ASAP, Inc.
Q4 2021 Earnings Call Transcript

Published: 11 Mar 2022

[Operator:]

Good afternoon, everyone. I would like to welcome all of you to the Waitr Holdings Incorporated Fourth Quarter 2021 Conference Call. Today's conference is being recorded. With us today are Waitr's Chief Executive Officer, Carl Grimstad; and Chief Financial Officer, Leo Bogdanov. By now you should have access to the company’s earnings press release. If not, it may be found at sec.gov or the 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 our future business and financial results constitute forward-looking statements. These statements are based on management’s current business and market expectations and our actual results could differ materially from those projected in the forward-looking statements. Please see the risk factors contained in 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 fourth quarter 2021 earnings release for a full reconciliation of its non-GAAP financial measure to the most comparable GAAP financial measures. I would like to now turn the call over to Waitr’s CEO, Carl Grimstad, who will give an overview of the company’s business activities and developments for the fourth quarter of 2021. He will then turn the call over to Leo Bogdanov, 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 fourth quarter 2021 earnings call. During 2021 we delivered over $540 million in gross food sales for our restaurant and business partners to over 100,000 independent contract drivers, resulting in payments to these independent contract drivers of over $104 million. We started our payment strategy in late 2021 and are now facilitating access to third-parties that are providing payment processing services for approximately 1,900 merchants, with an annualized volume of approximately $900 million. In the fourth quarter of 2021, we continue to methodically deploy our capital in various initiatives in order to position the company for long-term growth. These include investments in our technology platform with new product offerings, expansion of our complementary businesses in solidifying key partnership opportunities within our industry. Additionally, we continued investing in product and engineering personnel, including key additions to our technology management team in early 2022. We should benefit from this as we plan to move into multiple delivery verticals, and expand our payments capabilities. Our investments in 2021 also included the acquisition of businesses that offer access to third-party payment processing solution providers. These acquisitions were important steps in pursuing our overall growth strategy of facilitating access to a full suite of third-party payment processing solution services to our current base of restaurants and other future merchants. These services along with the existing logistics network will provide value added and competitively priced payment solutions to our restaurant ecosystem, as well as an expanding merchant base beyond the restaurant industry. Additionally, we solidify key partnerships with integrated commerce technology, such as Olo’s Dispatch and they continue to build out of our Google Food Ordering capabilities. We believe these integrations will provide a vehicle to generate additional order flow by opening the doors to a wider consumer base within our markets. While 2021 presented challenges including impacts from the ongoing pandemic and hurricanes in our core Southern markets. The recent macroeconomic headwinds, such as inflation and rising gas prices present more challenges that we are currently navigating. We continue to focus our effort on our core delivery markets, enhancing our technology platforms and providing quality service to our restaurant partners and diners. On December 17, 2021, the company announced that is entered into a non-binding letter of intent to acquire Retail Innovation Labs Incorporated, which does business as Cova. The parties mutually agreed on March 10, 2022, that they know they are no longer pursuing a business combination as contemplated in the letter of intent, but continue to discuss a potential business relationship involve facilitating Cova Customer Access to third parties that provide payment processing solutions. The company believes that such an arrangement can be mutually beneficial and will allow both parties to continue to execute their respective business strategy without affecting a business combination. As previously announced, we have acquired the asap.com domain name, as well as several related domain names in connection with our rebranding strategy. We expect ASAP will serve as the foundation of our brand moving forward, as we believe in better embodies the future direction of our company. We are excited to show the public what 2022 has to offer as we continue to diversify the company and help grow our constituent base of merchants, consumers and independent contract drivers. We continually strive to build on and monetize this ever-expanding ecosystem by providing other value added third-party services to this chore base. With that I will turn it over to Leo, our Chief Financial Officer for a recap of the fourth quarter results.

[Leo Bogdanov:]

Thank you, Carl. Let’s now review our fourth quarter and annual 2021 financial results. Revenue for the fourth quarter of 2021 was $38.6 million, compared to $46.8 million in the fourth quarter of 2020. Revenue in the fourth quarter of 2021 decreased approximately 11% from revenues of $43.4 million for the third quarter of 2021, which is consistent with the decline from third to fourth quarter of 2020. The year ended December 31, 2021, revenue was $182.2 million compared to $204.3 million for the year ended December 31, 2020. Adjusted EBITDA for the fourth quarter of 2021 was $1.7 million, compared to $9.9 million in the fourth quarter of 2020. Adjusted EBITDA for the year ended December 31, 2021, was $15.6 million, compared to $43.4 million for the year ended December 31, 2020. Net loss per share for the fourth quarter of 2021 was $0.06, compared to net income per share for $0.02 in the fourth quarter of 2020. Net loss for the year ended December 31, 2021, was $5.2 million or $0. 04 per share, compared to net income of $15.8 million or $0.15 per share for the year ended December 31, 2020. Cash on hand totaled $60.1 million as of December 31, 2021. Total outstanding long-term debt as of December 31, 2021, was $84.5 million consisted primarily of our $35 million of term loans, and $49.5 million of convertible notes. That concludes the recap for fourth quarter and annual 2021 financial results. We'll now go into a short Q&A session.

[Operator:]

We will take our first question from Dan Kurnos of Benchmark Company.

[Dan Kurnos:]

Great. Carl, just talk a little bit about -- obviously, we had issues with COVID lapping and then the stimulus going away. Clearly rising inflation, you brought that up. But on the other hand, you signed a number of online ordering deals. You have the opportunity to show kind of vertical expansion here. So if you can kind of balance those 2, just as we get into 2022, just how you think the puts and takes evolve this year as you look at kind of total revenue for the year?

[Carl Grimstad:]

Yes. We're just really getting started with Google Food Ordering. We were up against the deadline with their shut off. I think it's March 15, I think we've got the necessary things done that had to occur. It's hard for me to project what the impact will be from an order flow perspective. But I definitely think it will be meaningful. You brought up the macro factors, the biggest issue that we're dealing with on a daily basis right now is gas prices and the impact on our independent contract drivers. Not to mention, if you just think about our overall constituent group, we're in the second and third tier markets, people are challenged with the rising cost of everything, food being one of them, fuel. So our diners are looking for less expensive alternatives. Our drivers are being impacted by rising costs, mostly in the form of fuel cost. Our independent restaurants struggle with the labor force as well as the fact that, generally speaking, as you know, it is less expensive to go the QSR route for a family to feed -- to have dinner than it is an independent restaurant. So I think there are -- across the board, we have a number of headwinds that we're dealing with from a macro perspective right now that are challenging.

[Dan Kurnos:]

Got it. That's helpful. And then just the thought on contribution from payments, both this year and next year as you guys get more into that side of the equation and then maybe if you want to transition that into your own sort of transition. I did ask about vertical expansion. Obviously, cannabis is still on the sort of the horizon, but just kind of where we are as you look to sort of transform the business.

[Carl Grimstad:]

Yes. The payment side is getting in full swing. I think last month alone, we signed over 200 new merchant accounts. I expect I'd be disappointed if we weren't on a run rate by the end of this year to be between 700 and 1,000 new accounts a month. And that's beyond just our restaurant base, that's merchants of all types. That current -- the number that I threw out is just the current run rate of the 1,900 merchants we have signed thus far. On the verticals, we're definitely moving in the direction, Dan, of deliver anything and everything. The -- we continue to be very focused on the cannabis vertical. We're -- we love the guys at Cova. We're continuing to work towards a relationship there that's going to work for both of us. And the low-hanging fruit in the beginning of that, we'll be offering payment services to their installed base throughout Canada and the U.S.

[Dan Kurnos:]

And just lastly for me, Carl. One thing that you did very well when you first came on was obviously take a business that was challenged and bring back sort of the EBITDA. You've been doing some investing and now we've got sort of a business transition, but you've been keeping EBITDA still positive. Given the headwinds on sort of cost from gas, but maybe higher margins from payments and some of the other things that are going on. Just how do we think about sort of your ability to maintain adjusted EBITDA, plus or minus, over the next, let's call it, 12 to 24 months?

[Carl Grimstad:]

I feel very confident that this is a positive cash flow business, irrespective of the challenges. We started to see the headwinds really mid-summer, and we're constantly trying to rightsize the workforce for what looks to be the new or the new, new order flow level. So I think good, better and different, we're very focused on cash flow positive, Dan, as you know. So it's really a function of making sure that we keep our costs in line for the current size of the order flow and then scale it appropriately as time goes on.

[Operator:]

And that does conclude today’s question-and-answer session. I would now like to turn the call back over to Carl Grimstad for any additional or closing comments.

[Carl Grimstad:]

Thank you. Thanks, everyone, for attending our call today. Please have a great weekend, and we’ll see you next quarter. Thank you.

[Operator:]

And again, that does conclude the call. We would like to thank you for your participation. You may now disconnect.