Good afternoon, ladies and gentlemen. Welcome to Phunware's First Quarter 2022 Investor Conference Call. Currently, all participants are in a listen-only mode. Joining me today are Alan S. Knitowski, President, Chief Executive Officer, and Co-Founder, Randall Crowder, Chief Operating Officer, and Matt Aune, Chief Financial Officer. The format today will include prepared remarks by Alan, Matt, and Randall, followed by a question-and-answer session. As a reminder, today's discussion will include forward-looking statements. These forward-looking statements, including any such statements referring to the potentially effects or impact of the COVID-19 pandemic, reflect current views as of today and are based on various assumptions that are subject to risks and uncertainties disclosed in the risk factors section of our SEC filings. Actual results may differ materially and undue reliance should not be placed on them. Additionally, the matters being discussed today may include non-GAAP financial measures. Reconciliation of GAAP to non-GAAP financial information is set forth in the earnings press release, which is available on the Investor Relations section of Phunware's website at investors.phunware.com. I further encourage you to visit investors.phunware.com to access not only the earnings press release but also the current investor presentation, SEC filings, and additional collateral on Phunware. At this time, I'd like to turn things over to Phunware's President, CEO, and Co-Founder, Alan Knitowski. Sir, please proceed.

Thank you very much, and welcome to our first quarter 2022 investor conference call. As a reminder, Phunware is a 13-year-old technology company focused on the intersection of mobile, cloud, big data, and blockchain with business-to-business, business to government, and business to consumer customers worldwide. Our core mission is to create a Phunware ID for every human being on earth that has a device touching a network connected to their favorite brands, applications, and venues that just happen to run Phunware software or intersect with our cloud-based infrastructure. On one side, we provide our B2B and B2G customers with everything they need to succeed on mobile, including the products, solutions, data, and services for their digital transformation needs on Apple iOS and Google Android devices and applications. On the other side, we provide our B2C customers with the hardware systems, software, and cryptocurrency services needed for their engagement and incentivized participation in high-performance gaming, streaming, trading, cryptocurrency mining, and personal productivity computing. Central to these efforts is our enterprise cloud platform for mobile, called MaaS or multi-screen as-a-service, which is available for licensing under a SaaS business model over one to five-year contract periods worldwide. And our PhunToken and PhunCoin loyalty and rewards cryptocurrency ecosystem, which has facilitated transactions through our PhunWallet mobile applications for the Ethereum blockchain. The completion of Q1 constituted continued operational momentum for our business as we further accelerated our MaaS platform vision and adoption across a number of key fronts, including new product introduction, indirect channel expansion, digital asset activation, and a more than 310% sequential gain in year-over-year revenue growth, representing a new first-quarter record for reported revenues as a public company. In parallel, the conclusion of Q1 subsequently provided even more growth to our business as we further scaled our Phunware hardware sales and continued to improve our balance sheet, including a current digital currency balance of more than 652 Bitcoin and 1,222 Ethereum, valued at more than $22 million at today's trading prices. Importantly, and in tandem, we're upwardly revising our forward revenue guidance for Q2 2022 of over 275% year-over-year, which would represent a new second-quarter record for our company while trading publicly. Our CFO, Matt Aune, will break down these details and forecast further in his section of the earnings broadcast. In terms of our current operating environment, our core B2B and B2G customers are only beginning to return to their offices and facilities, remaining in a hybrid transition regarding their employees and contractors safely returning back to work. We expect that cities, states, and countries will continue opening on a broader basis throughout the balance of 2022, while also understanding that this remains an ongoing and unpredictable situation. In parallel, our B2C customers are both active and fully engaged, demonstrating strong demand for hardware and cryptocurrency alike, completely independent of what we see within the private and public sectors. As suggested previously in past quarters and reiterated again here, we're both excited and comforted by the dramatic increase in activity across all aspects of our product and solution offerings for mobile, big data, cryptocurrency, high-performance computing, and the cloud. Importantly, this activity encompasses all of our core growth engines rolling forward, including our MaaS cloud, our data-driven Loyalty Marketplace, our secure blockchain-enabled token, coin, and wallet capabilities, and our high-performance computing systems for gaming, streaming, trading, cryptocurrency mining, and personal productivity. Last year was the genesis of a powerful transition in our company's history as we shifted from a non-recurring, low-margin, transaction-based business to a far stickier, more scalable, recurring, and high-margin SaaS licensing business for our MaaS platform. In addition to continued enterprise and government interest in our MaaS Digital Front Door solution for healthcare, our MaaS Smart Workplace solution for corporations, and our MaaS Smart City Solution for cities, we accelerated conversations with customers from sectors that were hit hard by the pandemic, including hospitality, real estate, and healthcare verticals. These activities resulted in many new customer wins for our team, including Communications Cabling Innovations, Humana, Stanford Health, Miami-Dade County of Florida, Live Nation, Sanderson Farms, Developers Alliance, Southeast Tech, Cooperative Energy’s Safety, Sioux Falls Development Foundation of South Dakota, American Land Title Association, Yellowstone Bear World of Idaho, and California Operation Lifesaver, amongst many others. In conjunction with growing our portfolio of direct customers like these, we also further expanded our global footprint by amplifying our go-to-market strategy with indirect sales and channel partners by adding Axiom Labs to those previously announced during our prior earnings announcement. We remain extremely excited about the post-launch scaling of PhunWallet and our Blockchain Ecosystem powered by PhunCoin and PhunToken. We're continuing to aggressively scale and monetize this part of our business and look forward to the accelerated global adoption of both our blockchain-enabled MaaS Customer Data Platform and our MaaS Mobile Loyalty Ecosystem. During Q1, these important activities included the trading commencement of PhunToken on decentralized exchange, Uniswap, and initial exchange offering announcement for PhunToken here in Q2 on centralized exchange, LATOKEN. The trading commencement announcement of PhunCoin here in Q2 on centralized exchange Securitize. As a reminder, Phunware currently owns more than 80% of all PhunToken constituting more than 8 billion tokens and representing more than $50 million in ownership against a fully diluted digital asset market capitalization currently exceeding $60 million. This market did not exist when we completed our last earnings call, but it's now live and active. In parallel, and as an additional reminder, Phunware also currently owns more than 70% of all PhunCoin constituting more than 70 billion tokens and representing what is expected to be multiples of our PhunToken ownership value in USD terms when launched for trading over the next several weeks. Said differently for specific clarity and while recognizing and acknowledging that achieving trading volume and liquidity in both new digital asset markets will take some time, we currently believe that upon formally launching PhunCoin unsecuritized, our token ownership total for both PhunToken and PhunCoin combined is highly likely to exceed the entire NASDAQ market capitalization of Phunware. As stated above, we're extremely excited to announce today more than 310% sequential revenue growth year-over-year, which is well above our prior guidance of more than 250% as previously promised. Additionally, and in parallel, we're also pleased to upwardly revise our guidance for Q2 to above 275% revenue growth year-over-year, which is more than 25% higher sequentially than previously promised. We finished Q1 extremely strong, successfully posting the highest first-quarter revenues in the history of our company while trading publicly, and fully expect that Q2 will similarly represent the highest second-quarter revenues in the history of our company while trading publicly. As always, we will continue our core go-to-market strategy centered on direct and indirect agreements and contracts with Fortune 500 customers, especially in the Fortune 100 size range and governments ranging from local and county to state and federal. In parallel, we will also continue to dramatically expand our direct-to-consumer channel for B2C engagements across both our high-performance computing and cryptocurrency offerings to consumers. We're extremely excited by a number of developments that have occurred over the past quarter. And even more excited by what we see coming in the quarters ahead. First, we added to our MaaS bookings backlog and deferred revenues for future revenue recognition over a one to five-year contract period. That will ultimately provide SaaS revenue recognition over the coming 12 to 60 months rolling forward. While these efforts do not provide instant or near-term gratification on revenue recognition for our P&L, they importantly demonstrate the ongoing health and expansion of our business and will be broken down in further detail by our CFO in his section of the earnings broadcast. As a reminder, sales cycles typically represent three to six months on average, and recent impending customer wins will start appearing on our P&L in the coming reporting periods ahead. Second, we continue to expand our installed base of Phunware IDs on MaaS to more than 15 billion devices worldwide, including MaaS platform scalability capable of supporting up to 5 billion transactions per day, 500 thousand transactions per second, one billion unique devices per month with more than one petabyte of data typically growing at more than five terabytes per day when operating at scale. Our MaaS platform now provides a robust Customer Data Platform inclusive of both a detailed data ontology and a comprehensive knowledge graph for one-to-one interactions and engagements. And third, we commercially launched and are presently scaling our PhunWallet mobile applications on Apple iOS and Google Android in conjunction with our MaaS Blockchain Ecosystem all powered by our PhunCoin and PhunToken digital assets. While PhunCoin security tokens only appear on our balance sheet due to their status as a regulated security, PhunToken utility tokens are now flowing transactionally through our P&L as net new and virtually 100% gross margin revenue. As a reminder, during the comparable period in 2021, we did not have either the Lyte by Phunware hardware business or the MaaS Loyalty and Rewards ecosystem anchored by PhunWallet, PhunToken, and PhunCoin. Both lines of business are now active and scaling productively. At this time, our CFO, Matt Aune, will go deeper into our first-quarter financial performance as reported, including our strong sequential revenue growth year-over-year, our continued balance sheet improvements, and our 275% plus year-over-year revenue growth guidance that we expect for the second quarter. Matt, please go ahead.

Thanks, Alan. And good afternoon everyone. I would like to thank you all for joining us today for a review of our first-quarter 2022 financial performance and our progress on key strategic initiatives. For clarity, I'll be discussing GAAP financial measures, unless otherwise specifically noted. Our press release, 8-K, and website provide a reconciliation of all GAAP to non-GAAP financial results. Net revenues for the first quarter of 2022 totaled $6.8 million, which represents 312% growth year-over-year. We decided to combine what we have historically categorized as subscription and services revenue with our application transaction revenue from a presentation standpoint, as we continue to evolve our reporting presentation to match how we run the business. Going forward, we will only present platform revenues and computer hardware revenues. With that, our platform revenue representing 37% of net revenues was $2.5 million growing 51% over Q1 of last year. Our computer hardware revenue for Lyte by Phunware, as we have branded it, represented 63% of net revenues totaling $4.3 million. Gross margin was 26.1% compared to 58% in Q1 of last year. On a non-GAAP adjusted basis, gross margin was 26.8% compared to 71% in Q1 of last year. Platform gross margin was 57.2% compared to 58% last year. As I've mentioned previously, Lyte by Phunware has a different margin profile as a computer hardware business than our higher-margin platform business. Lyte by Phunware gross margin was 8.1%, which we're pleased to see an improvement from last quarter. However, we still have work to do to fully streamline our supply chain and expand gross margins to be more consistent with our mid and long-term operating goals. Total operating expense was $6.8 million up from $4.4 million in the same quarter last year. Other non-cash operating expense items were stock-based compensation and amortization of intangibles, making up a combined $0.7 million this year compared to $0.9 million in the prior year. By excluding these one-time and non-cash charges, adjusted operating expense was $6.1 million compared to $3.5 million last year. We have continued to invest in our sales and marketing teams year-over-year, pushing marketing efforts for PhunToken and Lyte by Phunware. I'm excited to see many of those efforts have directly affected our top-line revenue already, and we look forward to continuing to see much more in the future. On the G&A side, we've fully integrated the Lyte team and rebuilt our expense structure that we paused due to COVID during the beginning of 2021. Non-GAAP adjusted EBITDA loss was $4.2 million compared to $2.4 million last year. Net loss was $14.9 million, or $0.15 per share, compared to a $14.3 million net loss, or $0.22 per share, last year. The main factors driving the reported net loss were the accounting treatments that we were required to take, although they have minimal to no cash implications to operations as I have previously explained. These factors include impairment of digital currency of $9.4 million in the current quarter, and a year ago we had non-cash charges for loss on extinguishment of debt related to the payoff of our 2020 senior convertible notes for $5.8 million. And the fair value adjustment for warrant liabilities of $2.8 million. Non-GAAP EPS, adjusting for these items, along with stock-based compensation and amortization of intangibles, was $0.04 per share loss for the current quarter compared to $0.07 per share loss in the same quarter last year. Backlog and deferred revenue at the end of the quarter totaled $7.1 million, down slightly from $7.7 million at the end of last year. Moving to the balance sheet, we closed the quarter with $10.8 million in cash and $3.5 million in debt. We also currently hold just over 652 Bitcoin and 1,222 Ethereum with an aggregate value of approximately $23.5 million based on today's prices. In closing, we're thrilled to have continued to build on the momentum we built in Q4 2021 by posting our largest revenue quarter as a public company in Q1 2022. In addition, the progress made with topline has continued to invest in the business to further bolster our product offerings and expand the presence of our crypto ecosystem. We plan to achieve two additional major milestones in Q2: as PhunToken lists on LATOKEN and PhunCoin begins trading on Securitize. We expect to close the quarter strong and continue to achieve quarter-over-quarter growth for the remainder of the year. As previously mentioned, we hold approximately $34 million in cash and digital assets with very little debt and also have access to $200 million of additional capital as needed via our shelf offering. We're committed to continuing to build revenue and market share in all business lines through both organic and inorganic opportunities. We will remain active with both financial conferences and investor meetings in our efforts to tell our story and further strengthen our corporate profile in the capital markets. The next major financial conferences we'll be attending are the Needham Technology & Media Conference on May 16th through the 19th virtually, and the H.C. Wainwright Global Investment conference on May 23rd through May 25th in South Florida. We look forward to many one-on-one conversations and meetings with high-class institutional investors at each event as opportunities present themselves.

Thanks, Matt. Since our last earnings call, the markets have continued to take a hit all over the world due to macro issues such as inflation and the war in Ukraine, which is why we are thrilled to have exceeded our prior revenue guidance for the quarter by more than 60% with over 310% growth year-over-year. However, what I'm most excited about is our platform and what it represents for brands who now more than ever need better ways to engage consumers. Phunware spent more than a decade helping large brands establish mobile ecosystems on our MaaS platform that are designed to better engage unique audiences by ensuring every interaction is contextual. By leveraging blockchain technology, we now have the opportunity to deliver solutions that can not only authenticate and compensate those who have been engaged with PhunCoin, but also incentivize engagement with PhunToken while leveraging our MaaS Customer Data Platform to give consumers better control over their data and their relationship with brands. Looking ahead, we are well-positioned to commercialize the world's first truly decentralized data economy with a persistent mobile-first connection to consumers through PhunWallet and the robust infrastructure required to support an Oracle network that bridges Web3 applications to Web2 data. With Lyte by Phunware, we will do for data what Bitcoin did for finance by disintermediating hardware vendors, software vendors, system integrators, strategic consultants, and finally, carriers and service providers. During the quarter, we had two significant software subscriptions and services deployments. The first was our MaaS Smart Workplace solution for Norfolk Southern, which has set a new standard for tech enabling the employee experience at their new headquarters in Atlanta, Georgia. With over 25 integrations, employees can easily manage on-site operations such as lighting, room booking, and parking reservations from one unified mobile experience. This is a critical point to understand about our enterprise cloud platform. We're not deploying a mobile application to replace them all, but rather a mobile application to rule them all. In addition to our industry-leading location-based services software, this ability to integrate with well over 100 third-party software platforms is a key competitive advantage for us. Every space is going to leverage numerous vendors for different functions, but MaaS brings everything together into one seamless mobile experience to create a smart space in a mobile-first world. A complete list of all the integrations we offer can be found on Phunware.com under Partners. We also successfully launched our MaaS Smart Hospitality Solution in Atlantis in the Bahamas, which is highlighted in the promotional video that is now available online. This comprehensive mobile solution has already begun generating additional revenue for Atlantis by tech-enabling the guest experience across Paradise Island, which spans over 140 acres and includes five distinct resorts plus a casino. We're in active discussions with Atlantis to extend their capabilities to include gaming, augmented reality, and additional guest utilities such as access control and contactless registration. Second, Application Transactions or media data and Customer Data Platform. We will continue to cultivate agency relationships, but we have begun to see success targeting businesses directly in 2022 as these businesses look to diversify their media spend from both agencies and traditional advertising channels like Facebook and Google. We're also seeing considerable interest in what we're doing with PhunWallet to better source and curate first-party data while ensuring consumers are able to manage consent. From Google abandoning third-party cookies to the general data protection regulation in Europe, the California Consumer Privacy Act, and state attorneys general investigating data companies for deceptive trade practices, the writing is on the wall. Customer data platforms like ours will be critical for brands going forward. Third, in digital asset transactions or blockchain and DeFi, our primary means to grow our blockchain-enabled ecosystem will be through social media, thought leadership, and traditional investor relations. We've been engaged in that and it has already attracted considerable attention worldwide from both retail and institutional investors. As Alan previously mentioned, we were excited to see PhunToken begin trading on Uniswap, which is a considerable milestone in itself since this represents the first time a U.S. publicly traded company has launched a digital asset that is traded on a decentralized exchange. We expect to achieve two additional milestones in Q2 as PhunToken lists on LATOKEN and PhunCoin begins trading on Securitize. Securitize Markets is an SEC and FINRA-registered broker-dealer and operates Securitize Markets ATS, an alternative trading system. We're also working with our attorneys at Goodwin to prepare a Regulation A offering to support additional investments in and distributions of PhunCoin. To further help consumers and brands manage their activities within our blockchain-enabled data exchange and Mobile Loyalty Ecosystem, PhunWallet is available on both Apple iOS and Google Android. As an extension of our MaaS platform, we are working on regular product updates that larger roadmap milestones for Q2 and Q3 include creating a comprehensive user registration and profile experience to make it easier for users to register, as well as recover existing accounts across new devices. Enhancing the profile experience to give users more control over the information they choose to share, the ability to update and access their information, and an auditable account of their engagement activity. New support functionality to allow users to refer friends, family, and colleagues while being rewarded for the networks they build, and finally, location-based marketing that will enable consumers to interact with brands in the real world and be seamlessly rewarded with PhunToken. We're also focusing on token velocity and security for both PhunToken and PhunCoin by enabling our own layer two scaling methodology. As our functionality and roadmap expand, we expect to more aggressively target the developer community so they can build on top of the framework we've created. In the meantime, we will continue to provide exciting new resources through our new PhunToken.com website that will help drive mainstream adoption such as whitelisting for liquidity providers, a step-by-step guide to providing liquidity, and the staking calculator. In parallel, we were thrilled to announce Matt Lull as our new Executive Vice President and Chief Crypto Officer as we begin to leverage decentralized finance to better support not only a healthy global ecosystem but also our internal treasury initiatives. Fourth, hardware transactions or Lyte by Phunware. We're pursuing a direct-to-consumer selling strategy that is supported by a comprehensive marketing effort that has focused primarily across Facebook, Instagram, YouTube, and TikTok. After securing reliable supply chain relationships, we have begun the process of not only increasing our marketing spend but also targeting international markets that are English-speaking, such as Canada, Great Britain, and Australia. By the end of Q2, we expect to have completed the transition of the Lyte team to a facility just outside of Austin near Dell headquarters. At double the size of our old warehouse in Illinois, we will have plenty of room to expand, and the more efficient layout will better support the revenue growth targets Alan has set for the team. As we further scale and commercialize each business unit, we will point back to these as we think about reporting unit-specific key performance indicators in the future and providing further guidance for the market. As of the end of the quarter, we have 100 employees and have reduced our Lyte presence in Jersey, Illinois, to 19. Since the majority of our employees are in Texas and California, we're evaluating new office space in Newport Beach and expect to establish new headquarters in Austin by the end of Q2. Finally, we were thrilled to announce that we hired Chris as the company's General Counsel and Chief Legal Officer. For closing remarks, I'd now like to turn things back over to Alan.

Thanks, Randall. As highlighted throughout today's call, we are all extremely excited about the ongoing scaling of our MaaS Blockchain Ecosystem and the high-performance computing systems being shipped to consumers via Lyte by Phunware. What it means to me is that our decade-plus MaaS platform building across mobile, cloud, and big data accompanied by our years of community engagement in blockchain and cryptocurrencies have resulted in the culmination and convergence of massive global addressable markets and trends that can now act as strong wind at our backs to further accelerate our recent growth. We expect this ecosystem to complement and supplement our core MaaS offerings as we offer our enterprise customers additional capabilities to identify, engage, and then set their target audiences. While many corporations and individuals are newly familiar with blockchain and cryptocurrencies, both Phunware and our executives have a long and distinguished history within the global digital asset community. As such, we expect to be a trusted bridge for Fortune 500 corporations and governments looking to leverage blockchain. Please look for additional announcements in the coming weeks and months ahead as we enable consumers to not only regain control of their data with PhunCoin, but also to reward them for their engagement with PhunToken, which can be purchased online with U.S. dollars, Bitcoin, and Ethereum at buy.phuntoken.com. In parallel, and as we would again reiterate here, we intend to complement and supplement our core organic growth activities through direct and indirect channels worldwide, with opportunistic inorganic mergers and acquisitions. Importantly, and as we have done previously, we expect to focus our merger and acquisition activity rolling forward on targets that are operating profitably and would represent accretive deals in areas that will provide more customers, more partnerships, and more distribution for our MaaS platform and cryptocurrency ecosystem, especially in international markets including Europe, Asia, and South America. Finally, and importantly, rolling forward, we expect to maintain a laser focus on our core operating and financial model, which includes a rather breathtaking top-line revenue growth of 275% or more year-over-year, all while consistently working towards cash neutrality from operations at scale. In parallel, we also expect to leverage our new sound balance sheet strength to transition our corporate treasury activities into a strategic asset for the company. Not only can you expect to see more purchases of Bitcoin as we look to store value and protect ourselves from rapid inflation, but you can also expect to see an efficient and strategic use of stablecoins in decentralized finance to generate meaningful financial returns for our overall operations and results. With that, and in conjunction with a sincere thank you for your ongoing interest and support and all that we do on behalf of the entire Phunware family worldwide, I would like to now open up the call for questions through the operator. Operator, go ahead, please.

Certainly. Ladies and gentlemen, the floor is now open for questions. Please hold while we poll for questions. Your first question for today is coming from Scott Buck. Please announce your affiliation, then pose your question.

Good morning, guys. I'm with H.C. Wainwright. Just a few quick ones for me. On the hardware, gross margins, what do you guys think the ceiling is there once everything is fully up to speed? Could that be a 20% gross margin business?

Hey, Scott. Yeah, this is Matt, by the way. Absolutely. I think 20% to 30% gross margin is definitely attainable for that business. Like I said on the call, it's not where we wanted to be yet, but there's a lot of stuff that we have in process in terms of just optimizing supply chain, inventory, and a lot of things we're putting into place. Also, Randall mentioned that we are moving to a new facility here at the end of the quarter. So I think all those things together are going to give us a better ability to manage those margins and push us up in the right direction. So certainly, we're not where we want to be. We're better than we were in Q4, and we're moving in the right direction, and I think 20% to 30% is definitely attainable. When that's going to happen, I think we'll have to keep you updated, but that's certainly something we're targeting.

Okay, Matt, that's helpful. Not to ask for guidance, but we'd expect that to be a steady walk higher, not jump with any individual event, right?

Yes. I would agree with that comment.

Okay, that's helpful. Regarding cost infrastructure, there's clearly a lot of growth and some hiring on your end. Where do you currently stand in terms of supporting 250% to 300% revenue growth going forward? Do you need to hire more, or are you mostly set at this point?

Yeah, this is Alan. A couple of things on that. First, obviously we restructured how we report revenues to separate out platform from the hardware, so I hope your prior questions about the gross margin and where we are moving towards, I think that's really helpful. It will make it a little easier for you to monitor as we go and see how we do against that. In parallel, when you look year-over-year on just the platform side of things, we saw over 50% year-over-year growth, all of that is completely independent of any of the hardware even existing. So the good news is that what we're seeing is growth across all elements of what's happening. On the things that we call out as direct-to-consumer, which includes a lot of the token sales associated with what we're doing in the mobile loyalty and rewards side of things for rewarding people for being who they are, getting control of their digital identity, and rewarding them for their profitable behaviors and engagement with brands. All those components we even saw across the margins of the platform business were very stable and we expect those will expand a bit as we see even more software to go along with the high-margin actions in the tokens. I believe that when discussing significant growth in hiring, there will be a need for personnel at the new facility to support the expansion of high-performance computing, specifically builders needed to fulfill the orders we are receiving. On the platform side, we typically see headcount growth in two areas. First, there is the natural expansion of the engineering team dedicated to enhancing the platform and adding new features. Right now, most of the hiring has been focused on sales to bolster our capabilities for both direct and indirect sales. We have growth plans integrated into our operating strategy; however, for now, we expect modest growth on the hardware side and a measured approach since we are generating significant additional revenue by selling tokens and other items that do not require increased headcount for those sales.

That's really helpful, Alan. And then just last one for me, given what cryptocurrencies have done here over the last few weeks, would you expect to get more aggressive in acquiring additional Bitcoin or Ethereum?

So I think on our side, when we actually are doing token sales, obviously we accept U.S. dollars, Ethereum, and Bitcoin. One of the things that we typically do by default when we're getting token sales for U.S. dollars is we pretty much convert that fairly instantaneously into Bitcoin, so we do end up adding to our Bitcoin balance. If people actually buy with Bitcoin or Ethereum, we typically just hold onto those. So those balances on both fronts tend to increase as we go. I think right now, we leave the balance in cash that we need to operate our operating plan, and right now we don't really have any intent other than holding what we have in Bitcoin and Ethereum and allowing those balances to gradually go up. In the future, depending on what Matt looks at on the financial front as to what kind of runway that he wants, what kind of headcount, and what kind of initiatives we want to support, if he deems that we have a big enough cash balance that we don't need that for operational activities, then yeah, we would probably continue to add more in that area in the decentralized finance area.

Great. Well, I appreciate the additional color, guys. Thanks a lot.

Your next question for today is coming from Howard Halpern. Please announce your affiliation then pose your question.

I'm with Taglich Brothers. Congratulations on a great quarter. Regarding the platform side, the year-over-year growth comes entirely from internal growth. Your indirect and channel partners are still in the process of building a pipeline. Is that correct?

Hello, Howard. That's absolutely true. I’ll give Randall a chance to explain this further. There are many different components on the platform side that we’ve discussed before, so I'll let Randall take it from here.

Yes, we still expect that to be more significant in the second half of the year. However, this is an ongoing situation. You may remember from the last earnings call and a few others that even a large company like Carrier, valued at $20 billion on the New York Stock Exchange, does not take the integration of another technology lightly. There are many challenges involved, from SOX compliance to technical integration, training, to the implementation of various resources. Getting everything up and running is a considerable task, and even after monetization, things remain complex. As Alan and Matt mentioned, the way we recognize revenue means that even a multi-million-dollar deal through these channels will flow in as clients utilize the license. Our objective is to begin accumulating clients and customers. We still expect these things to take time: probably six to 12 months to sign up a channel, and then possibly another 12, even 18 months to truly activate and begin monetizing those channels. So the big ones that we have excited about right now are still Carrier looking at the second half of the year as people begin to get back into the office. Heating and cooling are large parts of their business, and that's going to be a Smart Workplace solution. That has obviously been impacted due to COVID. And then really bullish on Cox. Everybody knows them from broadband internet fame, but they're getting into healthcare in a big way. They've white-labeled a lot of our healthcare software and are focusing on the clinician experience in hospitals that need to drive that kind of productivity. We're already got customers in the pipeline for them, just working through contracting with them. And then HID as well, smart locks. A natural progression for them is Smart Workplace. They have licensed our Smart Workplace solution, but again, this has been impacted by COVID a little bit. The good news is we're seeing all of our contract proposals getting bigger. We’re seeing a lot of who we used to see competitively fall by the wayside. This is a very hard nut to crack when it comes to not only having the mobile software to engage but also the locations software that all of these large channel partners need in order to really drive that contextual engagement. Finally, one of the ones I'm really excited about is to have gotten another CEO really well connected over Axiom Labs. They will do $230 million this year, with 5,000 employees all over the world. They work with Google, Amtrak, RackSpace, Big Lots, you name it. They don't have a mobility partner. As they think about large multi-million-dollar deployments of their digital transformation platform services and software, we will be the answer to their mobile needs. And so that one is ongoing in training their business leaders right now. I see that starting to kick in in the second half of the year as well, so I think by the end of Q3, we should start to have a better sense of all of these indirect channel partners we signed up during the pandemic, and then we'll just keep pushing them. We just hired two new indirect channel executives. They're very senior. We're very bullish on what they're going to be able to bring to the table. They will be starting next week. So we’ll look for Q3 to have a hopefully more tangible update for you.

Okay. And how about what you're seeing in terms of activity as we start to ramp up into the political season? Are you seeing requests for your offering build?

Yeah, I'll go ahead and take this one. The short answer is yes. We've got proposals that are outstanding. We expect to announce more as we get through the next several weeks and a couple of months probably. But yeah, obviously, it's no secret that the 2022 elections are coming up in November. It's no secret that there are lots of polarizing issues on all fronts of the political spectrum, the judicial spectrum, whether it's legislative or executive in nature. We're seeing a lot of activity at the local level. I think one of the big lessons over the last few years is that while things are happening globally, people are really realizing that they need to get involved locally. What that means to their local city council, their local Kelly board of supervisors, their school districts, and all these things. But we expect that the announcements that we've made in the past, the work that we're doing is definitely going to start rolling out. While 2024 is the really, really big races as we get into the next presidential cycle, I think it's going to be more active, above-average active here for 2022.

Okay. And one last one for me in terms of what you've seen in the landscape, in the acquisition pipeline compared to the second half of last year. Where are you seeing multiples and opportunities, I guess, given what's occurred over the last couple of weeks in the market?

Yeah. Go ahead, Randall.

I'm really excited about this. Alan, myself, and a few others you may not have heard from will potentially get involved in the near future. Our EVP has reviewed much of our work, and we've spent considerable time discussing this topic. It seems that every software company believes they are a $100 million company, regardless of their cash flow or profitability, and this perception is prevalent across the board. However, we are not inclined to pay high multiples for such businesses, despite the appealing tech that some may offer. The truth is, our technology is superior and well-established. We don't need to acquire technology, which is beneficial as we start to implement our MaaS Loyalty and Rewards ecosystem. We're focusing on how brands connect and engage with customers, emphasizing a campaign-oriented approach. Many existing companies maintain long-term relationships with prominent Fortune 500 brands, resembling a retainer model. Their revenue appears similar to SaaS but is driven by ongoing marketing, advertising, and even employee benefits campaigns. Currently, we are seeking companies that offer closer to 1x revenue or a low multiple of EBITDA, as we aim to invest in profitable ventures. Those that are accretive to what we're doing, but that can expand their reach of our blockchain-enabled data exchange and mobile loyalty ecosystem. Think things around maybe on a low-end $7 to $8 million in top-line revenue, up to maybe $20 million in top-line revenue. But that we can acquire for a reasonable multiple. There are a few, and especially it seems like in Canada, that love this and are trading OTC, that are not trading near probably the multiple they would if they were under our umbrella or trading on NASDAQ. We're actively looking at both private and some public companies that would possibly be accretive to us.

Your next question for today is coming from Darren Aftahi. Please announce your affiliation, then pose your question.

Hey, guys. This is Austin on for Darren with Roth Capital Partners. Thanks for taking my questions and congrats on the quarter.

Thank you.

Just have a couple for you guys. First, not asking for any specific guidance or anything like that, but just curious about how we should probably think about the general mix between the segments moving into the Q2 guidance, especially given the pre-significant sequential ramp. I'm just curious what your general thoughts are on that.

Hey, Austin. This is Matt. Yeah, so you see a Q1 about two-thirds, one-third. Like obviously, Q4 was kind of a similar trajectory. So we'll see where we end up. We obviously have a lot of stuff in the pipeline, a lot of deals coming in, but as Randall mentioned earlier, a lot of that is going to get recognized over longer periods of time. And so you're likely to see that mix closer to what it was in Q1 for probably the next couple of quarters. As some of these bigger deals come in, we start to recognize that revenue. Ideally, in the long run, we want to get that down. We'd rather have a 50/50 or something lower than that in terms of light versus platform revenue; but in the foreseeable future, we're probably going to see that over the next couple of quarters. And then as we get some of these bigger deals closed and delivered, and start to recognize that revenue, you're going to see that mix slightly change over time.

Got it. No, that's very helpful. And then just the last one for me, I want to touch on the Axiom Labs partnership. I know it's still really early. I'm just curious what traction we've seen there. And I noticed that they probably play in some verticals that could possibly open up new doors for you guys. I'm just curious about your thoughts on that.

Crowder and I can address that. It's still early, and we are currently handling all the training for them. They organize their business around centers of excellence located around the globe, sometimes based on brands since they operate similarly to how we used to at Fox. Many of you might not know that Phunware was the mobile arm of Fox. If you ever downloaded a Fox mobile app, you've experienced our software and its benefits. We were deeply integrated with Fox, acting as partners and co-founders for those products. Axiom adopts a similar strategy with their customers by embedding teams with brands, particularly larger ones like RackSpace and Google, with whom they collaborate a lot. They also create centers of excellence for specific areas such as healthcare or blockchain, always emphasizing back-end architecture and platforms. Their goal is to prepare large companies, like law firms or hospitals using outdated systems, for modern cloud deployment. This is beneficial for us as the partnership is mutually advantageous. Some exciting opportunities we have reveal that some clients are not yet ready for the capabilities of MaaS and what we can provide. We need to prepare their back-end to enable the mobile solutions we know we can offer, and Axiom can now take on that aspect. We just signed the partnership and are currently training. We've already begun market activities, and there are potential deals in the pipeline, with hopes to close our first deal by Q3.

Perfect, awesome. Well, I appreciate it, guys. Thank you.

Thank you very much.

Thanks, Austin.

Your next question for today is coming from Lucas Ward. Please announce your affiliation then pose your question.

Hi. This is Lucas Ward in for Ed Woo at Ascendiant. Congratulations on a strong quarter, guys.

Thanks, Lucas.

You seem to have a lot of momentum in the digital asset business, and so I just wanted to get a little more color on what is the roadmap for monetizing that. I was curious, kind of a related question: how much is that actually contributing to the top-line today, and where do we see that going? PhunCoin and token.

We have a lot of things going on, so we always think about things in terms of the Phunware flywheel of sorts. So there are a lot of components to the ecosystem. We talk a lot about PhunToken. That's a digital asset that does drive revenue to the P&L. So those results are aggregated in the platform revenues side, where you see that we've shown more than 50% year-over-year on just the platform growth, kind of independent of all the circumstances occurring in the world. But PhunToken was the first token that we wanted to get live. As a reminder, that token is used to reward people for their engagement, their behavior, and their interactions with brands on that engagement. PhunCoin, which both I and Randall mentioned as well, that will go live on Securitize, which is an ATS trading for a security token. PhunCoin is specific to your personal digital identity and personal information that you choose to voluntarily share in return for benefit. We have the PhunWallet mobile applications on iOS and Android that can house both your PhunToken and PhunCoin, either that you earn or purchase if you want to purchase. On both of these, they have slightly different dynamics. Any of the PhunCoin sales, because it's the security token, all of those sales that will happen will show up as cash, Bitcoin, Ethereum on our balance sheet, but it has no relevance in terms of anything that flows through our financials in terms of the P&L as revenue. It's only the PhunToken sales that will appear within the platform section of our revenues. As we go forward, we have one roadmap that is specific to the use cases and feature sets as we upgrade the iOS and Android applications for PhunWallet. We also then have two parallel roadmaps for what happens with the PhunToken and PhunCoin ecosystems that feed in, because those are two brand new markets that complement our NASDAQ trading market as well. So as we move forward, you'll see us continue to include all of the PhunToken sales as both Randall and I mentioned. We're going to have an initial exchange offering for PhunToken on LATOKEN. That will be coming up probably at the end of the month leading into June. As we go forward, there will be a standalone road map that will allow us to get both domestic and international distribution with successive initial exchange offerings of PhunToken on those centralized exchanges. So internationally, that looks one way, but ideally some of the larger ones if we got into Tier one land would be things like Coinbase and Gemini. Unique to PhunCoin, though, it will only trade exclusively on a worldwide basis as a security and only on Securitize on their ATS.

Alright. Thanks for clarifying that. I think that's all I have. Again, congratulations.

Thank you very much.

There are no further questions in queue. I would like to turn the floor over to Alan for any closing remarks.

Yes. As always, we appreciate your interest in what we're doing. We appreciate all of the support. We are trying to be as communicative as possible. We're excited that the ugly part of the pandemic seems to largely be behind us; now we just need to see more of the corporations, to Randall's point, start getting back to their offices. When those intersect with our channels, clearly that's going to impact the scaling of their sales teams. We're excited that we took advantage of the downturn to get stronger as a company. We're very excited by the products and solutions that we were able to launch. We're very excited that this quarter represents the first quarter that we have two brand-new components of our business, both in the blockchain and digital asset domain, in addition to our direct-to-consumer high-performance computing. It's great to see that we're finding ways to launch brand-new organic products. We're able to close an acquisition and start scaling it, and as we go forward, we think that the best times are going to be ahead of ourselves. We're going to consistently keep growing. We're excited that we were able to upwardly revise already our Q2 revenue guidance from up over 250% year-over-year to up over 275% year-over-year. The rest of this is going to be a lot of work. We're excited that over the next few weeks, we have several financial conferences. We're going to be participating both remotely in the case of Needham and then in person in the case of H.C. Wainwright. While we keep introducing Phunware through these financial conferences, we’re also getting out on the road a lot more for our conferences, trade shows, and a lot of in-person customer and partner meetings that used to be very difficult to accomplish on-site or in person. With that being said, we'll look forward to giving you updates through announcements over the coming 90-day period. And we'll very much look forward to reconvening in about 90 days to update everybody on Q2. So with that, thank you very much for your support, and any follow-up questions I know we're going to have with the institutional crowd will be handled through the financial conferences and some follow-up analyst meetings. Both Randall and I will separately set up some kind of ask-me-anything sessions for retail investors who we value immensely around the world and really appreciate their involvement with our company. We want to give them an opportunity to be able to ask some Q&A just like here. So we'll have some guidance on that, and we'll put that information out. So until next time, on behalf of Randall, Matt, myself, and the entire Phunware team, thank you very much, and have a fantastic close to your week.

Thank you, ladies and gentlemen. This does conclude today's conference call. You may disconnect your phone lines at this time, and have a wonderful day. Thank you for your participation.