Waitr Holdings, Inc. (NASDAQ:WTRH) Q2 2022 Earnings Conference Call August 8, 2022 5:00 PM ET
Company Participants
Carl Grimstad – CEO & Chairman
Armen Yeghyazarians – CFO
Conference Call Participants
Dan Kurnos – The Benchmark Company
Operator
Good afternoon, everyone. I would like to welcome all of you to the Waitr Holdings, Inc. Second Quarter 2022 Conference Call. With us today are Waitr’s Chief Executive Officer; Carl Grimstad; and Chief Financial Officer, Armen Yeghyazarians. By now, you should have access to the company’s earnings press release. If not, it may be found at sec.gov or their Investor Relations website at investors.waitrapp.com.
Before I turn the call over to management, I would like to remind you that certain statements and projections in this call about future business and financial results constitute forward-looking statements. These statements are based on management’s current business and market expectations, and actual results could differ materially from those projected in the forward-looking statements. Please see the risk factors contained in the company’s annual report on Form 10-K for a discussion of risks that may cause actual results to vary from these forward-looking statements.
Finally, please note that on today’s call, management may refer to non-GAAP financial measures. Please refer to Waitr’s second quarter 2022 earnings release for a full reconciliation of its non-GAAP financial measures to the most comparable GAAP financial measures.
I would now like to turn the conference call over to Waitr’s CEO, Carl Grimstad, who will give an overview of the company’s business activities and developments for the second quarter of 2022. He will then turn the call over to Armen Yeghyazarians, who will provide an overview of the company’s operating and financial results. We will then open the call for Q&A. Carl?
Carl Grimstad
Thank you. Hello, everyone, and welcome to the second quarter 2022 earnings call. In July 2022, we entered into agreements to begin delivering from retailers in industries such as apparel, luxury, sporting goods, alcohol, parts [ph], electrical products and more.
This is in line with our vision to deliver anything ASAP to consumers, same day from any type of business. We also believe these agreements with third parties like Burke and Elite Extra will start making an impact to order volume in late third quarter and into the fourth quarter of 2022.
We added 7-Eleven in mid-June, 2022 with the addition of 7-Eleven locations to our platform. This created a new level of convenience for our customers. We are looking forward to working to ensure our customers past and present are aware that they now can order these items with which historically they could not.
In addition to expanding the variety of items we deliver, we also entered into a multi-year sponsorship agreement, partnering with the New York Giants, the New York Jets and MetLife Stadium as the exclusive mobile ordering platform at MetLife Stadium. Fans can use the ASAP platform to place mobile orders at all giants and jets home games with our platform integrated into each team’s app for a seamless mobile ordering experience from concession stands throughout MetLife stadium.
For other events ASAP mobile ordering will be done directly through our proprietary ASAP Stadium Ordering application. Our Stadium Ordering application technology is currently active at the University of Alabama, Louisiana State University and the New Orleans Saint Super. We have plans to add new venues across the nation over time. We will use our stadium technology and partnerships to enter new markets for both last mile delivery and payment processing solutions for merchants of all types.
July, 2022, also marked the start of our official transition to rebrand and change the name of the company to ASAP.
We are shifting to one platform, which once completed should provide additional cost and resource savings. Moreover, the shift to one platform and application should allow for a further focus on various feature enhancements and streamlining of service levels. We continue to provide our instant pay technology built for our independent contractor drivers and intend to commercialize the rollout of this technology to restaurant partners and potentially to all other verticals.
Additionally, we are pleased with our progress in facilitating merchants with access to third party payment providers, and expect this business to continue to see growth in the future.
During the second quarter of 2022, we negotiated the pay-down of approximately $21 million of debt while extending the debt maturity to May 15, 2024. In July, 2022, we entered into an agreement with the lenders of our convertible notes pursuant to which they converted approximately $6.8 million of the notes and currently now beneficially own approximately 16.3% of the company’s common stock in addition to their beneficial ownership in underlying warrants. This conversion reinforces their commitment to the company’s management team and future strategy.
Outstanding long term debt as of August 08, 2022 totaled approximately $57 million compared to $84.5 million at December 31, 2021. With this most recent conversion, debt has dis decreased by over $70 million or approximately 56% since January 01, 2020.
I am proud of our team and the foundation we are building for the long term future of the company. Our broader view towards our business strategy with respect to our industry should allow the company to grow profitably in the future. We believe the company will be close to adjusted EBITDA positive by the end of the third quarter, assuming stable order volume and taking out the cost of the rebrand.
Our focus is to be able to deliver a diverse set of products from any vendor. We also believe that we can become the preferred payment provider to any vendor. This along with our best-in-class proprietary stadium technology should help us strategically expand our operations. There is still work to be done in enhancing all of our systems, implementing our rebrand and the migration to one application, but our team is making great strides.
I believe we are on the right path. However, from a capital structure perspective, there is still work to be done. This is why we will be having a new shareholder vote in the fall of 2022 in order to effectuate a reverse stock split resulting in continued compliance with NASDAQ listing requirements, the importance of which is to maintain the company’s financial flexibility and the opportunity to further grow the business through future acquisitions.
Now I will turn over to Armen, our Chief Financial Officer, for a recap of the second quarter results.
Armen Yeghyazarians
Thank you, Carl. I would like to now review our second quarter 2022 financial results. Revenue for the second quarter of 2022 was $31.2 million compared to $49.2 million in the second quarter of 2021. For the six months ended June 30, 2022, revenue was $66.2 million compared to a $100.1 million for the six month end ended June 30, 2021. In addition to macroeconomic factors affecting order volumes, lack of stimulus payments in the first quarter of 2022, unlike those distributed in the late first quarter of 2021 also contributed to the decline in revenue for the six month end of June 30, 2022, compared to the six months end of June 30, 2021.
Adjusted EBITDA for the second quarter of 2022 was a net loss of $3.6 million compared to adjusted EBITDA $2.5 million in the second quarter of 2021. Approximately $1 million of the second quarter 2022 loss is from an increase to the IBNR insurance reserve. Net loss for second quarter 2022 was $11.7 million or $0.07 cents per share compared to a net loss of $5.6 million or $0.05 per share in the second quarter of 2021. Cash on hand, totalled $28.2 million as of June 30, 2022.
That concludes the recap of our second quarter 2022 financial results. We will now go into a short Q&A session.
Question-and-Answer Session
Operator
[Operator instructions] We’ll now take our question from Dan Kurnos of The Benchmark Company. Dan, your line is open, please. Go ahead.
Dan Kurnos
Great. Thanks. Good afternoon. Carl actually there is a decent amount to talk about here. But just first, let’s just get the sort of perfunctory high level view out of the way. Obviously you guys have been managing uneven order volumes, throughout this kind of travel, inflation, the environment, the macro backdrop, just at this point, how are you seeing — how are you seeing order volumes on a go-forward basis? Do you think that you’re starting to see a stabilization level and obviously your AOB continues to rise with food inflation? I don’t know how sustainable that is over the long term, but it feels like it’s going to remain elevated in the short term. So if you just talk about those factors first, please. Thank you.
Carl Grimstad
Thanks Dan. You hit the nail on the head. The order volume at this stage until we further diversify the business with payments revenue, and what have you is the number one driver to the P&L? We are in our softer period. I am thinking that as we go through back to school and into the fall, which orders tend to pick up that we will continue to see the trends that we’ve seen in past years.
But, this is specifically why I think that the business needs to further diversify itself into more than just prepared food delivery; but, as you heard in my comments, I do think that given the trends currently that by the end of the third quarter, backing out the sort of one-time cost of the rebrand that will start to be break even EBITDA, if not slightly positive in the fourth quarter.
Dan Kurnos
Got it. That’s helpful. Maybe we’ll start there then just on the rebrand sort of the puts and takes one I don’t know how to sort of handicap the rebrand costs, which are obviously one time in nature. But alternatively, this, as you mentioned, you’re prepared remarks, giving you an opportunity to simplify and unify the platform. We know historically that there were two brands running in tandem and I’m sure there’s a bunch of backend stuff that he’s been working to unify. So how do we think about sort of the longer tailed cost savings that could come from streamlining of the services?
Carl Grimstad
Yeah. not to quantify at this point, but very definitely as you describe it, actually, we had more than two platforms and, a lot of duplicative effort not to mention very difficult to allocate resources on moving three different platforms forward. So, hopefully when this project is complete, we’ll be able to re-evaluate cost structure across the board, not only on the developmental side, but also on the service side. I think that’s a super positive thing.
And, coinciding with what we’re going to be doing in the tri-state area, which I’m hopeful will be a driver of positive order growth in the upcoming quarters. We’re super excited about the exposure that we are going to receive through the winning of this relationship with both the giants of Jets and MetLife. You have you70,000, 80,000 people looking at your application that we can access every time there isn’t a game or a concert or whatnot, it is a great entree into arguably the biggest consumer market in the world being the tri-state area.
Dan Kurnos
A little bit of leading the witness, Carl, right. I was just clearly going to ask about that. It’s a big win for you guys. It’s fascinating, right, because there are multiple heavy weights in the space and here you are coming out on top. I’m just curious on the process of, either if you’re willing to talk about the economics or payback period or how we should think about the benefit from that. And obviously to your point, you now have an entry into New York, which theoretically could spread, whereas you did not really have a footprint there before. So not to get ahead of ourselves here, but just any kind of knock on effect as we think about, market expansion benefiting from that one.
Carl Grimstad
How we’re looking at it and I expect to see a number of these things in our future. We see it as, the in-stadium technology that we developed in house is best of breed. We won this piece of business, I have to say because our team got out there and didn’t nail it in, right and we had a functioning system at multiple other venues, and we took the approach that we’re there to help them sell more product whether it’s a hot dog, a beer or t-shirt.
So I think that in sports arena venue technology in that business is great, but it’s a multifaceted strategy of how to expand our brand from a national perspective. And since announcing that, just the inbounds that we have gotten with nationwide players, meaning not just food service operators, but brands, beer brands, food brands, because now, they don’t think of us just as a regional company. They think that the exposure, goes much beyond just a certain second or third tier city that we might be in.
So I see it as an entree into all of those merchants in the tri-state area, in this case, not only to provide our delivery services, but our merchant processing solutions also. You walk in there almost with the stamp of approval and it’s all about empowering my salesperson to have basically a folder of services that he can provide value based to that merchant. So I think that you’ll see us do more of this in other higher quote unquote, ‘higher volume markets’ where there’s — we don’t have to be the leader in the market, but if we could scrape off some orders here and there and have exposure to a greater level of consumer, it’ll bode well for everything that we’re doing.
Dan Kurnos
And, just to that last point, Carl, just to wrap up maybe an update on how payment penetration is going for you growth there and to what you just said, it sounds like you have a plan to further commercialize more tech and sort of grow the SaaS portfolio and I know it’s still a relatively small percentage, but, over the next, I don’t know, three plus years, how do we think about sort of traditional baseline versus SaaS offering?
Carl Grimstad
Yeah. Obviously it’s not quite big enough to break out individually just yet Dan, but I’ve always seen this business as an integrated payments company that also offers last mile delivery. So I think our future is in a financial — looking more like a financial technology company that also does last mile delivery. I listen to our big competitors that talk about the community or what have you, we’re kind of saying the same things slightly different though. Maybe instead of going at it, just from the consumer side, I like to go at it from the merchant side.
Consumers are tricky. Merchants are a little bit more consistent in their decision making. So I think we’re coming at it in a similar manner. I don’t see us as the super app, but we may be quote unquote, ‘the application for merchants to offer what they need to offer to their consumers and stay competitive over time’. And, that’s a collection of simple things, but when packaged together in a value proposition with great technology and service, I think it can be a winner. Last mile, delivery is here to stay. Payment solutions are here to stay, and I think the business is going to more and more over time into a financial technology company that also does delivery.
Dan Kurnos
Got it. Thanks for sticking with me, Carl. Super helpful. Appreciate it.
Operator
Thank you. We have no more questions. I’d like to turn the conference back to Carl, for closing re remark.
Carl Grimstad
Well, thank you again to everyone that attended our call. Please have a nice evening and we’ll talk to you again next quarter.
Operator
Thank you for joining us today. This concludes our conference. You may not now disconnect.
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