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spk00: 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.
spk02: 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.
spk04: 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.
spk02: We recognise that we're still educating the private and public sector organisations and even some OEMs about the value of data insights from connected, electric and autonomous vehicles and how all those datasets are pivotal to the success of the smart mobility landscape. For this quarter's update, I want to spend some time highlighting our product capabilities, which will enable us to continue to rapidly grow our access to the $30 billion data marketplace opportunity for the product verticals we are entering. First, we launched Wejo Labs. a tool which gives researchers and data scientists self-serve access to data from millions of connected vehicles across the US and Europe through the continuous purchase of data packages. Detailed traffic studies analysis can be completed using data from road conditions, inclement weather situations, and identifying road locations where hazardous driving occurs across billions of vehicle journeys, all in an effort to enhance safety. During our last update, we also discussed our real-time traffic intelligence solution, RTTI, and this quarter we launched a new complementary solution called Historic Traffic Patterns, HTTP. Our HTTP solution has the ability to generate data and insights from any location across 95% of America's roadways, all of which have been mapped by Wejo. Imagine the impact that having access to real-time traffic intelligence combined with historical traffic data can have on improving traffic safety and reducing emissions. This new product advances our already dominant position in the traffic marketplace and expands our relationship with major companies and reliance for their logistics and mapping. These and other traffic solutions in the pipeline can bind to serve an anticipated $3.4 billion industry by 2030, according to Petaluma's consulting group. When laying out our strategic goals for 2022, we plan to deploy solutions for the end-to-end insurance productivity core, And our announcement of a deal with Ford Europe marks our initial foray into an anticipated $7.6 billion European market by 2030. We've also created an API solution which delivers information from the vehicle to Wejo for analytics and insights. And upon consent from the driver, we'll share that information with insurers that customise policies and create savings for the customer based on their driving habits or limited mileage. This solution will generate recurring revenue derived from anticipated $44 billion global industry in 2030 and be available for any type of insurer trying to optimize their customer experience and efficiency. We're also developing our Autonomous Vehicle Operating System or AVOS platform designed to accelerate autonomous vehicle adoption globally. This platform creates an environment that enables full simulation testing using billions of miles of connected vehicle data. Leveraging solutions like real-time traffic insights and historic traffic patterns will allow global automotive manufacturers to be able to design and develop autonomous vehicles that understand historical road conditions well, anticipating real-time traffic events to improve safety. Long-term, we see this platform generating marketplace. These product launches deepen and broaden our capabilities and positions to expand our revenue opportunity. They enhance the marketplace breadth and positions to offer solutions across a wide range of spectrum of industries. We are not just developing these capabilities for one product vertical, as we believe they are dynamic and flexible enough to be effective across multiple product verticals. Why is this important? Well, it allows us to replicate our success across newer product verticals with minimal investment. It's our strategy to build capabilities that underpin products and services to serve a broad marketplace with reusable and scalable technology, and that's how we plan to accelerate our revenue profile. As we come to the close of this business update, I just want to reiterate some key points that showcase the foundation Ouija is building now that builds a brighter future for our investors. We have signed new customer deals and partnerships with Board of Europe, RoadMedia and Microsoft. As John mentioned, we have advanced our financial progress significantly by being one of the few recent public tech companies to have raised capital during these difficult economic times. improving our adjusted EBITDA outlook to $85 to $95 million from $110 to $120 million a year, helping to further extend our capital runway. We're reporting continued strong gross bookings, billings, TCV, and other custom market metrics in the quarter. and increasing the net revenue by nearly 200% of the quarter. These metrics demonstrate that our business is building nicely towards our long-term goals in both the marketplace and SaaS. Key customer wins, strong financial discipline, and our expanding product roll-up demonstrate how we're evolving into the premier SaaS solutions provider powered by connected, electric, and autonomous vehicle data. These financial numbers also highlight why Frost & Silver ranked Wejo number one on their research survey, strategic overview of the startup disrupting the global connected car market. I'd like to thank you for your time. John and I will now take your questions. Thank you.
spk01: Thank you. We're now conducting a question and answer session. If you'd like to be placed into question queue, please press star one on your telephone keypad. One moment, please, while we poll for questions. Our first question today is coming from Jeff Mueller from Baird. Your line is now live.
spk03: Yeah, thank you. So first I want to ask about the revenue guidance. You maintained it, but there was some commentary about visibility to, I think, 60% to 70% of the guidance. Just hoping you could contrast it with the original guidance from earlier in this year, because my understanding was you said at that time that was a base of revenue based upon contracted customers and late-stage pipeline. So just trying to understand... the difference because I thought it was already using a methodology that was based upon existing pipelines. So any sort of pipeline progression slowing with macro, it sounded like the impact from the cost structure prioritization and marketplace prioritization was relatively small. So just trying to understand the difference from the original guidance to this commentary on six to seven million of visibility without adding to pipeline.
spk04: Sure. So, yeah, you're right. You're exactly right, Jeff. I mean, we did, as we built the $10 million plus guidance at the beginning of the year when we announced in March, what we're talking about today is really still very much in line with that. It is very possible that when we talk about $10 million plus that when we add up our pipeline of activity, we can easily get if we closed everything to well above $10 million, but we're maintaining the guidance that we have based on the deals that are immediately in pipeline that we know will close. That's the 60 to 70%. And then the other deals that are in various stages of discussion that we think could have a pretty wide range of outcome. So we wanted to make sure that you understood kind of what can cause the range to occur, but we're still very much in line with what we would have expected. at this point.
spk03: Okay, got it. And then I get that you're still onboarding data partnerships and still reiterating the guidance for number of vehicles on platform. There seemed to be maybe a little bit of a nuanced part of the talking point where there was a comment about prioritizing certain types of data. So as we look out over the next several years, I guess, as you focus on your burn rate and your cost structure, are the multi-year outlooks for the number of vehicles that you expect to be on platform unchanged? Or is that part of the trade-offs with the expense management? And instead of the number of vehicles, we should more be talking about the data types that you're bringing online that have maybe better monetization per vehicle opportunities.
spk04: Maybe I'll start and then Richard can add. I mean, look, data, as you know, is critical, central to what we're doing. We have a very strong set of relationships that we've built and we're going to continue to build. So strategically, really nothing has changed. In terms of prioritizing where we spend the money in the short term, it is really focused on what's going to generate the revenue in the near term, but it's not going to change our long-term view of how we manage data. We'll try to be as efficient as we can when we reach relationships with our OEM and fleet partners, but fundamentally nothing has changed.
spk02: But fundamentally, one of the things we're acutely aware of is that we do need to manage our cloud costs. And if we're hitting critical mass of data in a particular field of use in a particular territory or even a state, then that's the point when we will be very vigorous about when we will curtail onboarding of vehicles for the sake of onboarding, as opposed to whether it's going to drive our unit economics up. But as John said, we, we, we, we do not have any intention of varying our number of live vehicles on platform, but we're very much focused on scaling on unit economics up as much as possible and managing our, our, our cloud press managing on cloud processing costs.
spk03: Got it. And I guess a bit related to that, just, um, Any update on Neural Edge and how important does that remain as an initiative as you manage cloud costs, but also manage cost structure generally?
spk02: So, Jeff, I believe you've accepted to join one of our tech analysts day where we do intend to demonstrate further how we've been investing in key technologies, which we're seeing demand from OEMs. That will include Neural Edge, which is the latest version of our debt platform. So we continue to be controlled in our expenditure, but spending in areas where we're seeing inbound demand from OEMs.
spk03: Got it. And then last for me, just on the insurance marketplace, which it seems like you're making good progress on and remains a key initiative. So I saw the Ford partnership, I think you said opening Europe as the first market. Where are you on Japan? I would have thought that that market would be far along given the sample relationship. And then is the large U.S. insurer still in conversations? Is that one of the deals that could potentially help you get to the $10 million on the year?
spk02: So foundationally, we're progressing well in Japan. It takes a long time to establish corporate structures, establish relationships in new territories. But with the additional investment from SOMPO, which we announced a couple of weeks ago, with our progression in Japan, generally with OEMs, we're very much on plan for the rollout of insurance in Japan. It takes time. In terms of the US, I won't go into the specifics, but we're very much in line with, as we said in our previous earnings, we're having more advanced in conversations with more insurers and carriers in the US market. And in terms of Europe, as you mentioned, Ford Europe is now a foundational OEM for us to launch a very broad insurance offering in the overall European market, including the UK.
spk03: Got it. Thank you. I'll turn it over. Thanks, Charlie.
spk01: Thank you. Jeff. Thank you. As a reminder, that's star 1 to be placed in the question queue. One moment, please, while we poll for further questions. If there are no further questions at this time, I'll turn the floor back over to management for any further or closing comments.
spk02: Thank you for all the attendees we've had today. We've seen some great demand in terms of attendance numbers this morning. We hope you're happy with how we've developed WeJo this year with a very clear eye on capital raise and cost management in a tough macroeconomic environment. We've had a great Q2 and we continue to be excited by the future of WeJo. Thank you for your time.
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