Otonomo Technologies Ltd. (Nasdaq: OTMO) (“Otonomo” or the
“Company”), the platform powering the mobility economy,
today announced its financial and operational results for the
quarter ended June 30, 2023.
Recent Developments
Cost Reduction Initiative
In June 2023, the Company completed the process of sunsetting
part of its connected vehicle data services (“CVD services”), which
include services relating to aggregate multi-layered data,
standardized data and data blurred to remove identifiers. The
sunsetting of CVD services resulted in a further workforce
reduction. Upon completion of the CVD services sunsetting, the
Company’s cost reduction initiative, which commenced in the fourth
quarter 2022, was complete.
The Company continues to focus on recurring revenue
opportunities and believes the resources dedicated to CVD services
can be better utilized in other lines of the Company’s
business.
Exchange Offer and Consent Solicitation
On July 24, 2023, the Company announced that it had commenced an
exchange offer and consent solicitation relating to its outstanding
warrants. On August 23, 2023, the Company announced that 5,496,433
public warrants, or approximately 63.7% of the outstanding public
warrants, and 5,200,000 private placement warrants, representing
all of the outstanding private placement warrants, were validly
tendered and not withdrawn prior to the expiration of the exchange
offer and consent solicitation. The Company expects to accept all
validly tendered warrants in exchange for 0.0167 ordinary shares
per warrant on or before August 25, 2023.
In addition, the Company received the approval of approximately
63.7% of the outstanding public warrants and approval of 100% of
the outstanding private placement warrants to the amendment to the
warrant agreement governing the warrants (the “Warrant Amendment”).
On August 23, 2023, the Company executed the Warrant Amendment and
announced that it will exercise its right, in accordance with the
terms of the Warrant Amendment, to exchange all remaining
untendered warrants for ordinary shares at an exchange ratio of
0.01503 ordinary shares for each warrant. The Company has fixed the
date for such exchange as September 7, 2023.
Reverse Share Split
On August 3, 2023, the Company effected a 1-for-15 reverse share
split of its ordinary shares. The reverse share split became
effective at 11:59 p.m. Eastern Time on August 3, 2023. The
Company’s ordinary shares began trading on a split-adjusted basis
on The Nasdaq Stock Market LLC (“Nasdaq”) at the open of business
on August 4, 2023 under the existing trading symbol “OTMO.”
Second Quarter 2023 Financial Results:
- Total revenue for the second quarter 2023 was $1.6 million
compared to $1.9 million for the second quarter 2022
- GAAP operating loss for the second quarter 2023 was $8.2
million compared to a loss of $64.0 million for the second quarter
2022, which included impairment charge of $45.8 million related to
goodwill and intangibles
- Non-GAAP operating loss* for the second quarter 2023 was $6.3
million compared to a loss of $15.8 million for the second quarter
2022
- Cash and cash equivalents, short term restricted cash, short
term deposits, and marketable securities as of June 30, 2023 was
$119.2 million
* For a definition of non-GAAP operating loss
and a reconciliation of such non-GAAP financial measure to the most
directly comparable GAAP financial measure, please see “Use of
non-GAAP Financial Information” and “Reconciliation of GAAP to
non-GAAP Financial Information.”
Second Quarter 2023 Business Highlights:
The following results relating to the Company’s revenue for the
second quarter 2023:
- Recurring revenue for the second quarter 2023 was 92% of total
revenue, representing growth of 33% as compared to second quarter
2022 (excluding revenue associated with the CVD services)
- Added 4 new customers in the second quarter 2023
- Bookings* increased by 85% year over year (excluding bookings
associated with the CVD services)
- Backlog** increased by 4% year over year (excluding the backlog
associated with the CVD services)
- Annual recurring revenue decreased by 13% year over year
(excluding annual recurring revenue associated with the CVD
services)
*Booking: Total value of contract that was
committed during the reporting quarter over the full term of the
contract.
**Backlog: Secured future revenue as of end of
quarter.
Management’s Remarks
“We completed our cost reduction initiative, which commenced in
the fourth quarter 2022, to ensure that we are well positioned with
the necessary capital to meet market requirements moving forward,”
said Ben Volkow, CEO and Co-Founder of Otonomo. “Following the
closing of the transaction with Urgently, we believe the combined
company will be well positioned to capitalize on the connections
between vehicle data and the fleet, insurance and roadside
assistance sectors to provide real-world services that will improve
customer experiences and safety.”
About Otonomo
Otonomo (NASDAQ: OTMO), the platform powering the mobility
economy, is igniting a new generation of mobility experiences and
services. With Otonomo, over 100 providers in the transportation,
mobility, insurance, and automotive industries are finally able to
harness mobility data and insights and transform them into
strategic assets and market advantages. Our partners gain access to
the broadest, most diverse range of data from connected vehicles,
mobile phones, public transport, EV infrastructure, and MaaS with
just one contract and one API. Vehicle and multimodal mobility data
is reshaped and enriched to provide deep visibility and actionable
insights and empower planning, deployment, and operations.
Architected with privacy and security by design, our platform is
GDPR, CCPA, and other privacy regulation compliant, ensuring all
parties are protected and companies remain privacy compliant across
geographies worldwide. Otonomo has R&D centers in Israel and
the UK and a presence in the United States and Europe. More
information is available at otonomo.io
Otonomo on Social
Media
- Follow Otonomo on LinkedIn
- Like Otonomo on Facebook
- Follow Otonomo on Twitter
Use of Non-GAAP Financial Measure
In addition to reporting financial results in accordance with
generally accepted accounting principles, or GAAP, Otonomo uses
non-GAAP measures of operating loss, which are adjustments from
results based on GAAP to exclude, as applicable, stock-based
compensation expenses, amortization of intangible assets and
depreciation, restructuring expenses, contingent liability expense
related to The Floow acquisition, and impairment of intangible
assets and goodwill. Otonomo’s management believes the non-GAAP
financial information provided in this release is useful to
investors’ understanding and assessment of Otonomo’s ongoing core
operations and prospects for the future. The presentation of this
non-GAAP financial information is not intended to be considered in
isolation or as a substitute for results prepared in accordance
with GAAP. A reconciliation of the non-GAAP financial measures
discussed in this press release to the most directly comparable
GAAP financial measures is included with the financial statements
contained in this press release. Management uses both GAAP and
non-GAAP information in evaluating and operating business
internally and as such has determined that it is important to
provide this information to investors.
Forward Looking Statements
This communication contains forward-looking statements within
the meaning of the federal securities laws. Such statements are
based upon current plans, estimates and expectations of management
of Otonomo and Urgently in light of historical results and trends,
current conditions and potential future developments, and are
subject to various risks and uncertainties that could cause actual
results to differ materially from such statements. The inclusion of
forward-looking statements should not be regarded as a
representation that such plans, estimates and expectations will be
achieved. Words such as “anticipate,” “expect,” “project,”
“intend,” “believe,” “may,” “will,” “should,” “plan,” “could,”
“continue,” “target,” “contemplate,” “estimate,” “forecast,”
“guidance,” “predict,” “possible,” “potential,” “pursue,” “likely,”
and words and terms of similar substance used in connection with
any discussion of future plans, actions or events identify
forward-looking statements. All statements, other than historical
facts, including statements regarding the expected timing of the
closing of the proposed transaction; the ability of the parties to
complete the proposed transaction considering the various closing
conditions; the expected benefits of the proposed transaction; the
competitive ability and position of the combined company; and any
assumptions underlying any of the foregoing, are forward-looking
statements. Important factors that could cause actual results to
differ materially from Otonomo’s and Urgently’s plans, estimates or
expectations could include, but are not limited to: (i) the risk
that the proposed transaction may not be completed in a timely
manner or at all, which may adversely affect Otonomo’s and
Urgently’s businesses and the price of Otonomo’s traded securities;
(ii) uncertainties as to the timing of the consummation of the
proposed transaction and the potential failure to satisfy the
conditions to the consummation of the proposed transaction,
including obtaining shareholder approvals; (iii) the proposed
transaction may involve unexpected costs, liabilities or delays;
(iv) the effect of the announcement, pendency or completion of the
proposed transaction on the ability of Otonomo or Urgently to
retain and hire key personnel and maintain relationships with
customers, suppliers and others with whom Otonomo or Urgently does
business, or on Otonomo’s or Urgently’s operating results and
business generally; (v) Otonomo’s or Urgently’s respective
businesses may suffer as a result of uncertainty surrounding the
proposed transaction and disruption of management’s attention due
to the proposed transaction; (vi) the outcome of any legal
proceedings related to the proposed transaction or otherwise, or
the impact of the proposed transaction thereupon; (vii) Otonomo or
Urgently may be adversely affected by other economic, business,
and/or competitive factors; (viii) the occurrence of any event,
change or other circumstances that could give rise to the
termination of the merger agreement and the proposed transaction;
(ix) restrictions during the pendency of the proposed transaction
that may impact Otonomo’s or Urgently’s ability to pursue certain
business opportunities or strategic transactions; (x) the risk that
Otonomo or Urgently may be unable to obtain governmental and
regulatory approvals required for the proposed transaction, or that
required governmental and regulatory approvals may delay the
consummation of the proposed transaction or result in the
imposition of conditions that could reduce the anticipated benefits
from the proposed transaction or cause the parties to abandon the
proposed transaction; (xi) risks that the anticipated benefits of
the proposed transaction or other commercial opportunities may
otherwise not be fully realized or may take longer to realize than
expected; (xii) the impact of legislative, regulatory, economic,
competitive and technological changes; (xiii) the risk that
integration of the Otonomo and Urgently post-closing may not occur
as anticipated or the combined company may not be able to achieve
the growth prospects and synergies expected from the transaction,
as well as the risk of potential delays, challenges and expenses
associated with integrating the combined company’s existing
businesses; (xiv) exposure to inflation, currency rate and interest
rate fluctuations and risks associated with doing business locally
and internationally; (xv) the impact of the COVID-19 pandemic on
Otonomo’s and Urgently’s business and general economic conditions;
and (xvi) the unpredictability and severity of catastrophic events,
including, but not limited to, acts of terrorism or outbreak of war
or hostilities, as well as Otonomo’s and Urgently’s response to any
of the aforementioned factors. Additional factors that may affect
the future results of Otonomo are set forth in its filings with the
United States Securities and Exchange Commission (the “SEC”),
including Otonomo’s most recently filed Annual Report on Form 20-F,
Current Reports on Form 6-K, and other filings with the SEC, which
are available on the SEC’s website at www.sec.gov. See in
particular Item 3D of Otonomo’s Annual Report on Form 20-F for the
fiscal year ended December 31, 2022 under the heading “Risk
Factors.” The risks and uncertainties described above and in the
SEC filings cited above are not exclusive and further information
concerning Otonomo and Urgently and their respective businesses,
including factors that potentially could materially affect their
respective businesses, financial conditions or operating results,
may emerge from time to time. Readers are urged to consider these
factors carefully in evaluating these forward-looking statements,
and not to place undue reliance on any forward-looking statements.
Readers should also carefully review the risk factors described in
other documents that Otonomo and Urgently files from time to time
with the SEC. The forward-looking statements in this communication
speak only as of the date of this communication. Except as required
by law, Otonomo and Urgently assume no obligation to update or
revise these forward-looking statements for any reason, even if new
information becomes available in the future.
Additional Information
In connection with the proposed transaction, Urgently has filed
with the SEC a registration statement on Form S-4 that includes a
proxy statement of Otonomo regarding the proposed transaction (as
amended or supplemented from time to time, the “Proxy
Statement/Prospectus”). The Proxy Statement/Prospectus was sent to
all Otonomo shareholders. INVESTORS AND SECURITYHOLDERS ARE URGED
TO READ THE PROXY STATEMENT/PROSPECTUS IN ITS ENTIRETY AND ANY
OTHER DOCUMENTS FILED BY EACH OF OTONOMO AND URGENTLY WITH THE SEC
IN CONNECTION WITH THE PROPOSED TRANSACTION OR INCORPORATED BY
REFERENCE THEREIN BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT
THE PROPOSED TRANSACTION AND THE PARTIES TO THE PROPOSED
TRANSACTION. Investors and shareholders may obtain a free copy of
the Proxy Statement/Prospectus and other documents containing
important information about Otonomo and Urgently, once such
documents are filed with the SEC, from the SEC’s website at
www.sec.gov. Otonomo makes available free of charge at
https://otonomo.io/ (in the “Investors” section) copies of
materials it files with, or furnishes to, the SEC.
No Offer or Solicitation
This communication shall not constitute an offer to sell or the
solicitation of an offer to buy any securities, nor shall there be
any sale of securities in any jurisdiction in which such offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such jurisdiction.
No offering of securities shall be made except by means of a
prospectus meeting the requirements of Section 10 of the U.S.
Securities Act of 1933, as amended.
Participants in the Solicitation
Otonomo, Urgently and their respective directors, executive
officers and certain employees and other persons may be deemed to
be participants in the solicitation of proxies from the
shareholders of Otonomo in connection with the proposed
transaction. Securityholders may obtain information regarding the
names, affiliations and interests of Otonomo’s directors and
executive officers in Otonomo’s Annual Report on Form 20-F for the
fiscal year ended December 31, 2022, which was filed with the SEC
on March 31, 2023. Additional information regarding the interests
of such individuals in the proposed transaction is included in the
Proxy Statement/Prospectus relating to the proposed transaction
that Urgently has filed with the SEC.
UNAUDITED OTONOMO TECHNOLOGIES LTD.
CONSOLIDATED BALANCE SHEET(in $
thousands)
|
As of |
|
June 30, |
December 31, |
|
2023 |
|
2022 |
Assets |
|
|
|
|
|
|
|
Current
assets |
|
|
|
Cash and cash equivalents,
short-term investments and restricted cash |
119,207 |
|
140,643 |
Account receivables and other
receivables |
2,031 |
|
4,314 |
|
|
|
|
Total current
assets |
121,238 |
|
144,957 |
|
|
|
|
Non-current
assets |
|
|
|
Other long-term assets |
432 |
|
606 |
Property, equipment, and
operating lease right-of-use assets, net |
2,466 |
|
3,083 |
|
|
|
|
Total non-current
assets |
2,898 |
|
3,689 |
|
|
|
|
Total
assets |
124,136 |
|
148,646 |
|
|
|
|
|
|
|
|
Liabilities and
shareholders' equity |
|
|
|
|
|
|
|
Current
liabilities |
|
|
|
Account payables, other
payables, and other short-term liabilities |
6,073 |
|
11,978 |
Deferred revenue |
232 |
|
216 |
Other current liabilities |
3,614 |
|
894 |
|
|
|
Total current
liabilities |
9,919 |
|
13,088 |
|
|
|
|
Non-current
liabilities |
|
|
|
Warrants for ordinary
shares |
104 |
|
155 |
Other non-current
liabilities |
852 |
|
1,975 |
|
|
|
|
Total non-current
liabilities |
956 |
|
2,130 |
|
|
|
|
Total
liabilities |
10,875 |
|
15,218 |
|
|
|
|
Shareholders’
equity |
113,261 |
|
133,428 |
|
|
|
|
Total liabilities and
Shareholders’ equity |
124,136 |
|
148,646 |
|
|
|
|
UNAUDITED OTONOMO TECHNOLOGIES LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS (in $
thousands)
|
Six-months Period ended |
|
June 30, |
|
2023 |
|
2022 |
|
|
|
|
Revenue |
3,465 |
|
2,951 |
|
|
|
|
Costs
of revenue and operating expenses: |
|
|
|
Cost of revenue |
1,644 |
|
1,341 |
Cloud infrastructure |
1,289 |
|
2,492 |
Research and development |
6,205 |
|
10,656 |
Sales and marketing |
6,512 |
|
10,503 |
General and
administrative |
10,908 |
|
11,072 |
Contingent liability expense
(income) |
2,061 |
|
(1,541) |
Amortization and
depreciation |
148 |
|
1,728 |
Impairment of Goodwill and intangible assets |
- |
|
45,785 |
|
|
|
|
Total cost of revenue and
operating expenses |
28,767 |
|
82,036 |
|
|
|
|
Loss from
operations |
(25,302) |
|
(79,085) |
|
RECONCILIATION OF GAAP TO NON-GAAP
FINANCIAL INFORMATION(in $ thousands)
|
Six-months Period Ended |
|
June 30, |
|
2023 |
|
2022 |
|
|
|
|
GAAP operating
Loss |
(25,302) |
|
(79,085) |
|
|
|
|
Share-based
compensation (1) |
3,177 |
|
4,881 |
Contingent
liability expense (income) |
2,061 |
|
(1,541) |
Impairment of
Goodwill and intangible assets |
- |
|
45,785 |
Amortization and
depreciation (2) |
148 |
|
1,728 |
Restructuring cost
(3) |
1,601 |
|
- |
|
6,987 |
|
50,853 |
|
|
|
|
Non-GAAP operating
Loss |
(18,315) |
|
(28,232) |
|
|
|
|
1. Share-based compensation: |
|
|
|
|
|
|
|
Cost of
Revenues |
31 |
|
13 |
Research and
development |
502 |
|
1,138 |
Sales and
marketing |
962 |
|
1,467 |
General and
administrative |
1,682 |
|
2,263 |
|
3,177 |
|
4,881 |
|
|
|
|
2. Amortization and depreciation: |
|
|
|
|
|
|
|
Amortization of
intangible assets |
- |
|
1,617 |
Depreciation of
property and equipment |
148 |
|
111 |
|
148 |
|
1,728 |
|
|
|
|
|
|
|
|
3.
Restructuring cost: |
|
|
|
|
|
|
|
Cost of
Revenues |
272 |
|
- |
Research and
development |
284 |
|
- |
Sales and
marketing |
961 |
|
- |
General and
administrative |
84 |
|
- |
|
1,601 |
|
- |
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