Phunware Reports Second Quarter 2023 Financial Results

AUSTIN, Texas, August 10, 2023 – Phunware, Inc. (NASDAQ: PHUN) (“Phunware” or the “Company,” “we,” “us” or “our”), the pioneer of Location Based SaaS that offers the only fully integrated enterprise cloud platform for mobile that enables brands to engage, manage and monetize anyone anywhere, today announced financial results for the quarter ended June 30, 2023.

“This past quarter was a pivotal period for Phunware, as we right sized our workforce to an optimal amount, reduced our corporate cash burn, and have refined our sales & marketing strategy to capitalize on opportunities across the multitude of industries where our Location-Based Platform solution can make a significant impact,” said Russ Buyse, CEO of Phunware. “Spearheaded by our newly appointed CFO Troy Reisner, we are working on restructuring our existing debt and negotiating with prospective investors on more favorable terms, in tandem with reducing our cash burn to accelerate our organization toward a path of growth and profitability. As we activate our revamped sales and marketing strategy, we continue to have productive conversations with prospective clients. One of the more recent deals we executed was with Thumper Pond, a resort that is representative of the entire category of mid-market hospitality brands that can affordably and effectively use our Location-Based Platform to offer guests the best and most personalized experience. Looking ahead, we remain laser focused on commercializing our Location-Based Platform across all verticals, with a heavy emphasis on hospitality and healthcare.”

Second Quarter 2023 Financial Results
Net revenues for the quarter totaled $3.5 million
Platform revenues were $1.3 million
Hardware revenues were $2.2 million
Net loss was $(6.5) million
Net loss per share was $(0.06)
Non-GAAP Adjusted EBITDA loss was $(5.2) million

Recent Business Highlights

Notable Corporate and Product Developments:
Filed Lawsuit Against UBS Securities for Market Manipulation
Announced Strategic Cost Saving Measures to Accelerate Path to Profitability
Exhibited the Future of Hospitality Tech at HITEC 2023 in Toronto
Attended the Cantor Fitzgerald Technology Conference on June 14, 2023
Announced CFO Transition

Notable Customer and Partner Wins:
Partnered With MKT Consulting to Digitally Transform Resident Experience at New Luxury High-Rise in Houston
Launched Smart Hospitality Solution at Thumper Pond Resort
Launched AI-Enabled Mobile Engagement

Conference Call Information

Phunware management will host a conference call today (August 10, 2023) at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time) to discuss its financial results for the quarter ended June 30, 2023.

Interested parties may access the conference call by dialing 877-545-0320 in the United States, or 973-528-0002 from international locations with access code: 875894. The conference call will be broadcast live and available for replay here and via the investor relations section of the Company’s website at

Safe Harbor Clause and Forward-Looking Statements

This press release includes forward-looking statements. All statements other than statements of historical facts contained in this press release, including statements regarding our future results of operations and financial position, business strategy and plans, and our objectives for future operations, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “expose,” “intend,” “may,” “might,” “opportunity,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “will,” “would” and similar expressions that convey uncertainty of future events or outcomes are intended to identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking.

The forward-looking statements contained in this press release are based on our current expectations and beliefs concerning future developments and their potential effects on us. Future developments affecting us may not be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) and other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described under the heading “Risk Factors” in our filings with the Securities and Exchange Commission (the “SEC”), including our reports on Forms 10-K, 10-Q, 8-K and other filings that we make with the SEC from time to time. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. These risks and others described under “Risk Factors” in our SEC filings may not be exhaustive.

By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. We caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and developments in the industry in which we operate may differ materially from those made in or suggested by the forward-looking statements contained in this press release. In addition, even if our results or operations, financial condition and liquidity, and developments in the industry in which we operate are consistent with the forward-looking statements contained in this press release, those results or developments may not be indicative of results or developments in subsequent periods.

Disclosure Information

Phunware uses and intends to continue to use its Investor Relations website as a means of disclosing material nonpublic information and for complying with its disclosure obligations under Regulation FD. Accordingly, investors should monitor the Company’s Investor Relations website, in addition to following the Company’s press releases, SEC filings, public conference calls, presentations and webcasts.

About Phunware, Inc.
Everything You Need to Succeed on Mobile — Transforming Digital Human Experience

Phunware, Inc. (NASDAQ: PHUN), the pioneer of Location Based SaaS that offers the only fully integrated enterprise cloud platform for mobile that enables brands to engage, manage and monetize anyone anywhere. Phunware’s Software Development Kits (SDKs) include location-based services, mobile engagement, content management, messaging, advertising, loyalty (PhunCoin & PhunToken) and analytics, as well as a mobile application framework of pre-integrated iOS and Android software modules for building in-house or channel-based mobile application and vertical solutions. Phunware helps the world’s most respected brands create category-defining mobile experiences, with approximately one billion active devices touching its platform each month when operating at scale. For more information about how Phunware is transforming the way consumers and brands interact with mobile in the virtual and physical worlds, visit and follow @phunware on all social media platforms.

Phunware PR & Media Inquiries:
Phone: (512) 693-4199

Phunware Investor Relations:
Matt Glover and John Yi
Gateway Investor Relations
Phone: (949) 574-3860

Condensed Consolidated Balance Sheets
(In thousands, except share and per share information)
June 30, 2023December 31, 2022
Current assets:
Cash$1,105 $1,955 
Accounts receivable, net of allowance for doubtful accounts of $100 and $198 at June 30, 2023 and December 31, 2022, respectively863 958 
Inventory2,168 2,780 
Digital assets71 10,137 
Prepaid expenses and other current assets624 1,033 
Total current assets4,831 16,863 
Property and equipment, net188 221 
Goodwill29,956 31,113 
Intangible assets, net2,190 2,524 
Right-of-use asset3,258 3,712 
Other assets367 402 
Total assets$40,790 $54,835 
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable$8,350 $7,699 
Accrued expenses1,542 2,895 
Lease liability968 954 
Deferred revenue1,092 2,904 
PhunCoin deposits1,202 1,202 
Current maturities of long-term debt, net6,094 9,667 
Warrant liability— 256 
Total current liabilities19,248 25,577 
Deferred revenue1,050 1,274 
Lease liability2,584 3,103 
Total liabilities22,882 29,954 
Commitments and contingencies (Note 8)
Stockholders’ equity
Common stock, $0.0001 par value; 1,000,000,000 shares authorized; 107,565,124 shares issued and 107,058,624 shares outstanding as of June 30, 2023 and 103,153,337 shares issued and outstanding as of December 31, 2022, respectively11 10 
Treasury stock at cost; 506,500 and 0 shares at June 30, 2023 and December 31, 2022, respectively(502)— 
Additional paid-in capital279,837 275,562 
Accumulated other comprehensive loss(426)(472)
Accumulated deficit(261,012)(250,219)
Total stockholders’ equity17,908 24,881 
Total liabilities and stockholders’ equity$40,790 $54,835 

Condensed Consolidated Statements of Operations and Comprehensive Loss
(In thousands, except per share information)

Three Months Ended
June 30,
Six Months Ended
June 30,
Net revenues$3,487 $5,485 $8,234 $12,263 
Cost of revenues3,031 3,965 7,417 8,972 
Gross profit456 1,520 817 3,291 
Operating expenses:
Sales and marketing1,472 1,928 2,600 3,413 
General and administrative4,766 5,251 9,478 9,556 
Research and development1,212 1,876 2,984 2,879 
Impairment of goodwill1,203 — 1,203 — 
Total operating expenses8,653 9,055 16,265 15,848 
Operating loss(8,197)(7,535)(15,448)(12,557)
Other income (expense):
Interest expense(553)(273)(1,090)(654)
Impairment of digital assets— (12,158)(50)(21,511)
Gain on sale of digital assets2,096 168 5,310 194 
Fair value adjustment of warrant liability2,682 256 2,469 
Other income, net127 45 229 71 
Total other income (expense), net1,673 (9,536)4,655 (19,431)
Loss before taxes    (6,524)(17,071)(10,793)(31,988)
Income tax expense— — — — 
Net loss(6,524)(17,071)(10,793)(31,988)
Other comprehensive income (loss):
Cumulative translation adjustment23 (85)46 (117)
Comprehensive loss$(6,501)$(17,156)$(10,747)$(32,105)
Net income (loss) per common share, diluted$(0.06)$(0.17)$(0.10)$(0.33)
Weighted-average common shares used to compute loss per share, basic and diluted105,133 97,742 104,151 97,293 

Condensed Consolidated Statements of Cash Flows
(In thousands)

Six Months Ended
June 30,
Operating activities
Net loss$(10,793)$(31,988)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of debt discount and deferred financing costs697 259 
Gain on change in fair value of warrant liability(256)(2,469)
Gain on sale of digital assets(5,310)(194)
Impairment of digital assets50 21,511 
Impairment of goodwill1,203 — 
Stock-based compensation2,824 1,270 
Other adjustments1,180 478 
Changes in operating assets and liabilities:
Accounts receivable57 178 
Inventory417 (892)
Prepaid expenses and other assets444 (631)
Accounts payable651 920 
Accrued expenses(997)(386)
Lease liability payments(691)(347)
Deferred revenue(2,036)(2,698)
Net cash used in operating activities(12,560)(14,989)
Investing activities
Proceeds received from sale of digital assets15,390 — 
Purchase of digital assets— (923)
Acquisition payment— (1,125)
Capital expenditures(9)(158)
Net cash provided by (used in) investing activities15,381 (2,206)
Financing activities
Payments on borrowings(4,270)(3,132)
Proceeds from sales of common stock, net of issuance costs995 — 
Proceeds from exercise of options to purchase common stock58 16 
Payment for stock repurchase(502)— 
Net cash used in financing activities(3,719)(3,116)
Effect of exchange rate on cash48 (121)
Net decrease in cash(850)(20,432)
Cash at the beginning of the period1,955 23,137 
Cash at the end of the period$1,105 $2,705 

Six Months Ended
June 30,
Supplemental disclosure of cash flow information:
Interest paid$438 $408 
Income taxes paid$— $— 
Supplemental disclosures of non-cash activities:
Right-of-use assets obtained in exchange for operating lease obligations$— $1,508 
Non-cash exchange of digital assets$557 $923 
Issuance of common stock in connection with acquisition of Lyte Technology, Inc.$— $1,125 
Issuance of common stock under the 2018 Employee Stock Purchase Plan$47 $116 
Issuance of common stock for payment of bonuses previously accrued$347 $— 

Non-GAAP Financial Measures and Reconciliation
Our non-GAAP financial measures include adjusted gross profit, adjusted gross margin and adjusted earnings before interest, taxes, depreciation and amortization ("EBITDA") (our "non-GAAP financial measures"). Our non-GAAP financial measures should be considered in addition to, not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. They are not measurements of our financial performance under GAAP and should not be considered as alternatives to revenue or net loss, as applicable, or any other performance measures derived in accordance with GAAP and may not be comparable to other similarly titled measures of other businesses. Our non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of our operating results as reported under GAAP. Some of these limitations include: (i) non-cash compensation is and will remain a key element of our overall long-term incentive compensation package, although we exclude it as an expense when evaluating its ongoing operating performance for a particular period, (ii) our non-GAAP financial measures do not reflect the impact of certain charges resulting from matters we consider not to be indicative of ongoing operations, and (iii) other companies in our industry may calculate our non-GAAP financial measures differently than we do, limiting their usefulness as comparative measures.
We compensate for these limitations to our non-GAAP financial measures by relying primarily on our GAAP results and using our non-GAAP financial measures only for supplemental purposes. Our non-GAAP financial measures include adjustments for items that may not occur in future periods. However, we believe these adjustments are appropriate because the amounts recognized can vary significantly from period to period, do not directly relate to the ongoing operations of our business and complicate comparisons of our internal operating results and operating results of other peer companies over time. Each of the normal recurring adjustments and other adjustments described in this paragraph help management with a measure of our operating performance over time by removing items that are not related to day-to-day operations or are non-cash expenses.

Reconciliation of GAAP to Non-GAAP Financial Measures
(In thousands, except percentages)

Three Months Ended June 30,Six Months Ended June 30,
(in thousands)2023202220232022
Net loss$(6,524)$(17,071)$(10,793)$(31,988)
Add back:  Depreciation and amortization188 182 376 368 
Add back:  Interest expense553 273 1,090 654 
Add Back: Stock-based compensation1,462 706 2,824 1,270 
Add Back: Impairment of digital currencies— 12,158 50 21,511 
Add Back: Impairment of goodwill1,203 — 1,203 — 
Less: Fair value adjustment for warrant liabilities(3)(2,682)(256)(2,469)
Less: Gain on sale of digital assets(2,096)(168)(5,310)(194)
Adjusted EBITDA$(5,217)$(6,602)$(10,816)$(10,848)

Three Months Ended June 30,Six Months Ended June 30,
(in thousands, except percentages)2023202220232022
Gross profit$456 $1,520 $817 $3,291 
Add back:  Stock-based compensation111 49 364 95 
Adjusted gross profit$567 $1,569 $1,181 $3,386 
Adjusted gross margin16.3 %28.6 %14.3 %27.6 %

Supplemental Information
(In thousands, except percentages)

Three Months Ended June 30,Change
(in thousands, except percentages)20232022Amount%
Net Revenues
Platform revenue$1,295 $1,628 $(333)(20.5)%
Hardware revenue2,192 3,857 (1,665)(43.2)%
Net revenues$3,487 $5,485 $(1,998)(36.4)%
Platform revenue as percentage of total revenue37.1 %29.7 %
Hardware revenue as percentage of total revenue62.9 %70.3 %

Six Months Ended June 30,Change
(in thousands, except percentages)20232022Amount%
Net Revenues
Platform revenue$2,640 $4,120 $(1,480)(35.9)%
Hardware revenue5,594 8,143 (2,549)(31.3)%
Net revenues$8,234 $12,263 $(4,029)(32.9)%
Platform revenue as percentage of total revenue32.1 %33.6 %
Hardware revenue as percentage of total revenue67.9 %66.4 %