Market Overview - The U.S. stock market is closing 2025 on a cautious note, with major index futures edging lower, extending a three-session losing streak, and hopes for a year-end "Santa Claus" rally fading [1] - Despite the recent pullback, 2025 has been a remarkable year for equities, with the S&P 500 poised for its third consecutive year of double-digit gains [1] Premarket Trading and Futures Movements - As of early Wednesday, U.S. stock futures indicated a softer open, with Nasdaq 100 futures down 0.43%, S&P 500 futures down 0.28%, and Dow Jones futures down 0.14% [2] - The S&P 500, Nasdaq Composite, and Dow Jones all finished slightly lower on Tuesday, marking the third consecutive day of losses [2] Commodities Market - Crude oil futures were trading lower by 0.38%, around $57.72 per barrel, while Gold Spot was down 0.35% to approximately $4,324.59 per ounce [3] Major Market Indexes Performance - The S&P 500 is on track for an annual gain of 17-18%, the Dow Jones has advanced 13-14%, and the Nasdaq Composite has jumped nearly 21% in 2025 [4] - This performance marks the S&P 500's third consecutive year of double-digit returns, a rare achievement since the 1940s [4] Federal Reserve Outlook - The Federal Reserve is expected to cut rates in 2026, with uncertainty regarding the extent and pace due to internal divisions and mixed economic data [6] - The FOMC approved a quarter-point reduction in December 2025, bringing the main interest rate to a range between 3.5% and 3.75% [6] - Inflation remains above the Fed's 2% target, with unemployment rising to 4.6% in November and only 64,000 jobs added [6] Corporate Developments - Vanda Pharmaceuticals shares surged over 18% after receiving FDA approval for its drug NEREUS [13] - Nike shares rose 1.54% following CEO Elliott Hill's purchase of approximately $1 million in company shares [13] - Nvidia's stock surged approximately 180% in 2025, driven by robust demand for AI chips, with ByteDance planning to increase spending on Nvidia's AI chips to around $14 billion in 2026 [13] - Urgent.ly Inc. shares rose significantly after the adjournment of its annual stockholder meeting [13] - Applied Digital announced a proposed merger with EKSO Bionics, leading to a 40% surge in EKSO shares [13] - FONAR Corporation shares surged 28.4% after confirming its acquisition by an insider-led group [13] - Society Pass Incorporated shares jumped 16.4% following a newly priced public offering [13] - Palantir and Tesla saw their shares decline amidst concerns about technology giants' capital expenditures [13] - Boeing shares advanced 0.6% after being awarded an $8.58 billion contract by the Defense Department [13] - Meta Platforms shares ended up 1.1% following its acquisition of an AI startup for over $2 billion [13]

Customer and Service Provider Network - As of September 30, 2025, the company has 59 Customer Partners and over 74,000 participating Service Provider vehicle drivers in its network[103]. Dispatch and Revenue Performance - For the three months ended September 30, 2025, the company completed approximately 194,000 dispatches, a decrease from 219,000 dispatches in the same period of 2024[119]. - For the nine months ended September 30, 2025, the company completed approximately 574,000 dispatches, down from 656,000 dispatches in the same period of 2024[119]. - Total revenue decreased by $3.3 million, or 9%, to $32.9 million for the three months ended September 30, 2025, compared to $36.2 million for the same period in 2024[141]. - Revenue decreased by $15.0 million, or 14%, to $95.9 million for the nine months ended September 30, 2025, compared to $110.9 million for the same period in 2024[156]. Cost and Profit Analysis - Cost of revenue decreased by $3.6 million, or 13%, to $24.8 million for the three months ended September 30, 2025, primarily due to a decline in dispatch volume[143]. - Cost of revenue decreased by $14.6 million, or 17%, to $71.9 million for the nine months ended September 30, 2025, primarily due to a decline in dispatch volume[157]. - Gross profit increased by $0.3 million to $8.1 million for the three months ended September 30, 2025, driven by improved unit economics per dispatch[144]. - Gross profit for the nine months ended September 30, 2025 was $24.0 million, a slight decrease from $24.4 million in the same period of 2024[158]. Operating Expenses - Non-GAAP operating expenses for the three months ended September 30, 2025, were $7.988 million, compared to $10.710 million for the same period in 2024, reflecting a decrease of approximately 25.5%[122]. - Total operating expenses decreased by $3.8 million, or 28%, to $9.9 million for the three months ended September 30, 2025[140]. - Research and development expenses decreased by $1.3 million, or 42%, to $1.8 million for the three months ended September 30, 2025[145]. - Sales and marketing expenses decreased by $0.8 million, or 53%, to $0.7 million for the three months ended September 30, 2025[147]. - General and administrative expenses decreased by $1.3 million, or 26%, to $3.7 million for the three months ended September 30, 2025[151]. - Research and development expenses decreased by $5.7 million, or 51%, to $5.4 million, representing 6% of total revenue, down from 10%[160][161]. - Sales and marketing expenses decreased by $3.0 million, or 59%, to $2.1 million, representing 2% of total revenue, down from 5%[162][163]. - Operations and support expenses decreased by $3.6 million, or 33%, to $7.3 million, representing 8% of total revenue, down from 10%[164][165]. - General and administrative expenses decreased by $4.2 million, or 25%, to $12.3 million, representing 13% of total revenue, down from 15%[166][167]. Net Loss and Cash Flow - Net loss for the three months ended September 30, 2025, was $5.2 million, compared to a net loss of $10.6 million for the same period in 2024[140]. - Net cash used in operating activities for the nine months ended September 30, 2025 was $5.6 million, an improvement from $28.8 million in the same period of 2024[182][183]. - Net cash used in investing activities for the nine months ended September 30, 2025 was $4.0 million, compared to a net cash provided of $26.0 million in 2024[184][185]. - Net cash used in financing activities for the nine months ended September 30, 2025 was $0.6 million, a decrease from $18.1 million in 2024[187][188]. Debt and Cash Position - As of September 30, 2025, the principal debt balance totaled $61.0 million, with maturity dates through July 31, 2026[171]. - The company had $4.0 million in cash, cash equivalents, and restricted cash as of September 30, 2025[171]. Strategic Focus and Future Outlook - The company capitalized $4.1 million in costs associated with internal development of its technology platform for the nine months ended September 30, 2025, and expects to invest an additional $1.0 to $1.5 million in Q4 2025[112]. - The company's gross profit is expected to increase modestly over the long term due to platform enhancements leading to more cost-effective Service Provider costs[129]. - The company aims for 100% Consumer satisfaction, with a consumer satisfaction score of 4.6 out of 5 for both the three and nine months ended September 30, 2025[116]. - The company is focused on investing in proprietary technology, machine learning, and data analytics to streamline operations and improve Consumer experience[111]. - The company anticipates that its platform capabilities will grow to meet the demands of new Customer Partners as its Service Provider network expands[107]. Regulatory and Reporting Status - The company is classified as an "emerging growth company" under the JOBS Act, allowing it to delay the adoption of new accounting standards until they apply to private companies[190]. - Management believes there are no material changes to critical accounting estimates that impact the portrayal of financial condition and results of operations[192]. - The company is a smaller reporting company and is not required to provide certain market risk disclosures[194].

Financial Data and Key Metrics Changes - For Q3 2025, the company achieved revenue of $32.9 million, marking a 9% decline or $3.3 million from the same quarter last year, primarily due to reduced dispatch volume from a top OEM customer and decreased revenue from the autonomous business [14] - Gross margin improved to 25%, up from 21% in the same period last year, driven by service dispatch mix and technology optimizations [15] - Non-GAAP operating income for Q3 2025 was $123,000, a significant improvement from a non-GAAP operating loss of $2.9 million in the prior year period, indicating a profitability inflection point [18] Business Line Data and Key Metrics Changes - The company is focusing on new account growth and expanding market share, particularly in the insurance markets, with a new contract launching soon and additional contracts in negotiation [7][8] - The company is also gaining momentum in securing revenue from new logos across various verticals, including fleet and autonomous vehicles [9] Market Data and Key Metrics Changes - The company is positioned to benefit from a potential economic downturn, as increased vehicle breakdowns may lead to higher revenue, particularly from premium OEMs and insurance customers [22][23] - The company anticipates a strong renewal cycle with existing customers, which is crucial for maintaining revenue stability [25][26] Company Strategy and Development Direction - The company aims to return to growth by expanding its existing B2B incident business, securing renewals, and developing new customer partnerships [12] - The company is also focused on transforming the roadside solutions market through product innovations that differentiate it from competitors [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate economic challenges, suggesting that a weakening economy could lead to increased demand for their services [23] - The company expects to maintain non-GAAP operating break-even in Q4 2025, with revenue guidance set between $30-$33 million [19] Other Important Information - The company received a continued listing extension from NASDAQ through February 16, 2026, after presenting a plan to regain compliance with listing rules [4] - The company is actively pursuing strategies to recapitalize its balance sheet to unlock incremental value for shareholders [11] Q&A Session Summary Question: How should investors think about Urgent.ly's positioning in a weakening economy? - Management indicated that the company is somewhat anti-cyclical, as economic downturns may lead to increased vehicle breakdowns, potentially improving revenue [22][23] Question: How should investors view the company's future renewals and customer wins? - Management highlighted strong opportunities in the pipeline, including new insurance contracts and a positive outlook for renewals, suggesting a strong finish to the year [25][26]

Revenue Performance - Revenue for Q3 2025 was $32.9 million, a decrease of 9% year-over-year[6] - Year-to-date revenue was $95.9 million, a decrease of 14% year-over-year[6] Profitability Metrics - Gross profit increased by 4% to $8.1 million, with a gross margin of 25%, up from 21% in the prior year[6] - Non-GAAP operating income was $0.1 million, an improvement of 104% from a non-GAAP loss of $2.9 million in the prior year[6] - The operating loss for Q3 2025 was $1,769,000, an improvement from an operating loss of $5,891,000 in Q3 2024[18] - The company reported a total operating loss of $6,369,000 for the nine months ended September 30, 2025, compared to $22,579,000 in the same period of 2024[18] Operating Expenses - GAAP operating expenses decreased by 28% to $9.9 million, compared to $13.7 million in the prior year[6] - Non-GAAP operating expenses improved by 25% to $8.0 million, down from $10.7 million in the prior year[6] - Total operating expenses for the nine months ended September 30, 2025, were $30,402,000, down from $47,025,000 in the same period of 2024, reflecting a reduction of 35.2%[17] - Non-GAAP operating expenses for the nine months ended September 30, 2025, were $24,483,000, down from $38,660,000 in the same period of 2024, reflecting a reduction of 36.7%[17] Asset Management - Total assets decreased to $42.8 million from $54.1 million at the end of 2024[15] Customer Engagement - Approximately 194,000 dispatches were completed in Q3 2025, maintaining a consumer satisfaction score of 4.6 out of 5 stars[6] - The company continues to focus on expanding relationships with existing customer partners and developing new customer opportunities[3] Expense Breakdown - Depreciation and amortization expenses for Q3 2025 were $1,204,000, slightly up from $1,130,000 in Q3 2024[18] - Stock-based compensation expenses for the nine months ended September 30, 2025, were $1,213,000, down from $1,765,000 in the same period of 2024[17] - Non-recurring transaction costs for Q3 2025 were $419,000, compared to $638,000 in Q3 2024, indicating a decrease of 34.4%[18] - Restructuring costs for Q3 2025 were minimal at $24,000, a significant improvement from $569,000 in Q3 2024[18]

Core Insights - Urgently Inc. reported Q3 2025 financial results showing revenue growth and margin expansion despite a year-over-year revenue decline [1][2] - The company achieved a significant reduction in operating expenses and improved both GAAP operating loss and non-GAAP operating income [2][7] Financial Performance - Revenue for Q3 2025 was $32.9 million, a decrease of 9% year-over-year, while year-to-date revenue was $95.9 million, down 14% [7][17] - Gross profit increased by 4% to $8.1 million, with a gross margin of 25%, up from 21% in the prior year [7][17] - GAAP operating expenses decreased by 28% to $9.9 million compared to $13.7 million in the prior year [7][17] - Non-GAAP operating expenses also improved by 25% to $8.0 million from $10.7 million year-over-year [7][17] - GAAP operating loss was reduced by 70% to $1.8 million from $5.9 million in the prior year [7][17] - Non-GAAP operating income reached $0.1 million, an improvement of 104% compared to a non-GAAP loss of $2.9 million in the prior year [7][17] Operational Metrics - Approximately 194,000 dispatches were completed in Q3 2025, maintaining a consumer satisfaction score of 4.6 out of 5 stars [7][8] - Year-to-date, the company completed around 574,000 dispatches with the same consumer satisfaction score [7][8] Strategic Focus - The company is focused on returning to growth by expanding relationships with existing customer partners and developing new customer opportunities [2][8] - Urgently aims to enhance user experiences through its technology-driven roadside assistance solutions [8]

Core Viewpoint - Urgently Inc. is set to release its third quarter 2025 financial results on November 12, 2025, and will host a conference call to discuss these results [1][2]. Company Overview - Urgently is a leading provider of digital roadside and mobility assistance technology and services, focusing on ensuring safe and uninterrupted movement for drivers [4]. - The company utilizes a digitally native software platform that integrates location-based services, real-time data, AI, and machine-to-machine communication to enhance roadside assistance solutions [4]. - Urgently aims to meet the demand for connected roadside assistance services, enabling partners in various sectors such as automotive, insurance, and telematics to deliver high customer satisfaction and loyalty [4].

Core Insights - Urgently, a leading provider of roadside and mobility assistance using AI technology, has partnered with Sony Honda Mobility of America to offer nationwide coverage for AFEELA vehicle owners starting in 2026 [1][2][3] Company Overview - Urgently focuses on providing safe and seamless mobility solutions through a digitally native software platform that integrates location-based services, real-time data, AI, and machine-to-machine communication [7] - Sony Honda Mobility of America is a joint venture between Sony Group Corporation and Honda Motor Co., Ltd., aiming to redefine mobility by combining entertainment innovation with automotive engineering [6] Partnership Details - The partnership will ensure that AFEELA customers receive reliable roadside assistance from day one of the vehicle's delivery, enhancing the overall customer experience [2][3] - Both companies are preparing for service integration to align with the AFEELA 1 launch, emphasizing a commitment to innovation and customer support [3][4] Customer Experience - The collaboration aims to provide AFEELA drivers with a premium, connected experience, leveraging Urgently's extensive network and digital-first platform [4] - The AFEELA brand is designed to offer a next-generation driving experience that incorporates advanced sensing and interactive technology [5]

Core Points - Urgently Inc. has been notified by Nasdaq of potential delisting due to non-compliance with Listing Rule 5550(b), which requires a minimum of $500,000 in net income, a market value of $35 million, or $2.5 million in stockholders' equity as of September 15, 2025 [1] - The company intends to request a hearing before the Nasdaq Hearings Panel to present its compliance plan and seek an extension [2] - Urgently is focused on providing digital roadside and mobility assistance services, utilizing technology such as AI and real-time data to enhance user experiences and customer satisfaction [3]

PART I. FINANCIAL INFORMATION This section presents Urgent.ly Inc.'s financial statements and management's discussion, highlighting its financial condition, operational results, and internal controls [Item 1. Financial Statements.](index=5&type=section&id=Item%201.%20Financial%20Statements.) This section presents Urgent.ly Inc.'s unaudited condensed consolidated financial statements, highlighting an accumulated deficit of **$209.9 million** and substantial doubt about its going concern ability - The company has a history of recurring operating losses and an accumulated deficit of **$209.9 million** as of June 30, 2025, raising substantial doubt about its ability to continue as a going concern[30](index=30&type=chunk) [Unaudited Condensed Consolidated Balance Sheets](index=5&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) This section provides a summary of Urgent.ly Inc.'s financial position as of June 30, 2025, and December 31, 2024 **Balance Sheet Summary (in thousands)** | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :-------------- | :---------------- | | Cash and cash equivalents | $4,705 | $14,054 | | Accounts receivable, net | $19,873 | $22,890 | | Total current assets | $26,909 | $40,756 | | Total assets | $40,152 | $54,071 | | Total current liabilities | $29,309 | $37,594 | | Total liabilities | $81,460 | $85,741 | | Total stockholders' deficit | $(41,308) | $(31,670) | [Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) This section details Urgent.ly Inc.'s financial performance and comprehensive loss for the three and six months ended June 30, 2025 and 2024 **Statements of Operations (Six Months Ended June 30, in thousands)** | Metric | 2025 | 2024 | | :------------------------------------ | :----- | :----- | | Revenue | $62,959 | $74,629 | | Cost of revenue | $47,037 | $57,948 | | Gross profit | $15,922 | $16,681 | | Total operating expenses | $20,522 | $33,369 | | Operating loss | $(4,600) | $(16,688) | | Total other expense, net | $(6,471) | $(7,845) | | Net loss attributable to common stockholders | $(11,096) | $(24,682) | | Basic and diluted EPS | $(9.18) | $(22.12) | **Statements of Operations (Three Months Ended June 30, in thousands)** | Metric | 2025 | 2024 | | :------------------------------------ | :----- | :----- | | Revenue | $31,687 | $34,537 | | Cost of revenue | $23,754 | $27,207 | | Gross profit | $7,933 | $7,330 | | Total operating expenses | $10,086 | $15,670 | | Operating loss | $(2,153) | $(8,340) | | Total other expense, net | $(3,453) | $(3,217) | | Net loss attributable to common stockholders | $(5,612) | $(11,667) | | Basic and diluted EPS | $(4.50) | $(10.43) | [Unaudited Condensed Consolidated Statements of Stockholders' Deficit](index=7&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Deficit) This section outlines changes in Urgent.ly Inc.'s stockholders' deficit for the periods ending June 30, 2025, March 31, 2025, and December 31, 2024 **Stockholders' Deficit (in thousands)** | Metric | December 31, 2024 | March 31, 2025 | June 30, 2025 | | :------------------------ | :---------------- | :------------- | :------------ | | Common Stock (Amount) | $1 | $1 | $1 | | Additional Paid-In Capital | $167,125 | $168,201 | $168,583 | | Accumulated Deficit | $(198,796) | $(204,280) | $(209,892) | | Total Stockholders' Deficit | $(31,670) | $(36,078) | $(41,308) | - Key changes in stockholders' deficit for the six months ended June 30, 2025, include a net loss of **$(11.1 million)**, issuance of common stock of **$0.6 million** in connection with the Highbridge loan amendment, and stock-based compensation expense of **$0.9 million**[22](index=22&type=chunk) [Unaudited Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section presents Urgent.ly Inc.'s cash flow activities from operations, investing, and financing for the six months ended June 30, 2025 and 2024 **Cash Flow Summary (Six Months Ended June 30, in thousands)** | Activity | 2025 | 2024 | | :---------------------- | :----- | :----- | | Operating activities | $(2,191) | $(20,120) | | Investing activities | $(2,456) | $24,678 | | Financing activities | $(4,702) | $(18,066) | | Net decrease in cash | $(9,349) | $(13,458) | | Cash, cash equivalents and restricted cash, end of period | $4,830 | $24,798 | - Net cash used in operating activities for the six months ended June 30, 2025, was **$2.2 million**, primarily due to a net loss of **$11.1 million**, offset by non-cash expenses totaling **$9.3 million** and a decrease in accounts receivable of **$2.9 million**[25](index=25&type=chunk)[182](index=182&type=chunk) - Net cash used in investing activities for the six months ended June 30, 2025, was **$2.5 million**, mainly due to **$2.4 million** in capitalized software investments[25](index=25&type=chunk)[184](index=184&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations of Urgent.ly Inc.'s accounting policies, significant transactions, and financial statement line items - The Company's financial statements are prepared assuming it will continue as a going concern, despite recurring operating losses and an accumulated deficit of **$209.9 million** as of June 30, 2025[29](index=29&type=chunk)[30](index=30&type=chunk) - Revenue concentration: **59%** of revenue for Q2 2025 and **56%** for H1 2025 was earned from two customers, with **72%** of accounts receivable at June 30, 2025, due from four customers[41](index=41&type=chunk) - As of June 30, 2025, total principal debt was **$55.3 million**, including a Highbridge Capital term loan (**$43.3 million**) and a MidCap Financial revolving credit facility (**$7.8 million**), with the Structural Capital term loan fully repaid in February 2025[68](index=68&type=chunk)[71](index=71&type=chunk)[77](index=77&type=chunk) - On July 1, 2025, the company issued 112,038 shares of common stock to investors, and on July 11, 2025, it entered into an At-The-Market (ATM) equity offering program to sell up to **$4.0 million** of common stock[98](index=98&type=chunk)[99](index=99&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=19&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Urgent.ly Inc.'s financial condition and operational results, highlighting reduced operating losses despite decreased revenue, driven by expense reductions and strategic investments - Urgent.ly operates a leading connected mobility assistance software platform, serving 55 Customer Partners and over 74,000 Service Providers as of June 30, 2025[102](index=102&type=chunk)[103](index=103&type=chunk) - Revenue is primarily generated from multi-year contracts with Customer Partners on a per-incident basis, membership programs, and SaaS solutions[104](index=104&type=chunk) - The company capitalized **$2.7 million** in software development costs in H1 2025 and expects to invest an additional **$2.0-$3.0 million** in the remainder of 2025[112](index=112&type=chunk) [Overview](index=19&type=section&id=Overview) This section provides a general description of Urgent.ly Inc.'s connected mobility assistance software platform and its operational focus - Urgent.ly's platform leverages location-based services, real-time data, AI, and machine-to-machine communication to deliver roadside assistance services[103](index=103&type=chunk) - The company's Sales and Partner Management Department focuses on Customer Partner retention and Consumer satisfaction, often engaging in pilot programs before multi-year contracts[105](index=105&type=chunk) [Key Factors Affecting Our Performance](index=19&type=section&id=Key%20Factors%20Affecting%20Our%20Performance) This section identifies critical elements influencing Urgent.ly Inc.'s financial and operational performance, including customer acquisition, technology investment, and seasonality - New Customer Partner acquisition is a key factor for revenue growth, margin improvement, and profitability, with one new Customer Partner launched and another scaled up in the first half of 2025[106](index=106&type=chunk)[109](index=109&type=chunk) - Continued investment in proprietary technology, machine learning, and data analytics is crucial for maintaining a competitive advantage and expanding platform functionality[110](index=110&type=chunk) - Seasonality impacts service requests, with higher volumes during summer/holiday travel and winter weather, and also during economic downturns due to delayed vehicle maintenance[113](index=113&type=chunk)[114](index=114&type=chunk) [Key Business Metrics](index=20&type=section&id=Key%20Business%20Metrics) This section presents essential operational metrics used to evaluate Urgent.ly Inc.'s business performance, such as consumer satisfaction and dispatch volumes **Consumer Satisfaction Score (1-5 star scale)** | Period | 2025 | 2024 | | :-------------------------- | :--- | :--- | | Three Months Ended June 30, | 4.7 | 4.5 | | Six Months Ended June 30, | 4.6 | 4.6 | **Number of Dispatches (in thousands)** | Period | 2025 | 2024 | Change | | :-------------------------- | :--- | :--- | :----- | | Three Months Ended June 30, | 191 | 205 | (14) | | Six Months Ended June 30, | 380 | 436 | (56) | [Non-GAAP Financial Measures](index=21&type=section&id=Non-GAAP%20Financial%20Measures) This section reconciles GAAP operating expenses and operating loss to their non-GAAP counterparts, providing alternative performance indicators **Non-GAAP Operating Expenses (in thousands)** | Period | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Operating expenses (GAAP) | $10,086 | $15,670 | $20,522 | $33,369 | | Less: Depreciation and amortization expense | $(1,079) | $(1,104) | $(2,065) | $(2,206) | | Less: Stock-based compensation expense | $(382) | $(438) | $(920) | $(1,156) | | Less: Non-recurring transaction costs | $(178) | $(207) | $(553) | $(933) | | Less: Restructuring costs | $(315) | $(425) | $(489) | $(1,124) | | **Non-GAAP operating expenses** | **$8,132** | **$13,496** | **$16,495** | **$27,950** | **Non-GAAP Operating Loss (in thousands)** | Period | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Operating loss (GAAP) | $(2,153) | $(8,340) | $(4,600) | $(16,688) | | Add: Depreciation and amortization expense | $1,079 | $1,104 | $2,065 | $2,206 | | Add: Stock-based compensation expense | $382 | $438 | $920 | $1,156 | | Add: Non-recurring transaction costs | $178 | $207 | $553 | $933 | | Add: Restructuring costs | $315 | $425 | $489 | $1,124 | | **Non-GAAP operating loss** | **$(199)** | **$(6,166)** | **$(573)** | **$(11,269)** | [Components of Results of Operations](index=22&type=section&id=Components%20of%20Results%20of%20Operations) This section details the primary revenue streams, cost structures, and gross margin expectations for Urgent.ly Inc.'s business operations - Revenue is primarily generated from roadside assistance services (RAS) through full-service outsourcing (flat-rate or claim cost pass-through) and direct membership offerings[126](index=126&type=chunk)[132](index=132&type=chunk) - Cost of revenue mainly consists of fees paid to Service Providers, technology hosting, platform-related costs, and direct call center support[128](index=128&type=chunk)[52](index=52&type=chunk) - Gross margin is expected to increase modestly over the long term due to platform enhancements leading to more cost-effective Service Provider costs[129](index=129&type=chunk) [Results of Operations](index=24&type=section&id=Results%20of%20Operations) This section analyzes Urgent.ly Inc.'s revenue, gross profit, and operating expenses, explaining the drivers behind changes in financial performance - Revenue decreased by **$2.9 million (8%)** for the three months ended June 30, 2025, primarily due to the early termination of a top 5 global OEM Customer Partner and a reduction in the Otonomo business, partially offset by new Customer Partners[139](index=139&type=chunk) - Gross profit increased by **$0.6 million** for the three months ended June 30, 2025, driven by improved unit economics per dispatch despite a decrease in volume[142](index=142&type=chunk) - Operating expenses significantly decreased across all categories for both the three and six months ended June 30, 2025, primarily due to reductions in Otonomo-related expenses, employee-related costs, and operational efficiencies[143](index=143&type=chunk)[145](index=145&type=chunk)[147](index=147&type=chunk)[149](index=149&type=chunk)[157](index=157&type=chunk)[160](index=160&type=chunk)[162](index=162&type=chunk)[164](index=164&type=chunk) - Revenue decreased by **$11.7 million (16%)** for the six months ended June 30, 2025, due to non-renewal of an auto manufacturer, existing Customer Partner volume reduction, Otonomo business reduction, early termination of a top 5 global OEM, and an EV Customer Partner bankruptcy[154](index=154&type=chunk) [Liquidity and Capital Resources](index=28&type=section&id=Liquidity%20and%20Capital%20Resources) This section assesses Urgent.ly Inc.'s ability to meet its short-term and long-term financial obligations, including cash position and debt arrangements - The company faces substantial doubt about its ability to continue as a going concern due to recurring losses and reliance on debt/equity financing[169](index=169&type=chunk) - As of June 30, 2025, cash, cash equivalents, and restricted cash totaled **$4.8 million**, with a principal debt balance of **$55.3 million**[170](index=170&type=chunk) - The company repaid the Structural Loan Agreement in February 2025, extended the Highbridge Loan Agreement maturity to July 31, 2026, and entered into a new MidCap Financial Revolving Credit Facility for up to **$20.0 million**[171](index=171&type=chunk)[173](index=173&type=chunk)[177](index=177&type=chunk) - An At-The-Market (ATM) equity offering program was established in July 2025 to sell up to **$4.0 million** of common stock[176](index=176&type=chunk) [Cash Flows](index=29&type=section&id=Cash%20Flows) This section analyzes Urgent.ly Inc.'s cash generation and usage from operating, investing, and financing activities for the reported periods **Net Cash Provided by (Used in) Activities (Six Months Ended June 30, in thousands)** | Activity | 2025 | 2024 | | :---------------------- | :----- | :----- | | Operating activities | $(2,191) | $(20,120) | | Investing activities | $(2,456) | $24,678 | | Financing activities | $(4,702) | $(18,066) | - Net cash used in operating activities significantly decreased to **$2.2 million** in H1 2025 from **$20.1 million** in H1 2024, primarily due to a reduced net loss and favorable changes in accounts receivable[182](index=182&type=chunk)[183](index=183&type=chunk) - Net cash used in investing activities was **$2.5 million** in H1 2025, a shift from **$24.7 million** provided in H1 2024, mainly due to investments in capitalized software and the absence of proceeds from short-term deposits/marketable securities sales seen in the prior year[184](index=184&type=chunk)[185](index=185&type=chunk) [Contractual Obligations and Commitments](index=30&type=section&id=Contractual%20Obligations%20and%20Commitments) This section outlines Urgent.ly Inc.'s significant contractual cash obligations, including credit facilities, long-term debt, and operating leases - Principal commitments include contractual cash obligations under credit facilities, long-term debt, and operating leases[189](index=189&type=chunk) [Emerging Growth Company Status](index=30&type=section&id=Emerging%20Growth%20Company%20Status) This section discusses Urgent.ly Inc.'s status as an emerging growth company and its election to delay adoption of new accounting pronouncements - As an 'emerging growth company' under the JOBS Act, Urgent.ly has elected to delay the adoption of new or revised accounting pronouncements, which may affect comparability with other public companies[190](index=190&type=chunk) [Critical Accounting Estimates](index=30&type=section&id=Critical%20Accounting%20Estimates) This section confirms that there are no material changes to Urgent.ly Inc.'s critical accounting estimates previously disclosed in the Annual Report - Management believes there are no material changes to the critical accounting estimates previously disclosed in the Annual Report[192](index=192&type=chunk) [Recent Accounting Pronouncements](index=30&type=section&id=Recent%20Accounting%20Pronouncements) This section details recent accounting pronouncements, including ASU 2023-09, and their potential impact on Urgent.ly Inc.'s financial disclosures - The FASB issued ASU 2023-09 in December 2023, effective for annual periods beginning after December 15, 2024, which provides improvements to income tax disclosures, and the company is evaluating its impact[46](index=46&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=30&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Urgent.ly Inc. is not required to provide detailed quantitative and qualitative disclosures about market risk - The company is a smaller reporting company and is not required to provide quantitative and qualitative disclosures about market risk[194](index=194&type=chunk) [Item 4. Controls and Procedures](index=30&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that Urgent.ly Inc.'s disclosure controls and procedures were ineffective as of June 30, 2025, due to material weaknesses in internal control over financial reporting, with remediation plans underway - Disclosure controls and procedures were not effective as of June 30, 2025, due to material weaknesses in internal control over financial reporting[195](index=195&type=chunk) - Two material weaknesses identified: (i) lack of evidence of segregation of duties within accounting and finance, and (ii) ineffective design and maintenance of IT general controls for information systems and user privileges[198](index=198&type=chunk) - Remediation plans include designing and maintaining new/revised controls for IT user access and reorganizing the finance department to improve segregation of duties[199](index=199&type=chunk)[200](index=200&type=chunk) PART II. OTHER INFORMATION This section provides additional information including legal proceedings, risk factors, equity sales, and other disclosures relevant to Urgent.ly Inc [Item 1. Legal Proceedings](index=32&type=section&id=Item%201.%20Legal%20Proceedings) Urgent.ly Inc. is not currently involved in any legal proceedings that are expected to have a material adverse effect on its business, financial condition, or results of operations - The company is not currently a party to any actions, claims, suits, or other legal proceedings that would individually or in the aggregate have a material adverse effect on its business, financial condition, or results of operations[206](index=206&type=chunk) [Item 1A. Risk Factors](index=32&type=section&id=Item%201A.%20Risk%20Factors) This section highlights new risk factors, including potential Nasdaq delisting due to non-compliance and the adverse impact of significant share sales, such as through the ATM Program - The company received a notification from Nasdaq on March 19, 2025, regarding non-compliance with the Minimum Net Income Requirement and other Continued Listing Standards, posing a risk of delisting[208](index=208&type=chunk)[209](index=209&type=chunk) - Sales of a substantial number of common shares, including through the ATM Program or exercise of registration rights, could significantly reduce the market price of the common stock and cause dilution[211](index=211&type=chunk)[215](index=215&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=33&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities or use of proceeds occurred during the fiscal quarter ended June 30, 2025 - No unregistered sales of equity securities or use of proceeds were reported[216](index=216&type=chunk) [Item 3. Defaults Upon Senior Securities](index=33&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This item is not applicable to Urgent.ly Inc. for the reporting period - Not applicable[217](index=217&type=chunk) [Item 4. Mine Safety Disclosures](index=33&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to Urgent.ly Inc. for the reporting period - Not applicable[218](index=218&type=chunk) [Item 5. Other Information](index=33&type=section&id=Item%205.%20Other%20Information) No directors or executive officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the fiscal quarter ended June 30, 2025 - No directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the fiscal quarter ended June 30, 2025[219](index=219&type=chunk) [Item 6. Exhibits](index=33&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed as part of this Quarterly Report on Form 10-Q, including corporate governance documents, employment/advisor agreements, the Sales Agreement for the ATM Program, and various certifications - Exhibits include amendments to the Certificate of Incorporation, Bylaws, Promotion Letter, Advisor Agreement, Sales Agreement for the ATM Program, and certifications (302 and 906)[221](index=221&type=chunk) [Signatures](index=35&type=section&id=Signatures) This section provides the official signatures for the Quarterly Report on Form 10-Q, confirming its submission - The report was signed by Matthew Booth, Chief Executive Officer (Principal Executive and Financial Officer) on August 13, 2025[226](index=226&type=chunk)

Financial Data and Key Metrics Changes - Revenue for Q2 2025 was $31.7 million, marking an 8% decline year-over-year, primarily due to reduced dispatch volume from a top customer and the autonomous business [21][22] - Gross profit increased to $7.9 million, with a gross margin of 25%, up from 21.2% in the same period last year, driven by margin improvement initiatives [22] - Non-GAAP operating loss was approximately $199,000, a 97% improvement compared to $6.2 million in the prior year [27] Business Line Data and Key Metrics Changes - The company secured two renewals for 2025, contributing to revenue stability, with 40% of the renewals completed so far [38] - The focus on the insurance market has led to a new contract with a premium insurance provider and ongoing negotiations with two additional providers [13][41] Market Data and Key Metrics Changes - The company is targeting mid-tier insurance providers, which are currently underserved, and has initiated a sales plan to reach these markets [12][41] - The AI-powered market analyzer, Spark, has been launched to enhance service performance across urban markets, showing significant improvements in wait times [15][16] Company Strategy and Development Direction - The company aims to return to growth by expanding existing B2B incident business and developing new customer partnerships [18] - Continued investment in AI and machine learning is seen as critical for maintaining competitive advantage and improving customer satisfaction [14][17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving non-GAAP operating breakeven in Q3 2025, with expectations for revenue growth to begin in late Q3 or early Q4 [29][31] - The company anticipates a flattening of seasonal revenue drops due to AI and machine learning initiatives [32] Other Important Information - As of June 30, 2025, the company had cash and cash equivalents of $4.8 million and a principal debt balance of $55.3 million [27][28] - The company has entered into a sales agreement to sell shares through an ATM program, although no shares have been sold yet [28] Q&A Session Summary Question: When should revenue growth from the premium insurance provider be expected? - Management expects to see revenue growth from the premium insurance provider by the end of Q3 or beginning of Q4, targeting 20% to 30% growth post-autonomous business [31] Question: Will the new revenue overwhelm typical seasonality in Q4? - Management noted that the seasonality curve is flattening due to AI work, suggesting continued revenue growth despite typical seasonal drops [32] Question: How much of the revenue do the renewals account for? - Renewals completed so far account for 40% of the revenue expected for the year [38] Question: What is the status of the sales cycle for new contracts? - The sales cycle is consistent with expectations, with larger companies moving slower and smaller companies moving faster [44] Question: When will nonrecurring transaction costs head towards zero? - Management indicated that the specific costs related to the autonomous business are expected to cease, with minimal ongoing costs anticipated [47]