Urgent.ly (ULY) - 2025 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements This section presents the company's unaudited condensed consolidated financial statements for the period ended March 31, 2025 Unaudited Condensed Consolidated Balance Sheets Key Financial Position Metrics | Metric | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------------- | :----------------------------- | :----------------------------- | | Cash and cash equivalents | $6,285 | $14,054 | | Accounts receivable, net | $23,506 | $22,890 | | Total current assets | $32,816 | $40,756 | | Total assets | $46,432 | $54,071 | | Total current liabilities | $32,512 | $37,594 | | Total liabilities | $82,510 | $85,741 | | Total stockholders' deficit | $(36,078) | $(31,670) | - The company's cash and cash equivalents decreased significantly from $14,054 thousand at December 31, 2024, to $6,285 thousand at March 31, 2025[15] - Total assets and total liabilities also decreased, while the stockholders' deficit widened[15] Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss Quarterly Performance Summary | Metric (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------- | :-------------------------------- | :-------------------------------- | | Revenue | $31,272 | $40,092 | | Cost of revenue | $23,283 | $30,741 | | Gross profit | $7,989 | $9,351 | | Operating expenses | $10,436 | $17,699 | | Operating loss | $(2,447) | $(8,348) | | Net loss | $(5,484) | $(13,015) | | Basic and diluted EPS | $(4.69) | $(11.69) | - Revenue decreased by 22% year-over-year, from $40.1 million in Q1 2024 to $31.3 million in Q1 2025[18][131] - Despite the revenue decline, operating loss significantly improved from $(8.3) million to $(2.4) million, and net loss decreased from $(13.0) million to $(5.5) million, primarily due to a substantial reduction in operating expenses[18][131] Unaudited Condensed Consolidated Statements of Stockholders' Deficit Changes in Stockholders' Deficit | Metric (in thousands) | December 31, 2024 | March 31, 2025 | | :-------------------- | :---------------- | :------------- | | Total Stockholders' Deficit | $(31,670) | $(36,078) | | Net loss | — | $(5,484) | | Issuance of common stock in connection with Highbridge loan amendment | — | $570 | | Stock-based compensation expense | — | $538 | - The total stockholders' deficit increased from $(31,670) thousand to $(36,078) thousand, primarily due to the net loss of $(5,484) thousand[21] - This was partially offset by an increase in additional paid-in capital from stock-based compensation and common stock issuance related to a loan amendment[21] Unaudited Condensed Consolidated Statements of Cash Flows Quarterly Cash Flow Summary | Cash Flow Activity (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash used in operating activities | $(5,166) | $(9,712) | | Net cash used in investing activities | $(1,202) | $23,729 | | Net cash used in financing activities | $(1,401) | $(18,066) | | Net decrease in cash, cash equivalents and restricted cash | $(7,769) | $(4,014) | - Net cash used in operating activities improved from $(9.7) million in Q1 2024 to $(5.2) million in Q1 2025[23][159] - Net cash used in investing activities shifted from a $23.7 million inflow in Q1 2024 to a $1.2 million outflow in Q1 2025[23][159] - Net cash used in financing activities also decreased significantly from $(18.1) million to $(1.4) million[23][159] Notes to Unaudited Condensed Consolidated Financial Statements 1. Organization - Urgent.ly Inc. is a connected mobility assistance software platform that completed a 1-for-12 reverse stock split effective March 17, 2025[25][26] - The company has a history of recurring operating losses and an accumulated deficit of $204.3 million, raising substantial doubt about its ability to continue as a going concern[28] - In Q1 2025, the company undertook a restructuring, eliminating 23 employees (13% of total) to reduce operating expenses, resulting in $174 thousand in charges[31] 2. Summary of Significant Accounting Policies - There have been no material changes to the company's significant accounting policies from its audited financial statements for the year ended December 31, 2024[32] - The company operates in a single reportable segment: Mobility Assistance Services[44] - The company has significant customer concentration, with 53% and 54% of revenue in Q1 2025 and Q1 2024, respectively, earned from a small number of customers[40] 3. Revenue - The company generates substantially all revenue from roadside assistance services (RAS) via its software platform, primarily through full-service outsourcing[47][120] Revenue by Type | Revenue Type (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------------- | :-------------------------------- | :-------------------------------- | | Full-service outsourcing—flat rate | $31,120 | $38,150 | | Full-service outsourcing—claim cost pass-through | $3 | $3 | | Membership | $99 | $145 | | Software licensing arrangements | $42 | $1,335 | | Professional services | $8 | $459 | | Total Revenue | $31,272 | $40,092 | - Capitalized contract costs to obtain and fulfill contracts are deferred as other non-current assets and amortized over the contract term or expected period of benefit[54][55] 4. Fair Value Measurements Fair Value of Financial Instruments | Financial Instrument (in thousands) | Fair Value as of March 31, 2025 (Total) | Fair Value as of December 31, 2024 (Total) | | :---------------------------------- | :-------------------------------------- | :----------------------------------------- | | Money market funds | $2,277 | $8,853 | | Contingent purchase consideration | $(2,848) | $(2,925) | | Derivative liability | $(471) | — | - The derivative liability, representing a contingent promise to issue additional consideration, was recorded at $471 thousand as of March 31, 2025[61][62] 5. Intangible Assets Net Carrying Amount of Intangible Assets | Intangible Asset (in thousands) | March 31, 2025 (Net Carrying Amount) | December 31, 2024 (Net Carrying Amount) | | :------------------------------ | :----------------------------------- | :-------------------------------------- | | Acquired technology | $3,975 | $4,365 | | Domain name | $31 | $31 | | Total Intangible Assets | $4,006 | $4,396 | - Amortization expense for intangible assets was $390 thousand for Q1 2025, a decrease from $852 thousand in the prior year period[64] 6. Accrued Expenses Breakdown of Accrued Expenses | Accrued Expense (in thousands) | March 31, 2025 | December 31, 2024 | | :----------------------------- | :------------- | :---------------- | | Accrued service provider costs | $4,059 | $4,447 | | Accrued compensation | $855 | $1,194 | | Accrued interest | $1,705 | $1,547 | | Contingent purchase consideration | $2,848 | $2,925 | | Accrued lender fees | — | $3,247 | | Accrued VAT and income taxes | $2,406 | $3,139 | | Total Accrued Expenses | $15,638 | $19,838 | - Total accrued expenses decreased from $19.8 million to $15.6 million, primarily due to the absence of accrued lender fees and other reductions[66] 7. Debt Arrangements Principal Debt Balances | Debt Type (in thousands) | March 31, 2025 | December 31, 2024 | | :----------------------- | :------------- | :---------------- | | Structural Capital term loan | — | $10,000 | | Highbridge Capital term loan | $41,600 | $40,000 | | MidCap Financial revolving credit facility | $10,892 | — | | 2022 convertible promissory notes | $4,257 | $4,257 | | Total principal debt | $56,749 | $54,257 | - The company fully repaid the Structural Capital term loan in February 2025 using proceeds from a new MidCap Financial revolving credit facility[69][71][72][75] - A new MidCap Financial revolving credit facility was entered into on February 26, 2025, for up to $20 million[75][76] 8. Stock-based Compensation - The 2023 Equity Incentive Plan and 2023 Employee Stock Purchase Plan were increased on January 1, 2025, by 46,106 and 9,221 shares, respectively[79][80] - Stock-based compensation expense decreased from $718 thousand in Q1 2024 to $538 thousand in Q1 2025[83] 9. Income Taxes - The company continues to fully reserve its U.S.-based deferred tax amounts as of March 31, 2025, due to its cumulative operating loss[88] 10. Commitments and Contingencies - Management believes there are no unresolved claims and litigation that will materially affect the company's financial position or operations[89] 11. Leases Lease Costs | Lease Cost (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------ | :-------------------------------- | :-------------------------------- | | Lease cost | $148 | $300 | | Sublease income | — | $(69) | Remaining Lease Maturities | Remaining Lease Maturities (in thousands) | Amount | | :---------------------------------------- | :----- | | 2025 | $350 | | 2026 | $284 | | 2027 | $218 | | Total lease payments | $852 | | Present value of lease liabilities | $777 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's analysis of financial condition and operational results for the first quarter of 2025 Overview - Urgent.ly is a leading connected mobility assistance software platform, leveraging location-based services, real-time data, and AI[95][96] - As of March 31, 2025, the platform serves 53 Customer Partners and over 75,000 Service Provider vehicle drivers[96] - Revenue is primarily generated from Customer Partners on a per-incident basis, membership programs, and SaaS solutions[97] Key Factors Affecting Our Performance - New Customer Partner acquisition and retention are crucial for revenue growth, margin improvement, and profitability[99][102] - Continued investment in innovation, including proprietary technology and machine learning, is essential to maintain a competitive advantage[103][104] - The company expects operating expenses to decrease in the short term due to a judicious staffing model and realignment efforts[105] - The business experiences seasonality, with higher demand during summer and winter holidays and during economic downturns[107][108] Key Business Metrics - Consumer satisfaction score was 4.6 out of 5 stars for both Q1 2025 and Q1 2024, reflecting a strong focus on service experience[111] Number of Dispatches | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :---------------- | :-------------------------------- | :-------------------------------- | | Number of Dispatches | 189,000 | 231,000 | - The number of completed dispatches decreased by approximately 18% year-over-year, from 231,000 in Q1 2024 to 189,000 in Q1 2025[113] Non-GAAP Financial Measures Non-GAAP Operating Metrics | Non-GAAP Metric (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :----------------------------- | :-------------------------------- | :-------------------------------- | | Non-GAAP operating expenses | $8,363 | $14,454 | | Non-GAAP operating loss | $(374) | $(5,103) | - Non-GAAP operating expenses decreased by 42% year-over-year, and non-GAAP operating loss significantly improved from $(5.1) million to $(0.4) million[116][119] Components of Results of Operations - Revenue is primarily generated from full-service outsourcing of roadside assistance services[120][124] - Cost of revenue mainly consists of fees paid to Service Providers, technology hosting, and direct call center support personnel[122] - Operating expenses are categorized into Research and Development, Sales and Marketing, Operations and Support, and General and Administrative[125][126][127][128][129] - Other income (expense), net includes interest, changes in fair value of liabilities, and gain/loss on debt extinguishment[130] Results of Operations Comparison of Quarterly Results | Metric (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change ($) | Change (%) | | :-------------------- | :-------------------------------- | :-------------------------------- | :--------- | :--------- | | Total revenue | $31,272 | $40,092 | $(8,820) | (22)% | | Cost of revenue | $23,283 | $30,741 | $(7,458) | (24)% | | Gross profit | $7,989 | $9,351 | $(1,362) | (15)% | | Operating loss | $(2,447) | $(8,348) | $5,901 | 71% | | Net loss | $(5,484) | $(13,015) | $7,531 | 58% | - Revenue decreased by $8.8 million (22%) primarily due to the non-renewal of one auto manufacturer Customer Partner and reduced dispatch volume[132] - Operating expenses decreased significantly across all categories, largely driven by reductions in Otonomo-related expenses and operational efficiencies[136][138][140][142] - Other expense, net, decreased by $1.6 million (35%) due to lower interest expense and the absence of a prior-year loss on debt extinguishment[146] Liquidity and Capital Resources - The company's history of losses and negative cash flows raise substantial doubt about its ability to continue as a going concern[147] - As of March 31, 2025, cash, cash equivalents, and restricted cash totaled $6.4 million, with a principal debt balance of $56.7 million[148] - Recent financing activities include extending loan maturities and entering into a new $20 million MidCap Credit Agreement in February 2025[149][150][151] - The company consistently maintains a working capital deficit and undertook further employee reductions in Q1 2025 to align expenses with revenue[156][158] Cash Flows - Net cash used in operating activities decreased to $5.2 million in Q1 2025 from $9.7 million in Q1 2024, driven by a lower net loss[159][160][163] - Net cash used in investing activities was $1.2 million in Q1 2025, a significant shift from $23.7 million provided in Q1 2024[159][164][165] - Net cash used in financing activities decreased to $1.4 million in Q1 2025 from $18.1 million in Q1 2024[159][166][167] Contractual Obligations and Commitments - Principal commitments include contractual cash obligations under credit facilities, long-term debt, and operating leases[168] Emerging Growth Company Status - As an 'emerging growth company,' Urgent.ly has elected to delay the adoption of new or revised accounting pronouncements[169] Critical Accounting Estimates - Management believes there are no material changes to the critical accounting estimates previously disclosed in the Annual Report[171] Recent Accounting Pronouncements - Refer to Note 2 'Summary of Significant Accounting Policies' for a description of new accounting standards[173] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company is exempt from market risk disclosures as a smaller reporting company - The company is a smaller reporting company and is not required to provide quantitative and qualitative disclosures about market risk[174] Item 4. Controls and Procedures This section details the evaluation of disclosure controls, identified material weaknesses, and ongoing remediation plans Evaluation of Disclosure Controls and Procedures - Management concluded that disclosure controls and procedures were not effective as of March 31, 2025, due to material weaknesses[175] - Despite the weaknesses, management concluded the financial statements fairly state the financial position in conformity with GAAP[175] Material Weaknesses in Internal Control over Financial Reporting - Two material weaknesses were identified: lack of segregation of duties and ineffective IT general controls[177] Remediation Plans for Material Weaknesses in Internal Control over Financial Reporting - Remediation plans include designing new controls for IT and reorganizing the finance department to address segregation of duties[178][179] - These material weaknesses will not be considered remediated until remedial controls operate for a sufficient period and are tested effectively[180] Changes in Internal Control over Financial Reporting - No other changes in internal control over financial reporting were identified during Q1 2025, apart from the ongoing remediation efforts[181] Inherent Limitations on Effectiveness of Controls and Procedures - Management acknowledges that control systems provide only reasonable, not absolute, assurance and are subject to inherent limitations[182] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company is not currently a party to any material legal proceedings - The company is not currently involved in any legal proceedings that would materially affect its financial position or operations[185] Item 1A. Risk Factors This section highlights a new risk factor concerning non-compliance with Nasdaq listing standards - No material changes to principal risk factors, other than those related to Nasdaq listing standards[186] Nasdaq Listing Standards - On March 19, 2025, the company received a notification from Nasdaq for failing to meet Continued Listing Standards[187] - A compliance plan was submitted, but there is no assurance of acceptance or regaining compliance, which could lead to delisting[188][189] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds There were no unregistered sales of equity securities during the reporting period - None[190] Item 3. Defaults Upon Senior Securities This item is not applicable to the company for the reporting period - Not applicable[191] Item 4. Mine Safety Disclosures This item is not applicable to the company for the reporting period - Not applicable[192] Item 5. Other Information No directors or executive officers adopted or terminated Rule 10b5-1 trading arrangements during the quarter - No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the fiscal quarter ended March 31, 2025[194] Item 6. Exhibits This section lists all exhibits filed as part of this Quarterly Report on Form 10-Q - The report includes various exhibits such as corporate documents, employment agreements, and amendments to loan and security agreements[196] Signatures The report is duly signed by the company's Chief Executive Officer and Chief Financial Officer - The report is signed by Matthew Booth, Chief Executive Officer, and Timothy C. Huffmyer, Chief Financial Officer, on May 14, 2025[202]