Phunware(US:PHUN)2022-11-11 00:40Financial Data and Key Metrics Changes - Net revenues for Q3 2022 totaled $4.8 million, representing a 120% year-over-year growth [31] - Full-year 2022 revenue is expected to exceed $22.5 million, up approximately 225% year-over-year [11][20] - Gross margin was 16.7%, down from 52.5% in Q3 of the previous year [31] - Non-GAAP adjusted EBITDA loss was $6.7 million, compared to a loss of $2.5 million in the previous year [35] - Net loss was $8 million or $0.08 per share, compared to a net income of $0.4 million or $0.01 per share last year [36] Business Line Data and Key Metrics Changes - Platform revenue represented 27% of net revenues, totaling $1.3 million, while hardware revenue accounted for 73% or $3.5 million [31] - Lyte by Phunware gross margin was 6%, impacted by inventory related to strategic purchases during the chip shortage [33] - Backlog and deferred revenue at the end of the quarter totaled $7.9 million, up from $6.1 million in the same quarter last year [36] Market Data and Key Metrics Changes - The company holds over 653 Bitcoins and 753 Ethereum, valued at approximately $13 million [38] - The operational environment remains challenging due to inflation, elevated interest rates, and geopolitical tensions, but business-to-consumer customers show robust demand [12][13] Company Strategy and Development Direction - The company is focused on scaling its MaaS platform and expanding its blockchain ecosystem, including PhunCoin and PhunToken [18][64] - Plans to enhance the margin profile through indirect sales channels and partnerships with Fortune 500 companies [21][51] - The company aims to maintain strong top-line revenue growth while working towards cash neutrality from operations at scale [81] Management's Comments on Operating Environment and Future Outlook - Management anticipates continued operational headwinds but expects a more normalized environment in 2023 [12][13] - There is a focus on mission-critical investments that enhance revenue, reduce costs, and improve customer satisfaction [108] - The company is optimistic about the potential for growth in the hospitality and healthcare sectors [110] Other Important Information - The company is transitioning from a non-recurring low-margin transaction business to a scalable, high-margin SaaS licensing model [15] - The company is actively seeking acquisition opportunities, particularly in international markets, to expand its customer base and distribution [80][119] Q&A Session Summary Question: Dynamics of improved margin profiles and indirect partners - Management discussed the high gross margins associated with software and the potential for improved margins through indirect sales channels [87][92] Question: Integration times for indirect partnerships - Management indicated that integration times can vary, with some partnerships allowing for faster implementation due to existing frameworks [100] Question: Outlook for IT budgets and sales cycles in 2023 - Management expressed concerns about inflation and interest rates but noted that mission-critical investments are still being made [106][108] Question: Acquisition landscape and deal flow - Management highlighted the strong dollar's impact on international acquisitions and the potential for finding accretive deals in foreign markets [116][118]