Ladies and gentlemen, thank you for standing by. Good afternoon, and welcome to the Phunware Second Quarter Conference Call. All participants are in a listen-only mode. [Operator Instructions] Participants of this call are advised that the audio of this conference call is being broadcast live over the internet and is also being recorded for playback purposes. A webcast replay of the call will be available approximately one hour after the end of the call through August 8, 2025. I would now like to turn the call over to Joey Delahoussaye of Core IR, the company's Investor Relations firm. Please go ahead, sir.

Thank you, operator. Good afternoon and thank you for participating in today's conference call. Earlier this afternoon, the company released its financial results for the quarter ended June 30, 2024. A copy of that press release can be found on the company's website at www.phunware.com by selecting Investors under the About tab from the corporate home page. Joining me on today's earnings call from Phunware's management team are Mike Snavely, Chief Executive Officer; and Troy Reisner, Chief Financial Officer. During this call, management will be making forward-looking statements, including statements that address Phunware's expectations for future performance or operational results. Forward-looking statements involve risks and other factors that may cause actual results to differ materially from those statements. For more information about these risks, please refer to the risk factors described in Phunware's most recently filed annual report on Form 10-K and subsequent periodic reports filed with the SEC and Phunware's press release that accompanies this call, particularly the cautionary statements in it. The content of this call contains time-sensitive information that is accurate only as of today, August 8, 2024. Except as required by law, Phunware disclaims any obligation to publicly update or revise any information to reflect events or circumstances that occur after this call. It is now my pleasure to turn the call over to CEO, Mike Snavely.

Thanks, Joey, and good afternoon to everyone on the call. During the second quarter of 2024, we've continued building upon the momentum begun during our first quarter. In quarter two, we delivered 100% customer retention, strengthened our bench of advisers within the hospitality sector and most recently became part of the FTSE Russell Microcap Index. In the first half of 2024, our customer bookings, which are signed contracts with clients that generate revenues over the course of the multiyear contract period have already exceeded bookings for all of 2023 even as we preserve cash by reducing our team. This is a testament to the effectiveness and efficiency of our revamped sales team and our evolved sales model, which continues to drive a strong and consistent pipeline, including over $7 million in new pipeline identified so far in the third quarter. As leaders in the mobile applications platform industry, I think it's valuable to take a moment and review what sets us apart. We provide location-based services, content management, mobile engagement, audience monetization and application analytics that help our clients at every stage of mobile application life cycle management. We help businesses create their ideal mobile app, monetize their audiences and create hyper-personalized mobile experiences all in the interest of ensuring our clients' customers fully utilize their offerings through mobile interactions. We've been in this business for about 15 years, and we are its pioneers. The Phunware platform is a fully integrated enterprise cloud for mobile devices that provides our clients with products, solutions, data and services necessary to engage with our audiences globally and manage and monetize their mobile app portfolios globally and at scale. Our model provides a faster time to market, requires less investment of resources and technical expertise and does not require customer management and integrations. We…

Thanks, Mike and good afternoon everyone. I'd like to thank you for joining us today for a review of our second quarter of 2024 financial performance. As usual, I'll be discussing GAAP financial measures unless otherwise specifically noted. Our press release, 8-K and website provide a reconciliation of all GAAP to non-GAAP financial results. As Mike indicated, a particular note is our bookings growth. Bookings is a forward-looking metric that reflects the commitment from our customers to pay Phunware money for subscriptions and services that we provide over time. When we use the term bookings, it will reflect the total contract value with the customer that was executed within the period defined. Software bookings in 2024 have increased approximately 623% and 939% for the second quarter of 2024 and the 6-month period then ended respectively as compared to the 2023 prior periods. Revenues for the second quarter of 2024 were $1 million, nearly a 10% increase over the first quarter of 2024. And for the 6-month period ended June 30, 2024, revenues were $1.9 million. The decrease of approximately $0.7 million or 26.8% for the six months ended June 30, 2024 compared to the corresponding period in 2023 was primarily due to a customer breakage fee in 2023. Gross profit for the three months ended June 30, 2024, was $470000, which is consistent with the prior year period. Gross profit for the six months ended June 30, 2024 was $994000, an increase of approximately $400000 or 63% compared to the corresponding period in 2023. Total operating expenses for the three months ended June 30, 2024 were $3.4 million, which represents a decrease of over $3.2 million or 48.6% from the same period one year ago. For the six months ended June 30, 2024, operating expenses were $6.8 million, which is…

Thank you, Troy. As these numbers demonstrate, we're diligently working on increasing our foothold within the hospitality and health care markets, while consciously controlling costs. I want to take a moment to acknowledge the tremendous work of management and the great team members who have helped to turn around the future of Phunware. We now look forward to scaling the core of Phunware reaching new markets, creating new solutions and continuing to innovate. I also wish to acknowledge and thank our loyal shareholders who have entrusted us with the mantle to drive Phunware forward. Thank you for your trust. We are honored by it and are dedicated to delivering lasting shareholder value. Now, I'd like to turn the call over to the operator, so that we can begin the question-and-answer session. Operator?

[Operator Instructions] Your first question comes from the line of Darren Aftahi of ROTH Capital. The line is open.

This is Dylan on for Darren. Thanks for taking my question. To start Mike, when you talk about investment in R&D and some new products for other markets, could you maybe talk about what exactly you need in terms of technology-wise and why those other markets might be different from the hospitality and resort style that you're going after right now?

Sure enough, we have built – I mean over the last 15 years really an enormous capacity to deliver mobile applications at scale globally. And we have had that scale to 25 million concurrent users and a video-on-demand streaming, context and otherwise throughout the history of the company. What we're looking to do is to really point that terrific technology asset toward continually larger markets. So hospitality is a terrific market. We like it. We are really making some progress in that market as you can see from the numbers that we've just shown. But we believe that there are other and additional and substantially larger markets that we can point our technology stack at. So R&D is going to be more about identifying those additional larger markets that we can go point our tech at and then probably some evolution and modification of the platform to meet the unique needs of those markets.

Got it. Thank you. And then in terms of bookings like obviously, another really strong quarter. I guess like when you're looking at three of your largest customers renewing is that accounting for most of the strength you're seeing so far? Or how much is coming from new customers as well? And what do you need to do to get those across the finish line into sort of top line revenue?

Yes. I don't have the specific breakdown in front of me. But what I'll say is that we have – we're continually identifying new opportunities and moving them down the sales pipeline. I think we've identified – last quarter I think we identified something like $5.5 million in total contract value. This quarter we've already identified approximately $7 million on top of that and we expect to liquidate a reasonable percentage of those over a period of time. So I think the sales machine is really starting to work.

Great. Thank you. I’ll pass it on.

Thank you. Your next question comes from the line of Howard Halpern from Taglich Brothers. Line is open.

Congratulations great quarter. In terms of implementing those customers can you talk a little bit about the implementation cycle and what you expect in the second half in terms of deployments?

Yes you bet. We have – I would say if you think about the happy path for implementation it's about a 30-day process. Now that assumes that customer dependencies are fulfilled timely, it assumes that we have the delivery capacity available to deliver those applications. But don't forget that our platform is mostly a configuration engine. So we ingest customer content. We work with the customer to ensure that the content meets the brand standards and is the correct description of the things that they want to display in the application. And so for that we are substantially reliant upon the customer. We've seen implementations go as quickly as a week. We've seen other implementations take six months. So I would say that our average is in that 30- to 45-day range probably shading a little closer to the 45.

Okay. I believe in the previous call this year you talked about seeking I guess customers within the hospitality vertical but in events customers or conventions and such have you had any success in that area yet? Or is it coming in the pipeline?

Yes it's coming in the pipeline. And so let me speak about that. So the bull's eye of our hospitality market is really going to be a destination property. Now it could be a destination property for a couple of reasons. Reason number one could be that it's a beautiful beach resort. Reason number two could be that it's a convention property. And so our relationship with Gaylord Hotels for example kind of falls into more of the convention category and we're actually expanding our relationship with those guys to accommodate certain of their convention-related facilities and activities. And we are also partnering with a couple of major players in the hosting of conventions to really penetrate that market. And the convention market is actually really interesting for us. And I'd say that we're making good progress and we'll certainly keep you apprised of that progress as those customer wins come in.

Okay. Well, thanks and keep up the great work.

Thanks, sir.

Thank you. [Operator Instructions] And our next question come from -- All right, I apologize. Our next question comes from the line of Ed Woo from Ascendiant Capital. Your line open.

Yes. Congratulations on the progress. My question is have you seen any changes in the sales cycle whether customers have been more cautious? Or has it been about the same in the past quarter?

It's really about the same. I mean we're looking at a roughly speaking 90-day sales cycle. Sometimes it's shorter, sometimes it's faster and we continue to work on our sales process to see if we can reduce the cycle time. Now, notably, we are also highly focused on identifying one-to-many relationships. And here's what I mean by that. So it's one thing to sell an individual property. That's terrific and we love our customers. It's another thing altogether to approach management companies, property portfolio owners and others in such a way as to penetrate multiple properties at once. And so we have some very interesting conversations going on right now with such groups where we could potentially spend a similar amount of time on the sales cycle but pick up five properties, 10 properties at a time. So that's where I think that you're going to see what I would characterize as the pace of rooftop wins increasing because we're looking at those one-to-many relationships.

Great. Well, thank you for answering my question and I wish you guys good luck. Thank you.

Thanks very much, Ed.

Thank you. Seeing as there are no more questions in the queue that concludes our question-and-answer session. I will now turn the call back over to Mike Snavely for closing remarks.

Yes. And I wanted to do these closing remarks live. I want to acknowledge that we've had a tough 2021 through 2023. And we've had to bad time, absolutely and as we had to shed cost and we had to buy time for the company. As you can see we're off to a good start here in 2024. We've delivered a couple of successive quarters of growth and improvement to our bottom-line particularly when you look at it comparable to the previous year. We've sort up our balance sheet and we've gotten our sales rhythm down. Now we have the benefit of time, capital and great interest amongst our loyal investors along with the seasoned management team and a Board with a big vision. We also have a track record of value delivery to the best brands in the world, including Fox, NBC, the Dallas Cowboys Stadium along with more recent customers like Ryman Entertainment and various Marriott properties. From this platform we could not be more excited about what markets we can tackle and the plays that we can run in software innovation crypto and AI. We intend to turn the attentions of tens of millions of lives back on Phunware and our solutions and to make Phunware great again. Thanks a lot everybody.

Ladies and gentlemen that concludes today's call. Thank you all for joining. You may now disconnect.