Urgent.ly (ULY) - 2025 Q2 - Quarterly Report

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. 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] Unaudited Condensed Consolidated Balance Sheets 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 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 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] Unaudited Condensed Consolidated Statements of Cash Flows 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][182] - 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][184] Notes to Unaudited Condensed Consolidated Financial Statements 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][30] - 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] - 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][71][77] - 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][99] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 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][103] - Revenue is primarily generated from multi-year contracts with Customer Partners on a per-incident basis, membership programs, and SaaS solutions[104] - 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] 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] - 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] Key Factors Affecting Our Performance 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][109] - Continued investment in proprietary technology, machine learning, and data analytics is crucial for maintaining a competitive advantage and expanding platform functionality[110] - 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][114] Key Business Metrics 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 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 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][132] - Cost of revenue mainly consists of fees paid to Service Providers, technology hosting, platform-related costs, and direct call center support[128][52] - Gross margin is expected to increase modestly over the long term due to platform enhancements leading to more cost-effective Service Provider costs[129] Results of Operations 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] - 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] - 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][145][147][149][157][160][162][164] - 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] Liquidity and Capital Resources 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] - 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] - 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][173][177] - An At-The-Market (ATM) equity offering program was established in July 2025 to sell up to $4.0 million of common stock[176] Cash Flows 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][183] - 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][185] Contractual Obligations and Commitments 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] Emerging Growth Company Status 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] Critical Accounting Estimates 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] Recent Accounting Pronouncements 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] Item 3. Quantitative and Qualitative Disclosures About Market Risk 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] Item 4. Controls and Procedures 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] - 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] - Remediation plans include designing and maintaining new/revised controls for IT user access and reorganizing the finance department to improve segregation of duties[199][200] 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 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] Item 1A. Risk Factors 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][209] - 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][215] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 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] Item 3. Defaults Upon Senior Securities This item is not applicable to Urgent.ly Inc. for the reporting period - Not applicable[217] Item 4. Mine Safety Disclosures This item is not applicable to Urgent.ly Inc. for the reporting period - Not applicable[218] Item 5. Other Information 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] Item 6. Exhibits 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] 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]