Urgently. Ticker ULY. I'm Anja Soderstrom, an equity analyst here at Sidoti, and with me today I have the management team, Matthew Booth, the President and CEO, Timothy Huffmyer, the CFO, and Jenny Mitchell, the Vice President of Finance Strategy and Investor Relations. So this will be conducted as a fireside chat, and we will welcome your participation. You can submit your questions in the Q&A function at the bottom of your screen. And before we kick it off, I will first hand it over to Jenny Mitchell for some Safe Harbor commentary. Good morning, everyone, and thank you for taking the time to learn more about Urgently. Before we begin, I'd like to remind you that our remarks today may include forward-looking statements. Actual results may differ from those projected in any forward-looking statements we make. And I'd like to refer you to our Safe Harbor statement included in our investor presentation and to the risk factors section of our most recent 10-Q filed with the SEC, both of which are available on our investor relations website. So with that, I'd like to turn the call over to Matt Booth, Urgently's CEO. Great. Thanks, Jenny. And thanks again to all the folks here for actually having us back again after the last conference. We have a bunch of one-on-ones with folks today, and then I think a few tomorrow. So if anyone isn't on the schedule, please reach out to us and let us know. We'd love to talk to you in person and tell you more about Urgently. So for those of you that are new to the story, let me give you a high-level overview of Urgently and the background of the company. So Urgently is focused on the service side of mobility. We provide mechanical breakdown services. That's basically roadside assistance to fleets and OEMs for their vehicles that are under warranty. The business model is super simple. We get paid when your car breaks down. That means it has a flat tire, a battery issue, or an accident. That call comes to us, and we get you serviced through one of our 74,000 drivers covering all of North America. The OEM or the fleet company pays Urgently, and we pay the service provider. The roadside event is a brand-defining event, one that's pretty important for our customers because it's the largest touchpoint that many of these brands have with their customers after the car leaves the showroom. So it has to be an incredible experience. An exceptional customer experience for us is a cornerstone of the business. We've completed over 5 million rescues, and motorists at the end of every job get a link to rate the service, and we rate it 4.5 or 4.6 out of 5 stars across 5 million events. It's pretty great because you're starting off your day with some kind of motorist problem, and then the fact that we can get someone to 4.5 or 4.6 out of 5 stars is pretty fantastic. Because of our focus on technology and quality, we have some great investors that we've got along the way, including BMW, Porsche, Jaguar Land Rover, American Tire Distributors, and Enterprise Rent-A-Car. Last year, we did about $185 million of revenue while maintaining our high service levels as we scale. I think that's really important. Lots of companies, when they scale up, they start to have degradation in the service. We haven't seen that, and we'll talk more about financials in a minute and why this is so critical to us. The slide that Jenny is showing now is a live snapshot of our platform. It shows every job in real time. So if you click on any of these events at all, you see the vehicle, you see the disablement reason, and the service provider actually coming to the motorist, very similar to Uber or Lyft when you can see the driver coming to meet you. And it's this real-time transparency that's really the key to our technology. It really sets us apart from other players. We spend a lot of time and effort and money on our technology. We use technology to create a competitive moat around the business. A few examples of this, we're basically solving a fairly complex geospatial search challenge. It's a bit like searching for a local product on Google, and you want to know what stores are great and what stores carry the product you're looking for. But in our case, the motorist or the service provider is the store, and they're all moving, and we have to match their location with the service need and the service and the service offer. It's all done in real time with real-time inventory, including weather and traffic and other inputs. And we use data and data science and machine learning to predict the outcome, pre-score the providers, the desired margin, and rank the providers that can provide exceptional service. So when you look back across our financials for the last couple of years, you see a 20-point margin improvement since Tim got here, and this is a real big reason why. In terms of the competitive market, there are two major players in the roadside assistance market in the U.S. One is providing service directly to the motorists. Think AAA started in 1902. They provide service to about 60 million or so members. And the other is a B2B service that caters to fleets and OEMs and insurance companies. It's an interesting market because in the insurance side, AAA sells insurance into the market. So almost exclusively, the insurance side of the B2B market goes to the large family-owned business outside of Boston. They really don't have any competitors because until we came along, there really wasn't anyone that had enough scale that they could take on these large accounts. Like many industries with big incumbents, technical innovation creates a superior market entry position. And over time, a new winner will emerge. We believe that Urgently is that company since we've built the company with the technology forward. Let me just hit a few of the financial results going forward, and then we're happy to kind of jump into more questions. Revenue is expected to be between $30 million and $33 million for Q4 2024 and in the range of $141 million- $144 million for the full year of 2024, excuse me. We're targeting non-GAAP break-even operating loss for Q4 2024 to be about $2 million, and non-GAAP operating expense break-even is expected to be in Q1 2025. We've had very strong margin improvement, as you can see from the financials, largely due to tech scale and business optimization. We've reduced a substantial amount of headcounts, 340 FTE and FTE equivalents year- over- year. That includes Otonomo and their assets, and we expect to be, as I mentioned before, non-GAAP break-even in Q1. In terms of our longer-term outlook, post-merger integration, revenue targets are 20%-30% growth a year, and post-merger integration, gross margin targets are in the 25%-30% range. You can see we're edging up to that. We feel pretty confident in kind of where we sit. Anja, I'll pause there, and I'll take any questions that you want to go over or any questions that the audience has. Okay. Yeah, so maybe we can dive more into your technology and how it sets Urgently apart from other players in the market. Yeah, sure. So we started this company about 10 years ago, and the concept was we all knew at the time that connected cars were going to become a big part of the market going forward. So we're focused primarily on the fleet side of the business and on the OEM side of the business. And the reason that is, is fundamentally, new cars are basically iPhones on wheels, so they're sending out signals that you can interpret and you can do diagnostics with. So we believed the way to do this market and transform the market is to have technology that can intercept signals from vehicles in real time and diagnose them in real time. So we pull signals off the vehicle, we do diagnostics, and we send service vehicles out. It's probably one of the few companies in scale that can do this, and we started planning this many, many years ago when the company started. Going forward, the car parc is about 13. The average car in the U.S. is about 13 years old, 13 and a half years old or so. The market will eventually be replaced by all connected cars, and that's going to require a platform like Urgently in order to interpret these signals to get service out to it. So we feel like we're on the leading edge of pushing the envelope on connectivity. Okay. Thank you. That was a good input. And you recently divested The Floow. And can you talk us through the rationale for that and the terms of the deal? Yeah, sure. So we merged with a company called Otonomo last October. I think it was October 19th. We really liked a couple of assets that they had. We really liked their connected car platform. We really liked a lot of the technology that both The Floow and Otonomo had. For The Floow, we have a perpetual license to the technology to integrate it with our services. We felt at the time The Floow still had a lot of opportunity and growth for it, so we decided to divest the business and spin off 51% of the current management team, which we did, and we completed that. And that allows them to go and seek outside capital. So we're not going to be funding The Floow anymore. They can go seek outside capital, and they continue to grow. On the upside, we have retained license to the technology, and then finally, we can deploy the technology and allow them to go, excuse me, allow them to go seek external capital. Okay. Thank you. And then can I also talk? You mentioned this in your review, but maybe deep dive into the competitive environment. Has it changed recently, and who do you compete against in the market? So primarily, there are two large competitors, as I mentioned. There's AAA, started in 1902, and there's a family business outside of Boston, which does about $2 billion in revenue. And the market is split between those two. On the subscription side, AAA dominates with 60 million members. And on the B2B side, a company in Boston does about $2 billion, $1.5 billion in roadside, mainly from large insurance companies, so Progressive, State Farm, USAA. And because AAA sells insurance in something like 14 states, insurance companies won't work with them. So the market has gravitated towards the other scaled player. Now, the choice was really between those two for a long time, and it wasn't until Urgently came along, and we proved over time that we could scale and keep our customer service scores very high, that people started to look at us and say, "You know what? This is a real alternative." So we started to have many discussions with a larger piece of the roadside assistance market. That in years past, we had been too small to service, but that's changed now. Now we have enough scale where we can service anybody. Okay. Thank you. And how penetrated are you with BMW today? And do you have any other large customers? And you also talked about landing and expanding with customers. Can you talk about how you grow this year with your customers? Yeah. So I'd say that most of our contracts come in two flavors. Either we're the exclusive provider, and that's the case for someone like BMW. For other providers, we may split it with someone else. I think our thesis going forward is these really large insurance companies that we don't have today. They're going to want multiple vendors, just like you would have failover for technology reasons. You might have two data centers or you might move into the cloud to make sure that the service doesn't go down. There's a problem, you can switch volume back and forth. So for us, I think on the roadside piece, use BMW as an example. We're 100% penetrated on that particular account, but there's a lot of other really good opportunities that crop up as we kind of work with the account and figure out what else we can do. So we do deal integration software and a repair and logistics platform and an aftermarket program with B2B subscription partnerships and VIP program. There's a lot of interesting things that we do. So I'd say the core business is heavily penetrated, but there's all these other opportunities, including international expansion and things that we've talked to them about, where we can take this technology and start to move it out to other tertiary business lines. Okay. Thank you. And what does your go-to-market strategy look like, and do you anticipate to have to expand your sales force? Our sales force now is set up. It's a combination of a partner team and a sales team, and they do both of those things. It's about 20 or so folks that go out and talk to accounts. A lot of it, it's a small industry that's very well known. The best way to sell in this business is just to provide really great service to your current partners because your current partners will talk to other folks that are related, that are in other businesses, and they'll say, "Hey, this company's really great. They're doing a great job." That's the best way is word of mouth. There's probably 50 accounts of scale in the U.S. that we're looking at. So we know most of the people that work at these companies. We know when the RFP has come up. We know what they're looking for. So it's really a pretty greenfield opportunity for us as we start to go into next year. Now, it's probably a good point to remind folks that we spent the last year integrating and ingesting and optimizing the business after the Otonomo acquisition. So we'll start to put the foot back on growth in the next couple of quarters, and we'll start to see you'll start to hear us talk more about growth and accelerated growth versus business optimization as we start to achieve our margin targets. Okay. You did a good job on lowering your operating expenses in the third quarter. Is there any room for further improvement there? Yeah, there's always room for further improvement. But yeah, we've taken a lot of cost out of the business. And I think when we started executing this plan about 18 months ago, it was pretty aggressive, and there were folks that thought we wouldn't be able to achieve what it is we achieved. I think certainly we've proven with our financial statements and where we are that we've done a really good job about optimizing the business, improving margin, and then pulling expenses out. We expect that to continue, and we expect as we build more technology and be able to optimize the business more, we'll be able to pull more expenses out of the business. We're kind of in inning three, I think, in this and where we believe our tech platform can go in terms of optimization. We're much more efficient than kind of the competitive set if you look at vis-à-vis how many heads we have versus competitors. So I think the scale is finally starting to prove itself, and you'll see more and more of that over the next kind of 18-24 months. Okay. I'm going to incorporate a question here from the audience. When do you plan to go DTC, and do you need to invest more in technology for that? And what time do you see there, and can you give more color in your strategy for that? Yeah, sure. So we like the DTC market, the direct-to-consumer market. The big company there, of course, is AAA, largest subscription business probably in the world, 60 million members that pay between $50-$100-ish a year. We did have in the past a direct-to-consumer effort, and it was more of a trial basis. We did about 187,000 direct-to-consumer jobs. Margin was great. They were on-demand jobs. It was a little bit different than subscription. I think on that piece, we're super focused on fleets and OEMs and expanding the B2B market right now. But I think next year we'll start to look at how do we expand into that business and what's the best way to go and do it. The TAM is huge. It's $6 billion or $7 billion in the U.S. or North America for a direct-to-consumer business like that, but we want to make sure we get the CAC and the LTV right before we launch the business. It's easy to end up upside down in a direct DTC business, as a lot of us here have experience in that. So we want to make sure we're really methodical about it. And then also, we're super focused on, "Let's continue to optimize the B2B side of the business," and then next year start to look at when and if we might go into this market in a more pronounced way. Okay, and how does the EV evolution and autonomous driving affect your business? So, I'm pretty bullish personally on two things. One, EVs, and then number two, autonomy. And let me talk about the pros and cons of each. So, EVs, one of the challenges with EVs, which I think is going to get solved in the next 24 months, the local infrastructure for repair and for mechanical breakdowns and charging is difficult for people that own large fleets, but that's going to change as this infrastructure gets built out. So, this last mile is like people like to call it these milk runs. They're all going to be EVs, and it's going to require infrastructure to be built out, the equivalent of mechanics and the equivalent of gas stations to do charging. It's not really there yet, but it's going to be a big growth area. There's a lot of companies focusing on this. So it's going to be a very big opportunity for us on the service side. On the autonomous side, we ran a survey recently, and it was an astounding amount. Something like 50% of people had actually ridden in an autonomous vehicle, which we were stunned about. We ended up running it a couple of times to make sure that the numbers were right. And Tim and I were in San Francisco not too long ago, and we took Waymo around. So these are going to be, it's going to be a really big market. I think people are going to look back in five or 10 years and be surprised at how fast it's going to grow because it's coming. This technology is ready. It works really well. It's super efficient. As soon as you can work through where they go at night and where they park and how they get cleaned and kind of the mechanics of running a large fleet, you'll start to see expansion pretty quickly. Okay. Exciting, and can you talk us through your revenue model? Yeah, sure. So it's pretty simple. Our contracts today, 98% of the revenue is what we call B2B. So we provide white-label service for OEMs and fleets. If a customer that bought a new car has a breakdown service, that's usually included with your warranty. So that call comes to us, whether it's through the car, through a call center, or through an app, however the customer chooses to reach out to us. And we dispatch the service out to one of our 76,000 technicians in North America algorithmically. And we bill the OEM or the fleet, and we pay the service provider. And we keep the money in between, which is how the gross margin falls out of the business. So it's pretty simple, really. The business is very stable. It's easy to predict. The only time we saw a degradation in the amount of volume was during COVID when no one was driving, which is what you'd expect. If no one's driving, there's not going to be any breakdowns. So at that time, the revenue declined. But other than that, it's fairly consistent and fairly predictable. Okay. Thank you. And can you walk us through your initiatives to drive towards your midterm outlook for gross margins of 25%-30%? Yeah. So most of them are focused around the technology end. So we spend a lot of time building ROI cases for every single initiative that we do. And like every other company, we rank order them. This one's going to provide one point of margin. This one's going to provide a half a point of margin. And then we execute on those. We have a good three or four points of margin initiatives that are on the docket for the next two quarters that we're going to kind of work through. But we're at the point now where it's about how do we take $50,000 a month out? How do we take $25,000 a month out? And it's really about optimization and scale. And everything has a very specific technically driven return on investment with it. Okay, and also, now when you're more focused on profitability, can you still grow as fast? Yeah. Well, I think the big piece for us in this last year was really just ingesting the two companies, The Floow and then Otonomo and the teams and the technology took a lot for us to do that. So we've largely completed that. So we can continue to cut costs. We can continue to focus on profitability, and we will start to talk more about growth in the next couple of quarters. So you'll start to see a pretty big shift from us as we start to talk about how we're going to grow into 2025. Okay, and is there any seasonality investors should be aware? Sorry, can you say that again? Is there any seasonality? Oh, seasonality. So typically, three-day weekends are busy. The summer is busy when people drive more. It's busy when there's storms and inclement weather. So there is a little bit more volume and a volume shift in the summer and then in the winter when there's more storms. So there is predictable seasonality. We know what it is. We know what it is ahead of time. The technology predicts the job volume based on the portfolio of clients. So we have a pretty good beat on it. But if you look at our financial statements, you'd see some seasonality, especially in the summer in terms of the margin shift and the job mix shift. Okay, and when do you anticipate to reach a GAAP break-even? It'll be a non-GAAP break-even. The goal is Q1, which, that's the guidance that we've put out there, then follow EBITDA break-even later in the year. Okay. And let's touch a bit on your balance sheet and cash burn. Sure. So cash burn primarily is in two places. One, we capitalize some software, which is the non-GAAP operating piece, about $400,000-$500,000 a month. And then, of course, interest payments. We're in the process right now of redoing and extending the current portfolio of debt we have, which is due in January. So we expect to announce something on that pretty quickly, either an extension or a paydown or a combination of those two things. Okay. Thank you. And then in terms of your contracts, you have announced several renewed contracts with existing OEMs this year, as well as one recently with a leading global car rental company. What does your pipeline look like for further contract wins? Yeah, sure. So let me answer the first part of the question is we've been very successful on the renewal basis. We've renewed about 50% of our run rate revenue already this year. So we feel very positive that we've knocked down all the key renewals that we need to get done or most of the key renewals that we need to get done in this quarter and then into next quarter. On the pipeline piece, the easiest way to think about this is it's about $1.5 billion B2B roadside business, which is the piece that we're focused on today, not including the direct-to-consumer piece. Give or take, about $500 million of that comes up for renewal every year. And it's chunky. There's some years that big contracts come up and others don't. But the way to think about it is, in any given year, you're targeting between $400 million and $600 million of pipeline opportunity. You've been doing a project with Volvo, right? Can you talk about that and maybe how that's progressing? There's different programs that we have with different clients. We don't generally talk specifically about any individual clients that we're doing, but let me give you just an example of something that we've had a lot of demand for recently, which is start to tier the service on a VIP basis, so as an example, if you have customers that own multiple cars or an insurance company and you might have an insurance that insures their house and their boat and their kids, you might want to provide a different level of service to those customers, so we've recently launched a VIP business line, which is kind of call it white glove, which comes into a dedicated call center and gets handled by experienced reps, etc., etc., etc. It's been pretty successful, so we'll start to tier the service over time. And one of the things that you'll hear us announce sometime next year is Pricing as a Product. We won a technology award for that recently, but the ability to tier the service based on price and based on what outcome is desired in terms of quality and customer service. And it's kind of like one of those old Choose Your Adventure books where we'll let the customers decide how they break down their customer portfolios and what kind of service do they want to apply to each segment of their customer base. We're super excited about that coming out. It's going to be very differentiated. Okay. Thank you. And you're also winding down a contract with one of your top five OEMs as they've shifted their internal strategy. What is the risk that we will see others do the same, and how do you anticipate this to affect your revenue? Yeah. So most of the things like this that we've run into, it's only happened to us a couple of times. And there are things that are usually outside of our control. So as an example, someone may have a large fleet of EVs, and they may decide for whatever reason that they want to shift back to ICE-powered vehicles, or someone may decide that for business reasons, they want to stop doing some specific portion of their business. The risk is pretty small, but you can imagine just based on the challenges in the global automotive market with different types of vehicles that are out there and the shift to electric vehicles. And then what's going to happen as China starts to push EVs into the market? Most of those risks we can't control for. They're made up for with the portfolio that we have of these different accounts. So we're not particularly concerned about that. Where we would get concerned is if we had quality degradation and someone decided to leave because we weren't providing good service. That's not. That doesn't happen to us. We provide excellent service. Okay. Thank you. Can you also just touch on the macroeconomic environment? Has that been a hurdle for you, and how do you see that evolving? We talk about this a lot internally. And I'd say one of the things I don't know if anyone on the call remembers, we just got through an election cycle, and we don't know what's going to happen going forward in 2025 and 2026. I mean, there's talks of tariffs. There's talks about building factories in the U.S. There's talks about stopping electric vehicle incentives. So there's all kinds of talk going on about things that are going to happen or not happen. I think short of the geopolitical risk between the Pacific Rim or the Ukraine conflict spilling over, I expect business in the U.S. to grow pretty quickly and to be a pretty strong tailwind for us, just given the current administration and how they're talking about incentivizing manufacturing here and incentivizing U.S.-built products. I think from our perspective, we're in a pretty good position, we believe. Okay. Thank you. And I see a couple of questions here from the audience in regards to if you're engine agnostic. Does it matter if it's electric vehicles or combustion engines? It doesn't matter. We have a specialized fleet that we've built out and service providers for electric vehicles. The challenge of electric vehicles is our weight, and they require flatbeds and different types of equipment to get out there. But we have some pretty robust training materials, and we go out to different shows and train service providers so they know how to tow these different vehicles and how to get them started. But the fleet handles it without a problem. We've seen some of the businesses that we work with, their electric vehicle percent of jobs is 10% or 15%. So it's growing pretty quickly. Back a couple of years ago when no one was sure it was going to take off, it's really changed quite a bit. So even in the large OEMs and in the electric vehicle only, it's grown pretty quickly. We expect that to continue. Okay. Thank you. And in terms of M&A, do you foresee any other M&A opportunities in the near future or any other divestitures? Yeah. So I think if you look at Tim's background and my background and some of the other executives that we have up here, we have a strong background in M&A. We like M&A. We think that this environment is very much like 2000 versus the banking refi crisis in 2018. So there's a lot of great companies out there that just can't get scale and can't make it through. So we'll look at more M&A kind of into next year and some other things. There's some interesting opportunities out there. But for the most part, we're super focused on, "Let's get the business to break even. Let's refinance our debt, and let's improve the margin, and let's start to grow again." And then organically, we'll see a lot of those M&A opportunities come to us. And as you can imagine, we get a lot of inbound M&A activity, as I'm sure many other companies do. There's some great stuff out there. So I think something for the folks on the call, we will continue to look at that for sure. We like the M&A. Okay. Thank you. We're almost out of time here. So I'm going to close it down here. I want to thank you, Matt and the team, and Urgently for joining us today and everyone in the audience who participated. I know you have a very full one-on-one schedule already, but if anyone wants to follow up with you outside of this presentation, I'm sure we can make that happen. You can either reach out to us directly or to the company's IR. And with that, I want to hand it over to you, Matthew, for some closing remarks. Yeah. Great. I appreciate it. Thanks again. It's always great to talk to you and to talk to the folks. Last time we did a bunch of one-on-ones, they were all really great. We talked to some great people. So if anyone's not on the schedule, we'd love to talk to you, even if you're just curious about the business and about what we're doing. I think just to close out, look, I mean, we're pretty upfront about the things that we're doing. We said we were going to digest and reduce expenses. We did that. We said we were going to get to non-GAAP break-even. We expect to do that in Q1. And then we said we were going to start growing again, and we're going to start growing again next year. So you can start to see these things as we start to roll out future announcements. So just thanks again for having us. Look forward to taking more questions from people. Okay. Great. Thank you. Thank you, everyone. Have a good rest of the day. Bye.