partnership will quite literally save lives. It allows for faster and safer response times from EMTs and more accurate assessments of the severity of an accident. This partnership validates that we are evolving from a data supplier to an analytics and insight provider which will only improve our revenue generation going forward. Our platform is strong and continues to grow with new product roles including RTTI, Historic Traffic Patterns or HTP and Wejo Labs. These key products have built the foundation for accelerating revenue in the traffic space as RTTI is the number one real-time data supply when it comes to connected vehicle data. In addition to the foundation that we are building with our new products, we have proven that our data can be applied to additional verticals benefiting the company as we expand to end-to-end insurance and audience and media measurement. Our operational momentum is illustrated by strong customer activity with new pipeline deals up 50% in the first half of the year. our expanding product portfolio, our upward-trending KPIs, and finally, our strong execution in securing additional capital and improving our cost structure. Speaking of KPIs, that's a good opportunity to bring in our CFO, John Maxwell, into this discussion so we can discuss our KPIs and the financial progress we have made to date. Thank you, John.

Thank you, Richard. We are off to a good start for the year as we continue to build momentum in our business. We reported a record level of gross billings and annual recurring revenue, or ARR, in the period. Gross bookings and customer activity continued to be very strong. Our bookings have translated into strong revenue growth, and we anticipate we'll continue to do so as we add more new business. Net revenue is up nearly 200% in Q2 over the prior year. These KPIs tell a powerful story of customers waking up to the value that we joke and deliver. Most of our business continues to be derived from our traffic segment in our marketplace offering, where we are the clear leader. But as Richard discussed, we are focused on delivering products and services across multiple product verticals, as well as our SaaS solutions. Our total number of customers has doubled over the same period last year, continuing a strong customer growth trend. We expect to continue to expand customer activity by bringing a significant number of smaller organizations as well. And as we expand into new marketplaces and expand our SaaS opportunities, customer activity will continue to grow. Total contract value, similar to customer activity, more than doubled in the period compared to the prior year. While TCV has a moderate impact on revenue in the current period, it really illustrates the book of business the company is building for future revenue growth. Gross bookings continue at a strong pace like we saw in Q1 and are up 126% from the same period last year. Our most significant new bookings outside of the highlighted ones came from customers doing traffic management, traffic signal timing, road safety, and congestion analysis. We are focused on other market verticals and expect that we will see a further broadening of our customer base as our product offerings expand. Gross bookings per vehicle also grew at 101% to $1.39. ARR, which was at record levels during the period, was up over 50% versus the second quarter of 21. This indicates that a larger number of our customers are moving to a subscription-based model as opposed to being a one-time purchaser. Our business continues to mature from proof-of-concept engagement, with customers to longer subscription-based contracts of 12 to 36 months. With all of these factors, net revenue for the quarter was $1.6 million, representing a 198% increase when compared to the same period in the prior year. About two-thirds of this revenue is from marketplace, and we are seeing early revenue from SaaS opportunities as well. We are maintaining our net revenue guidance of $10 million plus for the full year 2022. Our revenue performance to date of $2.2 million, which is up 158% year over year, and in line with analyst consensus, implies that we will have to generate just under $8 million of additional revenue in the back half of the year. As of this call, we have visibility into 60 to 70% of the full year target of $10 million based on a combination of our previous bookings plus our later stage pipeline. That places us in the range of $6 to $7 million without adding anything new to our pipeline. Of course, we are always adding new deals to the pipeline but these numbers reflect what we know as of today. To make up the difference, we have several potentially large deals in progress in the insurance marketplace and in automotive SaaS that we believe will get our revenue to $10 million plus, depending on the timing and final structure of the deal. Revenue recognition can be impacted by a number of factors, including, of course, timing, but also the structure of the deal. For example, whether the customer deal is done as a software license agreement that has a one-time licensing fee or a SaaS agreement with services paid over time will have a meaningful impact on the amount of revenue in the period, while the TCV is often around the same level. Specifically, a deal to license our software will drive more upfront revenue recognition with a smaller level of revenue recognized over time, while a SAS deal will generally be recognized over the life of the agreement. As such, a major OEM SAS deal can drive a large booking, adding to TCV, but may not significantly increase revenue in the same period. We will focus our customer dialogue on what is best for the customer relationship, and accounting will take its natural course. But these types of differences will be drivers of revenue accounting. any one of these customer deals could generate several million dollars of revenue in a year. Irrespective of the accounting treatment, these new customer deals will drive significant gross bookings, total contract value and backlog, and we believe enough incremental revenue to meet or beat our guidance for the year. The remainder of our financials and other KPIs for second quarter versus the prior year are an adjusted EBITDA loss of $28.9 million, and a 29% increase in monetizable vehicles on platform. We expect to continue to add vehicles to our platform to support expansion into multiple geographies outside of the US. Our adjusted EBITDA loss during the period was impacted by our cost management efforts. Our previously announced cost reduction initiatives will further reduce our adjusted EBITDA losses in the second half. Our burn rate based on guidance for the full year was about $10 million per month. Using adjusted EBITDA as a proxy for cash burn, we expect to cut that rate to about $5 million to $6 million per month as we exit 2022. The improvement in our cost structure has been and will continue to be driven by a hiring freeze, elimination of non-revenue generating projects, and prioritization of workflows that are squarely focused on delivering our revenue goals for 2022. Despite some of these actions, Our plans have not changed, with the exception of the timing of launches of some new product verticals, which will move into 2023. These had only modest revenue expectations for 2022. We continue to be laser focused on the verticals of traffic, insurance, and audience and media measurement for the balance of the year as our key revenue drivers. We have pushed non-essential non-revenue focused projects to future periods to allow for additional flexibility. We have also focused our spending on product and commercial development that has revenue impacts in 2022 and 2023. And finally, we are focused on making our cloud and data costs as efficient as possible. We believe that all of these measures will lead to margin expansion as our business scales over time. And as a result of these initiatives, we are targeting an improved adjusted EBITDA loss in the range of 85 to 95 million dollars for the full year. Finally, we are maintaining our guidance with respect to vehicles on platform for full year 2022. Despite our cost prioritization efforts, we will still onboard vehicles at the 27 to 32 million range this year. focusing on vehicles that give us incremental sensor data, electric vehicles, and vehicles that deliver PII data, which is rich with driver and vehicle insights to support our 2022 and 23 revenue plans. This will represent vehicle growth of almost 75% at the midpoint of the range. Including our pipe raise and cash on balance sheet, our pro forma cash at the end of the quarter was about $38 million. To maximize our capital runway, we are also reducing cash burn, leveraging our partners to improve results, accessing additional capital from the Committed Equity Facility and the Apollo FPA. With these initiatives and assuming that current market conditions persist while we access the CEF and the FPA, we will have access to sufficient liquidity through late 2023. Back to you, Richard. Thank you, John.