Phunware, Inc. (NASDAQ:PHUN) Q4 2022 Earnings Call Transcript

Scott Buck: Hi. Good afternoon, guys. Thanks for taking my questions. First one, you had some nice big customer wins here over the last few months between Gaylord and the expansion of VHC. But I’m curious what the current selling environment looks like for some of these larger deals, just given what seems like an ever-increasing level of macro uncertainty?

Russell Buyse: Well, we’ve seen continued evolution as in our pipeline opportunities. They have not changed their pace as a result of the bank takeovers and other recent uncertainties. So we’ve not seen any impact there as far as our process and sales. And further, just on a macro basis, we expect hospitalities on the industry to grow 6%, 7% this year. So there’s really no good reason for them to slow down either.

Scott Buck: All right. That’s helpful. And then could you remind us the seasonality of the Lyte business. I guess I’m a bit surprised to see relatively flat revenue versus the third quarter despite the holiday season?

Matt Aune: Yeah. I can take.

Russell Buyse: Yeah.

Matt Aune: Yeah. I mean, typically, we’re going to see more bookings in Q4. The backlog will drive up — typically, Q4 and Q1 will be the bigger quarters. I will say, more specifically with Lyte and you can kind of dig in once we file the K here as well. We did have a little more focus on profitability in Q4 this year, I’m sorry, last year versus some of the prior quarters. So, of course, we’re driving as much topline, but we are also trying to get the CPA cost down and so that might have had some impact there. But at the end of the day, we were able to drive better margins by doing that, so.

Scott Buck: Great. Matt, that’s helpful. And then last one for me, you had a bit of recovery with some of the digital currency valuations. I’m curious kind of what the plan is with the remaining digital assets you have on the balance sheet?

Matt Aune: Yeah. Sure. So we still do have some Bitcoin Ethereum on the balance sheet. I think our approach right now, like I said on the call, we’ve got some runway here to kind of figure out what we’re going to do is kind of the next steps in terms of debt or equity. But essentially, from our point of view and talking to investors and the Board, I think, it’s important for us to — if we need to use digital assets that we’ll liquidate them use for operating and that, obviously, lowers the chance of diluting people further or taking on additional debt. So right now, we’re focused on kind of managing that as closely as possible. Certainly, as it goes up, that benefits us and kind of just evaluate that on a day-to-day, weekly basis in terms of how we liquidate that or how long we keep it. But certainly, that’s part of our strategy going forward and we’ll see in the next couple of months what our longer term strategy will kind of just let everybody know.

Scott Buck: Great. I appreciate the additional color got. Thank you very much.

Operator: Thank you. Our next question is coming from Ed Woo with Ascendiant Capital. Please go ahead.

Ed Woo: Yeah. Welcome, Russ. My question is on M&A. You mentioned that you guys are going to be evaluating it. Have you seen significant improvement in or depressed pricing for M&A target and what are any particular focus on targets that you guys are interested?