Presto Automation Inc. Announces Second Quarter Fiscal 2023 Financial Results

Continues momentum with Presto Voice A.I. platform by adding Del Taco Restaurants as second drive-thru enterprise customer

SAN CARLOS, Calif.--()--Presto Automation (“Presto” or the “Company”) (NASDAQ: PRST), a provider in the labor automation technology industry, today announced financial results for the second quarter 2023 ended December 31, 2022.

“It has been exciting to see artificial intelligence gain mainstream recognition with the emergence of chatGPT and large language models (LLMs). One of our early investors was Sam Altman, CEO of OpenAI. We have been leveraging GPT-3 in some of our AI solutions for a while now,” Mr. Suri said. “We are pleased to announce that Presto has continued to expand our drive-thru Voice A.I. solution with the signing of Del Taco, a deal that offers a $10M ARR opportunity. We are also continuing to scale Presto Voice AI, with approximately 300 drive-thru locations now implemented, and customer cash collections grew 50% quarter over quarter. Presto voice AI products are also installed in pilots in QSR chains with 15,000 drive-thrus, which represents a $200M ARR opportunity.”

Second Quarter 2023 Financial Highlights

For the second quarter of fiscal 2023, compared to the second quarter of fiscal 2022:

  • Total Revenue: Total revenue was $7.4 million down 4% compared to $7.7 million for 2022.
  • ARR: ARR was $29 million, a decrease of 4% year-over-year. ARR would have been $32 million but for the accounting treatment related to a specific customer contract that precluded the recognition of certain revenues related to the contract.
  • Net Loss: Net loss improved to $(17) million, compared to $(24) million for 2022.
  • Adjusted EBITDA*: Adjusted EBITDA loss was $(10) million for 2023, compared to $(5) million for 2022.

Second Quarter 2023 Business Highlights

  • Signed Del Taco as second enterprise customer Voice A.I. for drive-thru.
  • Initiated expense rationalization program in effort to reduce overall operating expenses.

*Adjusted EBITDA is a non-GAAP financial measure defined under “Non-GAAP Financial Measures,” and is reconciled to net income, the closest comparable GAAP measure, at the end of this release.

Financial Outlook Update

  • For the fiscal year ending June 30, 2023:
    • The Company expects reported ARR to be between $28 - $30 million.

Second Quarter 2023 Conference Call

Presto Automation will host a conference call today at 4:30 PM ET to review the Company’s financial results for the quarter ended December 31, 2022. The call will be accessible by telephone at 877-407-0792 (domestic) or 201-689-8555 (international) using passcode 13736036. The call will also be available live via webcast on the Company’s investor relations website here or directly here, A telephone replay of the conference will be available at 844-512-2921 with access code 13736036 and will be available until 11:59 PM ET on Tuesday, February 28, 2023. An archive of the webcast will also be available shortly after the call and will remain available for 90 days.

Non-GAAP Financial Measures and Definition of Key Metric

This press release includes Adjusted EBITDA, which is a financial measure that is not calculated in accordance with Generally Accepted Accounting Principles in the United States (“GAAP”). We believe Adjusted EBITDA is useful for comparing our financial performance to other companies and from period to period by excluding the impact of certain items that do not reflect our core operating performance, thereby providing consistency and direct comparability with our past financial performance and between fiscal periods.

Adjusted EBITDA is defined as net loss, adjusted to exclude interest, other income (expense), net loss on debt extinguishment, income taxes, depreciation and amortization expense, stock-based compensation expense, fair value adjustments on warrant liabilities and convertible promissory notes, merger related ancillary costs, and hardware repair expenses related to COVID and COVID-related expenses due to damage from liquid ingress.

We include this non-GAAP measure because it used by management to evaluate our core operating performance and trends and to make strategic decisions regarding the allocation of capital and new investments. A reconciliation of Adjusted EBITDA to its most comparable GAAP financial measure is included below under “Reconciliation from GAAP to Non-GAAP Results” at the end of this release.

In addition, we use Annual Revenue Run-Rate, or ARR, as a key business metric to evaluate our business, identify trends, formulate business plans and make strategic decisions. We calculate ARR by annualizing quarterly revenue at the end of the fiscal quarter. Our calculation of ARR may differ from similarly titled metrics presented by other companies, and the amount of revenue we recognize over any 12-month period may differ significantly from the ARR at the beginning of that period.

About Presto

Presto overlays next-generation digital solutions onto the physical world. Our enterprise-grade touch, vision, and voice technologies help hospitality businesses thrive while delighting guests. With over 250,000 systems shipped, we are one of the largest labor automation technology providers in the industry. Founded by a number of MIT students in 2008, Presto is headquartered in Silicon Valley, California with customers, including some top 20 restaurant chains, in the U.S.

PRESTO AUTOMATION INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(unaudited)

(in thousands, except per share and per share amounts)

 

Three Months Ended December 31,

 

Six Months Ended December 31,

 

2022

 

2021

 

2022

 

2021

Revenue

       

Platform

 

$

4,131

 

 

$

5,134

 

 

$

8,529

 

 

$

9,671

 

Transaction

 

 

3,221

 

 

 

2,562

 

 

 

6,180

 

 

 

5,254

 

Total revenue

 

 

7,352

 

 

 

7,696

 

 

 

14,709

 

 

 

14,925

 

Cost of revenue:

       

Platform

 

 

4,219

 

 

 

3,793

 

 

 

8,208

 

 

 

7,815

 

Transaction

 

 

2,833

 

 

 

2,230

 

 

 

5,477

 

 

 

4,564

 

Depreciation and impairment

 

 

291

 

 

 

461

 

 

 

582

 

 

 

927

 

Total cost of revenue

 

 

7,343

 

 

 

6,484

 

 

 

14,267

 

 

 

13,306

 

Gross profit

 

 

9

 

 

 

1,212

 

 

 

442

 

 

 

1,619

 

Operating expenses:

       

Research and development (1)

 

 

5,112

 

 

 

3,805

 

 

 

11,381

 

 

 

7,806

 

Sales and marketing (1)

 

 

2,227

 

 

 

1,651

 

 

 

4,626

 

 

 

2,825

 

General and administrative (1)

 

 

6,276

 

 

 

2,158

 

 

 

12,200

 

 

 

4,132

 

Loss on infrequent product repairs

 

 

-

 

 

 

28

 

 

 

-

 

 

 

463

 

Total operating expenses

 

 

13,615

 

 

 

7,642

 

 

 

28,207

 

 

 

15,226

 

Loss from operations

 

 

(13,606

)

 

 

(6,430

)

 

 

(27,765

)

 

 

(13,607

)

Change in fair value of warrants and convertible promissory notes

 

 

(378

)

 

 

(16,196

)

 

 

59,444

 

 

 

(29,770

)

Interest expense

 

 

(3,030

)

 

 

(868

)

 

 

(6,406

)

 

 

(2,256

)

Loss on early extinguishment of debt

 

 

(337

)

 

 

-

 

 

 

(8,095

)

 

 

-

 

Other financing and financial instrument (costs) income, net

 

 

-

 

 

 

-

 

 

 

(1,768

)

 

 

-

 

Other income, net

 

 

327

 

 

 

11

 

 

 

2,355

 

 

 

2,641

 

Total other income (expense), net

 

 

(3,418

)

 

 

(17,053

)

 

 

45,530

 

 

 

(29,385

)

Income (loss) before provision for income taxes

 

 

(17,024

)

 

 

(23,483

)

 

 

17,765

 

 

 

(42,992

)

Provision for income taxes

 

 

5

 

 

 

24

 

 

 

5

 

 

 

24

 

Net income (loss) and comprehensive income (loss)

 

$

(17,029

)

 

$

(23,507

)

 

$

17,760

 

 

$

(43,016

)

         

Net income (loss) per share attributable to common stockholders:

       

Basic

 

$

(0.33

)

 

$

(0.86

)

 

$

0.44

 

 

$

(1.58

)

Diluted

 

$

(0.33

)

 

$

(0.86

)

 

$

0.35

 

 

$

(1.58

)

Weighted-average shares used in computing net income (loss) per share attributable to common stockholders, basic

 

 

50,998,941

 

 

 

27,211,309

 

 

 

40,475,200

 

 

 

27,157,425

 

Weighted-average shares used in computing net income (loss) per share attributable to common stockholders, diluted

 

 

50,998,941

 

 

 

27,211,309

 

 

 

50,775,172

 

 

 

27,157,425

 

         
         

(1)

Includes stock-based compensation expense as follows (in thousands)

       
 

Three Months Ended December 31,

 

Six Months Ended December 31,

 

2022

 

2021

 

2022

 

2021

Research and development

 

$

555

 

 

$

145

 

 

$

732

 

 

$

250

 

Sales and marketing

 

 

224

 

 

 

114

 

 

 

336

 

 

 

213

 

General and administrative

 

 

1,749

 

 

 

210

 

 

 

3,808

 

 

 

485

 

Total*

 

$

2,528

 

 

$

469

 

 

$

4,876

 

 

$

948

 

         

*For the three and six months ended December 31, 2022, such amount reflects $1,696 and $1,874, respectively, of stock-based compensation expense related to earn out shares attributable to option and RSU holders.

PRESTO AUTOMATION INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)

(in thousands, except share and par value)

December 31,

 

June 30,

2022

 

2022

ASSETS

Current assets:

Cash and cash equivalents

$

38,211

 

$

3,017

 

Accounts receivable, net

 

2,572

 

 

1,518

 

Inventories

 

649

 

 

869

 

Deferred costs, current

 

4,780

 

 

8,443

 

Prepaid expenses and other current assets

 

2,265

 

 

707

 

Total current assets

 

48,477

 

 

14,554

 

 

Deferred costs, net of current portion

 

436

 

 

2,842

 

Investment in non-affiliate

 

2,000

 

 

-

 

Deferred transaction costs

 

-

 

 

5,765

 

Property and equipment, net

 

1,489

 

 

1,975

 

Intangible assets, net

 

6,942

 

 

4,226

 

Goodwill

 

1,156

 

 

1,156

 

Other long-term assets

 

674

 

 

18

 

Total assets

$

61,174

 

$

30,536

 

 

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities:

Accounts payable

$

2,982

 

$

5,916

 

Accrued liabilities

 

4,356

 

 

6,215

 

Financing obligations, current

 

6,786

 

 

8,840

 

Term loans, current

 

-

 

 

25,443

 

Convertible promissory notes and embedded warrants, current

 

-

 

 

89,663

 

Deferred revenue, current

 

3,533

 

 

10,532

 

Total current liabilities

 

17,657

 

 

146,609

 

 

Term loans, noncurrent

 

52,022

 

 

-

 

PPP loans

 

-

 

 

2,000

 

Warrant liabilities

 

2,362

 

 

4,149

 

Deferred revenue, net of current portion

 

609

 

 

237

 

Other long-term liabilities

 

748

 

 

-

 

Total liabilities

$

73,398

 

$

152,995

 

Stockholders' deficit:

Preferred stock, $0.0001 par value–1,500,000 shares authorized as of December 31, 2022 and June 30, 2022, respectively; no shares issued and outstanding as of December 31, 2022 and June 30, 2022, respectively

 

-

 

 

-

 

Common stock, $0.0001 par value–180,000,000 shares authorized as of December 31, 2022 and June 30, 2022, respectively; 51,231,608 and 27,974,439 shares issued and outstanding as of December 31, 2022 and June 30, 2022, respectively

 

5

 

 

3

 

Additional paid-in capital

 

170,794

 

 

78,321

 

Accumulated deficit

 

(183,023

)

 

(200,783

)

Total stockholders' deficit

 

(12,224

)

 

(122,459

)

Total liabilities and stockholders' deficit

$

61,174

 

$

30,536

 

PRESTO AUTOMATION INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(in thousands)

Six Months Ended December 31,

2022

 

2021

Cash Flows from Operating Activities

 

 

Net income (loss)

$

17,760

 

$

(43,016

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

Depreciation, amortization and impairment

 

845

 

 

1,053

 

Stock-based compensation

 

3,002

 

 

954

 

Earnout share stock-based compensation expense to option and RSU holders

 

1,874

 

 

-

 

Contra-revenue associated with warrant agreement

 

615

 

 

-

 

Noncash expense attributable to fairvalue liabilities assumed in Merger

 

34

 

 

-

 

Change in fair value of liability classified warrants

 

(11,188

)

 

2,768

 

Change in fair value of warrants and convertible promissory notes

 

(48,271

)

 

26,909

 

Amortization of debt discount and debt issuance costs

 

1,884

 

 

175

 

Loss on extinguishment of debt and financing obligations

 

8,095

 

 

-

 

Paid-in-kind interest expense

 

2,366

 

 

-

 

Share and warrant cost on termination of convertible note agreement

 

2,412

 

 

-

 

Forgiveness of PPP Loan

 

(2,000

)

 

(2,599

)

Change in fair value of unvested founder shares liability

 

(1,160

)

 

-

 

Noncash lease expense

 

168

 

 

-

 

Loss on disposal of property and equipment

 

14

 

 

-

 

Changes in operating assets and liabilities:

 

 

Accounts receivable, net

 

(1,054

)

 

(459

)

Inventories

 

219

 

 

(321

)

Deferred costs

 

6,308

 

 

5,958

 

Prepaid expenses and other current assets

 

(1,155

)

 

599

 

Other long-term assets

 

-

 

 

(83

)

Accounts payable

 

1,388

 

 

(4,777

)

Vendor financing facility

 

-

 

 

(6,792

)

Accrued liabilities

 

(2,090

)

 

(2,656

)

Deferred revenue

 

(6,627

)

 

(7,305

)

Other long-term liabilities

 

-

 

 

(699

)

Net cash used in operating activities

 

(26,561

)

 

(30,291

)

 

 

Cash Flows from Investing Activities

 

 

Purchase of property and equipment

 

(171

)

 

(109

)

Payments relating to capitalized software

 

(2,459

)

 

(787

)

Investment in non-affiliate

 

(2,000

)

 

Net cash used in investing activities

 

(4,630

)

 

(896

)

 

 

Cash Flows from Financing Activities

 

 

Proceeds from the exercise of common stock options

 

60

 

 

58

 

Proceeds from the issuance of term loans

 

60,250

 

 

-

 

Payment of debt issuance costs

 

(1,094

)

 

-

 

Repayment of term loans

 

(32,980

)

 

-

 

Payment of penalties and other costs on extinguishment of debt

 

(6,144

)

 

Proceeds from issuance of convertible promissory notes and embedded warrants

 

-

 

 

500

 

Proceeds from issuance of financing obligations

 

-

 

 

439

 

Principal payments of financing obligations

 

(2,657

)

 

(978

)

Proceeds from issuance of common stock

 

1,000

 

 

-

 

Contributions from Merger and PIPE financing, net of transaction costs and other payments

 

49,840

 

 

-

 

Payment of deferred transaction costs

 

(1,890

)

 

(105

)

Net cash provided (used in) by financing activities

 

66,385

 

 

(86

)

 

 

Net increase (decrease) in cash and cash equivalents

 

35,194

 

 

(31,273

)

Cash and cash equivalents at beginning of year

 

3,017

 

 

36,909

 

Cash and cash equivalents at end of year

$

38,211

 

$

5,636

 

 

 

Supplemental Disclosure of Non-Cash Investing and Financing Activities

 

 

Capitalization of stock-based compensation expense to capitalized software

$

459

 

$

9

 

Issuance of warrants

 

853

 

$

-

 

Capital contribution from shareholder in conjunction with Credit Agreement

 

2,779

 

 

-

 

Issuance of warrants in conjunction with Senior Term Loan

 

2,076

 

 

-

 

Issuance of warrants in conjunction with Lago Term Loan

 

843

 

 

-

 

Convertible note conversion to common stock

 

41,392

 

 

-

 

Reclassification of warrants from liabilities to equity

 

830

 

 

-

 

Recognition of liability classified warrants upon Merger

 

9,388

 

 

-

 

Recognition of Unvested Founder Shares liability

 

1,588

 

 

-

 

Forgiveness of PPP Loan

 

(2,000

)

 

(2,599

)

Transaction costs recorded in accounts payable and accrued liabilities

 

-

 

 

3,720

 

Right of use asset in exchange for operating lease liability

 

308

 

 

-

 

PRESTO AUTOMATION INC.

Reconciliation from GAAP to Non-GAAP Results

(In thousands, except per share data, unaudited)

Three Months Ended

 

Six Months Ended

December 31,

 

December 31,

2022

 

2021

 

2022

 

2021

Adjusted EBITDA

 

 

 

 

Net income (loss)

 

(17,029

)

 

(23,507

)

 

17,760

 

 

(43,016

)

Interest expense

 

3,030

 

 

868

 

 

6,406

 

 

2,256

 

Other income, net

 

(327

)

 

(11

)

 

(2,355

)

 

(2,641

)

Depreciation and amortization

 

412

 

 

518

 

 

845

 

 

1,053

 

Provision for Income taxes

 

5

 

 

24

 

 

5

 

 

24

 

Stock-based compensation expense

 

827

 

 

475

 

 

3,002

 

 

954

 

Earnout stock-based compensation expense

 

1,696

 

 

-

 

 

1,874

 

 

-

 

Change in fair value of warrants and convertible promissory notes

 

378

 

 

16,196

 

 

(59,444

)

 

29,770

 

Loss on extinguishment of debt and financial obligations

 

337

 

 

-

 

 

8,095

 

 

-

 

Other financing and financial instrument (costs) income, net

 

-

 

 

-

 

 

1,768

 

 

-

 

Deferred compensation and bonuses earned upon closing of the Merger

 

-

 

 

-

 

 

2,232

 

 

-

 

Public relations fee due upon closing of the Merger

 

-

 

 

-

 

 

250

 

 

-

 

Loss on infrequent product repairs

 

-

 

 

28

 

 

-

 

 

463

 

Contra-revenue associated with warrant agreement

 

409

 

 

-

 

 

615

 

 

-

 

Hardware repair expense related to COVID

 

-

 

 

737

 

 

-

 

 

1,110

 

Adjusted EBITDA

$

(10,262

)

$

(4,672

)

$

(18,947

)

$

(10,027

)

 

Contacts

Investors:
Chris Whitcomb, VP Investor Relations
investor@presto.com

Media:
Christopher Cast & Brian Ruby
media@presto.com

Contacts

Investors:
Chris Whitcomb, VP Investor Relations
investor@presto.com

Media:
Christopher Cast & Brian Ruby
media@presto.com