Wejo Group Limited’s (WEJO) CEO Richard Barlow on Q2 2022 Results – Earnings Call Transcript

Wejo Group Limited (NASDAQ:WEJO) Q2 2022 Earnings Conference Call August 15, 2022 8:30 AM ET

Company Participants

Tahmin Clarke – Senior Vice President, IR

Richard Barlow – Founder and CEO

John Maxwell – Chief Financial Officer

Conference Call Participants

Jeff Meuler – Baird


Hello. And welcome to the Wejo’s Second Quarter 2022 Earnings Call and Webcast. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions]

As a reminder, this conference is being recorded. It’s now my pleasure to turn the call over to Tahmin Clarke. Please go ahead.

Tahmin Clarke

Good morning, everyone. And thank you for joining Wejo’s business update call to discuss our second quarter business and financial results. With me on the call today are Richard Barlow, our Founder and CEO; and John Maxwell, our CFO.

As a preliminary matter, please note that this call may not be transcribed, recorded or broadcast without our express written consent. We take no responsibility for any inaccuracies that may appear in the transcripts of this call by third parties. Our remarks and the Q&A that follow are copyrighted by Wejo Group Limited.

Remarks made today on this call about future expectations, events, strategies, objectives, trends or projected financial results, and other similar items are forward-looking. Forward-looking statements are subject to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.

Forward-looking statements are not guarantees of future performance and as such should be taken in the context of the risks and uncertainties that are outlined in the SEC filings of Wejo, including our annual report on Form 10-K recently filed with the SEC, as well as other documents filed with the SEC.

Forward-looking statements speak only as of the date made and the company undertakes no obligation to update such statements in the future.

In addition, during this call, we will be discussing certain financial metrics that do not conform to Generally Accepted Accounting Principles in the U.S. better known as GAAP. For a reconciliation of these financial metrics to GAAP, please refer to our annual report on Form 10-K filed with the SEC.

And now, I’d like to turn the call over to our Founder and CEO, Richard Barlow.

Richard Barlow

Thank you for joining for Wejo’s second quarter 2022 business update. I’m proud that Wejo continues the process of building a market-leading business that is well-positioned to dominate smart mobility sector, an idea which is validated by a number one ranking in the Frost & Sullivan Research report strategic overview of startups, disrupting the global connected car market.

Our efforts to build sustainable pipeline and revenue is reflecting our strong customer partner activity during the quarter, which included 90 deals close to- date and continuing contractual agreements with premier global companies, with also additional customers in a wide range of sectors including, automotive, insurance, audience immediate measurement, retail and Departments of Transportation. The companies within these sectors are significant names and paths for expanding customer relationships and increasing revenue per contract.

We’ve also signed new contractual arrangements with a wide range of smaller players who have realized the value of our SaaS products and services to enhance their business. As a result of these wins, big and small, our turn with the customer’s doubled and net revenue increased by nearly 200%.

But we’re not just focused on revenue, we’ve also taken aggressive actions to reduce our cost structure to accelerate our path to profitability, using adjusted EBITDA as a proxy t cash, we believe these actions will reduce our monthly cash burn rate from $10 million to $5 million to $6 million by quarter four. We’re focusing our spending and efforts on revenue generation and these actions are part of a broader effort to position the company to deliver on our financial objectives in 2022 and beyond.

We recently announced that we have raised $15.9 million for a PIPE process without the existing supporting investors on some new investments, all of whom are excited by our business and the opportunity ahead of us. This raise strengthens our capital position and provides additional liquidity for the company.

We are proud to raise funds in this challenging environment, which is testament to the value our investors see in our business. The combination of our cash impact proceeds, low spending levels and access to capital for our Kansas City and Apollo facilities ensures that we have the funding we need through to late 2023.

Our Chief Financial Officer, John Maxwell will delve deep into the company’s financial details, but I wanted to highlight a few of our strong KPIs. Total contract value or TCB, total customers are up over 100% in the quarter versus the same period last year, while gross bookings and gross billings are both up approximately 125% in the quarter, demonstrating the continuing progress of our business and we have accomplished all this, despite the diverse array of challenges most companies are facing the current economic and market environment.

We expect positive trajectory of our KPIs continue to demonstrate that connected vehicle data can impact customers and drivers in meaningful ways today. For example, our recent partnership with RoadMedic allows 9-1-1 first responders to access real-time comprehensive traffic data from millions of connected vehicles using our Real Time Traffic Solution or RTTI.

First responders emergency roadside assistance providers can utilize our RTTI solution to find the fastest and safest route to the scene of an incident to assist any injured motorists, passengers and bystanders as quickly as possible. RoadMedic, which is embedded in the operating systems of cancel tons of the [ph] paper to provides first responders with instant crash detection.

This and intelligent crash data that RTTI solution provides enhanced the capabilities of this technology. This partnership will quite literally save lives. It allows for faster safe response times from EMTs more accurate assessments of the severity of an accident. This partnership validates that we’re evolving from a data supplier to an analytics and insight provider, which will only improve our revenue generation going forward.

Our platform is strong and continues to grow with new product roles, including RTTI, Historic Traffic Patterns or HTP in Wejo labs. These key products have been the foundation for accelerating revenue traffic space as RTTI is the number one real-time data supplier when it comes to connected vehicle data.

In addition to the foundation we are building with our new products, we have proven our data can be applied to additional verticals and benefiting the company as we expand to end-to-end insurance and audience immediate measurement.

Our operational momentum is illustrated by, strong customer activity with new pipeline deals of 50% in the first half of the year, our expanding product portfolio, our upward trending KPIs, and finally, our strong execution securing additional capital and improving our cost structure.

Speaking of KPIs, that’s a good opportunity to bring in our CFO, John Maxwell into this discussion, so we can discuss our KPIs and financial progress we’ve made to-date. Thank you, John.

John Maxwell

Thank you, Richard. We’re off to a good start for the year as we continue to build momentum in our business. We reported a record level of gross billings and annual recurring revenue or ARR in the period. Gross bookings and customer activity continued to be very strong, our bookings have translated into strong revenue growth and we anticipate will continue to do so as we add more new business. Net revenue is up nearly 200% in Q2 over the prior year.

These KPIs tell a powerful story of customers waking up to the value that Wejo can deliver. Most of our business continues to be derived from our traffic segment and our marketplace offering where we are the clear leader, but as Richard discussed, we are focused on delivering products and services across multiple product verticals, as well as our SaaS solutions.

Our total number of customers has doubled over the same period last year, continuing a strong customer growth trend. We expect to continue to expand customer activity by bringing a significant number of smaller organizations as well. And as we expand into new marketplaces, and expand our SAS opportunities, our customer activity will continue to grow.

Total contract value similar to customer activity more than doubled in the period compared to the prior year. While TCV has a moderate impact on revenue in the current period, it really illustrates the book of business the company is building for future revenue growth.

Gross bookings continue at a strong pace like we saw in Q1 and are up 126% from the same period last year. Our most significant new bookings outside of the highlighted ones came from customers doing traffic management, traffic signal timing, road safety and congestion analysis. We are focused on other market verticals and expect that we will see a further broadening of our customer base as our product offerings expand.

Gross bookings per vehicle also grew at 101% to $1.39. ARR, which was at record levels during the period was up over 50% versus the second quarter of 2021. This indicates that a larger number of our customers are moving to a subscription-based model as opposed to being a one-time purchaser. Our business continues to mature from proof-of-concept engagement with customers to longer subscription-based contracts of 12 months to 36 months.

With all of these factors, net revenue for the quarter was $1.6 million, representing a 198% increase when compared to the same period in the prior year. About two-thirds of this revenue is from marketplace and we are seeing early revenue from SaaS opportunities as well. We are maintaining our net revenue guidance of $10 million plus for the full year 2022.

Our revenue performance to-date of $2.2 million, which is up 150% year-over-year and in line with analysts’ consensus implies that we will have to generate just under $8 million of additional revenue in the back half of the year.

As of this call, we have visibility into 60% to 70% of the four-year target of $10 million based on a combination of our previous bookings plus our later stage pipeline. That places us in the range of $6 million to $7 million without adding anything new to our pipeline. Of course, we are always adding new deals to the pipeline, but these numbers reflect what we know as of today.

To make up the difference, we have several potentially large deals in progress in the insurance marketplace and in automotive SaaS that we believe will get our revenue to $10 million plus, depending on the timing and final structure of the deal.

Revenue recognition can be impacted by a number of factors, including, of course, timing, but also the structure of the deal. For example, whether the customer deal is done as a software license agreement that has a one-time licensing fee or a SaaS agreement with services paid over time, will have a meaningful impact on the amount of revenue in the period, while the TCV is often around the same level.

Specifically, a deal to license our software will drive more upfront revenue recognition, with a smaller level of revenue recognized over time, while a SaaS deal will generally be recognized over the life of the agreement. As such, a major OEM SaaS deal can drive a large booking, adding to TCV, but may not significantly increase revenue in the same period.

We will focus our customer dialogue on what is best for the customer relationship and accounting will take its natural course. But these types of differences will be drivers of revenue accounting. Any one of these customer deals could generate several million dollars of revenue in a year.

Irrespective of the accounting treatment, these new customer deals will drive significant gross bookings, total contract value and backlog, and we believe enough incremental revenue to meet or beat our guidance for the year. The remainder of our financials and other KPIs for second quarter versus the prior year are, an adjusted EBITDA loss of $28.9 million and a 29% increase in monetizable vehicles on platform. We expect to continue to add vehicles to our platform to support expansion into multiple geographies outside of the U.S.

Our adjusted EBITDA loss during the period was impacted by our cost management efforts. Our previously announced cost reduction initiatives will further reduce our adjusted EBITDA losses in the second half.

Our burn rate based on guidance for the full year was about $10 million per month. Using adjusted EBITDA as a proxy for cash burn, we expect to cut that rate to about $5 million to $6 million per month as we exit 2022. The improvement in our cost structure has been and will continue to be driven by a hiring freeze, elimination of non-revenue generating projects and prioritization of workflows that are squarely focused on delivering our revenue goals for 2022.

Despite some of these actions, our plans have not changed, with the exception of the timing of launches of some new product verticals, which will move into 2023. These had only modest revenue expectations for 2022. We continue to be laser focused on the verticals of traffic, insurance, and audience and media measurement for the balance of the year as our key revenue drivers.

We have pushed non-essential non-revenue focused projects to future periods to allow for additional flexibility. We have also focused our spending on product and commercial development that has revenue impacts in 2022 and 2023. And finally, we’re focused on making our cloud and beta costs as efficient as possible.

We believe that all of these measures will lead the margin expansion as our business scales over time. And as a result of these initiatives, we are targeting an improved adjusted EBITDA loss in the range of $85 million to $95 million for the full year.

Finally, we are maintaining our guidance with respect to vehicles on platform for full year 2022. Despite our cost prioritization efforts, we will still onboard vehicles at the $27 million to $32 million range this year, focusing on vehicles that give us incremental sensor data, electric vehicles and vehicles that deliver PII data, which is rich with driver and vehicle insights to support our 2022 and 2023 revenue plans. This will represent vehicle growth of almost 75% at the midpoint of the range, including our PIPE raise and cash on balance sheet, our pro forma cash at the end of the quarter was about $38 million.

To maximize our capital runway, we are also reducing cash burn, leveraging our partners to improve results, accessing additional capital from the committed equity facility and the Apollo FPA. With these initiatives and assuming that current market conditions persist while we access the CEF and the FPA, we will have access to sufficient liquidity through late 2023.

Back to you, Richard.

Richard Barlow

Thank you, John. We recognize that we’re still educating the private and public sector organizations and even some OEMs about the value of data and science in connected, electric and autonomous vehicles, and how those datasets are pivotal to the success in the smart mobility landscape.

For this quarter’s update, I want to spend some time highlighting our product capabilities, which will enable us to continue to rapidly grow access by $30 billion data marketplace opportunity for product verticals we’re entering.

First, we launched Wejo Labs, that also gives researchers and data scientists self-serve access to data from millions tens of vehicles across the U.S. and Europe through the continuous purchase the data packages. Detail traffic studies analysis can be completed in data from road conditions, inclement weather situations and identifying road locations where hazardous driving cause across billions of vehicle journeys all in an effort to enhance safety.

During the last update, we also discussed our Real Time Traffic Intelligence solution, RTTI and this quarter we launched a new complementary solution called Historic Traffic Patterns or HTP. Our HTP solution has the ability to generate data and insights from any location across 95% of America’s roadways, all of which have been mapped by region.

Imagine the impact of having access to real time traffic intelligence combined with historical traffic data can have an improving traffic safety and reducing emissions. This new product has already dominant position in the traffic marketplace and expands our relationship with major companies are relying on us for their logistics and mapping.

These and other traffic solutions in the pipeline combined to serve an anticipated $3.4 billion industry by 2030 according to Ptolemus Consulting Group. When they ask for strategic goals for 2022, we plan to deploy solutions for the end-to-end insurance proposal and our announcement of a deal with Ford Europe marks our initial foray into an anticipated $7.6 billion European market by 2030.

We’ve also created an API solution which delivers information from the vehicle to Wejo for analytics and insights, and a problem sent from the driver will share the information with insurers to customize policies and create savings for customers based on their driving habits or limited mileage. This solution will generate recurring revenue derived from anticipated $44 billion global industry in 2013 and be available for any type of insurance trying to optimize their customer experience and efficiency.

We’re also developing our Autonomous Vehicle Operating System or AVOS platform designed to accelerate autonomous vehicle adoption globally. This platform creates an environment that enable full simulation testing using billions of miles of connected vehicle data, leveraging solutions like Real Time Traffic Insights and Historic Traffic Patterns to allow global automotive manufacturers to be able to design and develop autonomous vehicles and understand historical locations well anticipating real time traffic events to improve safety. Long-term, we see this part to generate marketplace.

These product launches deepen and broaden our capabilities and positions to expand our revenue opportunity. They enhance the marketplace breadth and position our solutions across a wide range of spectrum of industries.

We’re not just developing these capabilities for one product vertical, as we believe they are dynamic and flexible to be effects across multiple product verticals. Why is this important? Well, it allows us to replicate our success across new product verticals with minimal investment. It’s our strategy to build capabilities, underpin products or services to serve a broad marketplace with reusable scale technology and that’s how we plan to accelerate our revenue profile.

As we come to the close of this business update, I just want to reiterate some key points that showcase the foundation Wejo is building now that builds a brighter future for our investors. We have some new customer deals and partnerships with Ford Europe, RoadMedic and Microsoft.

As John mentioned, we advanced the financial progress to get the economy by being one of the few recent public tech companies that raise capital during this difficult economic times, improving our adjusted EBITDA outlook to $85 million to $95 million from $110 million to $120 million in the year and to further extend our capital runway.

We’re reporting continued strong gross bookings, billings, TCV and other custom market metrics in the quarter and increase the net revenue by nearly 200% in the quarter. These metrics demonstrate that our business is building nicely towards our long-term goals in both marketplace and SaaS, key customer wins, strong financial discipline and our expanding product rollout demonstrating how we’re evolving into the premier SaaS solutions provider powered by connected, electric and autonomous vehicle data. These financial analyses also highlight that Frost & Sullivan ranked Wejo number one on their research survey, strategic overview of the startup disrupting the global connected car market.

I’d like to thank you for your time. John and I will now take your questions. Thank you.

Question-and-Answer Session


Thank you. [Operator Instructions] Our first question today is coming from Jeff Meuler from Baird. Your line is now live.

Jeff Meuler

Yeah. Thank you. So, first, I want to ask about the revenue guidance, you maintained it, but there was some commentary about visibility to I think 60% to 70% of the guidance. Just hoping you could contrast it with the original guidance from earlier in this year, because my understanding was, you said, at that time that was a base of revenue based upon contracted customers and late-stage pipeline. So just trying to understand the difference, because I thought it was already using a methodology that was based upon existing pipeline. So any sort of pipeline progression slowing with macro, it sounded like the impact from the cost structure prioritization and marketplace prioritization was relatively small. So, just trying to understand the difference from the original guidance to this commentary on $6 million to $7 million of visibility without adding the pipeline?

John Maxwell

Sure. So, yeah, you’re right. You’re exactly right, Jeff. I mean, we did, as we built the $10 million plus guidance at the beginning of the year when we announced in March, what we’re talking about today is really still very much in line with that. It is very possible that when we talk about $10 million plus that, when we add up our pipeline of activity, we can easily get, if we closed everything to well above $10 million, but we’re maintaining the guidance that we have based on the deals that are immediately in pipeline that we know will close, that’s the 60% to 70%.

And then the other deals that are in various stages of discussion that we think could have a pretty wide range of outcome. So we wanted to make sure that you understood kind of what can cause the range to occur. But we’re still very much in line with what we would have expected at this point.

Jeff Meuler

Okay. Got it. And then, I get that you’re still onboarding data partnerships and still reiterating the guidance for number of vehicles on platform. I — there seem to be maybe a little bit of a nuanced part of the talking point where there was a comment about prioritizing certain types of data. So as we look out over the next several years, I guess, as you focus on your burn rate and your cost structure, are the multiyear outlooks for the number of vehicles that you expect to be on platform unchanged or is that part of the trade-offs with the expense management and instead of the number of vehicles, we should more be talking about the data types that you’re bringing online that have maybe better monetization per vehicle opportunities?

John Maxwell

Maybe I’ll start and then Richard can add. I mean, look, data, as you know, is critical central to what we’re doing. We’ve very strong set of relationships that we’ve built and we’re going to continue to build. So, strategically, really nothing has changed.

In terms of prioritizing where we spend the money in the short-term, it is really focused on what’s going to generate the revenue in the near-term. But it’s not going to change our long-term view of how we manage data. We’ll try to be as efficient as we can when we reach relationships with our OEM and fleet partners, but fundamentally, nothing has changed.

Richard Barlow

Yeah. But fundamentally one of the things we’re clearly aware of is that we do need to manage our cloud costs and we’re hitting critical mass of data in a particular field of use, in a particular territory or even a state then that’s the point when we will be very vigorous about when we will curtail onboarding of vehicles for the sake of onboarding as opposed to whether it’s going to drive our unit economics up.

But as John said, we do not have any intention of varying our number of live vehicles on platform, but we’re very much focused on scaling on unit economics up as much as possible and managing our cloud process — managing on cloud processing costs.

Jeff Meuler

Got it. And I guess, a bit related to that, just any update on Neural Edge and how does — how important does that remain as an initiative as you manage cloud costs, but also manage cost structure generally?

Richard Barlow

So, Jeff, I believe you’ve accepted to join one of our Tech Analysts Day, where we do intend to demonstrate further how we’ve been investing in key technologies, which we’re seeing demand from OEMs. That will include Neural Edge, which is the latest version of our debt platform. So we continue to be controlled in our expenditure, but spending in areas where we’re seeing inbound demand from OEMs.

Jeff Meuler

Got it. And then last for me just on the insurance marketplace, which it seems like you’re making good progress on and remains a key initiative. So I saw the Ford partnership, I think, you said, opening Europe as the first market. Where are you on Japan, I would have thought that that market would be far along, given the sample relationship? And then is the large U.S. insurer still in conversations, is that one of the deals that could potentially help you get to the $10 million on the year?

Richard Barlow

So foundationally we’re progressing well in Japan, it takes a long time to establish corporate structure, established relationships in new territories, but with the additional investment from Sompo, which we announced a couple of weeks ago, with our progression in Japan generally with OEMs and we are very much on plan for this rollout of insurance in Japan. It takes time.

In terms of the U.S., I won’t go into the specifics, but we are very much in line with that, as we said in our previous earnings, we’re having more advanced in conversations with more insurance and carriers in the U.S. market.

And in terms of Europe, as you mentioned, Ford Europe is now a foundational OEM for us to launch a very broad insurance offering in the European market including the U.K.

Jeff Meuler

Got it. Thank you. I’ll turn it over.

John Maxwell

Thanks, Jeff.

Richard Barlow

Thanks, Jeff.


Thanks. Thank you. [Operator Instructions] If there are no further questions at this time, I’ll turn the floor back over to management for any further or closing comments.

Richard Barlow

Thank you for all the attendees we’ve had today. We’ve seen some great demand since attendance numbers this morning. We hope you’re happy with the — with how we’ve developed Wejo this year, with a very clear eye on capital raise, on cost management in a tough macroeconomic environment. We’ve had a great Q2 and we continue to be excited by the future of Wejo. Thank you for your time.


Thank you. That does conclude today’s teleconference and webcast. You may disconnect your line at this time and have a wonderful day. We thank you…

Richard Barlow

Thank you.


… for your participation today.

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