Urgent.ly Inc 10-Q for FY2025 Q3
Urgent.ly Inc. (ULYX)
About this 10-Q
Urgent.ly Inc filed this 10-Q on November 13, 2025, covering the quarter ended September 30, 2025 (FY2025 Q3).
Headline figures
Quarter ended September 30, 2025, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $32.94M
- down 9.1% from $36.25M a year earlier
- Net loss
- $5.18M
- compared with a net loss of $10.61M a year earlier
- Diluted EPS
- -$3.63
- compared with -$9.49 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ________________ to ________________
Commission File Number:
(Exact Name of Registrant as Specified in its Charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer |
(Address of principal executive offices) |
(Zip Code) |
Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
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Accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As of November 10, 2025, the registrant had
Table of Contents
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Page |
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PART I. |
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Item 1. |
1 |
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Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss |
2 |
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Unaudited Condensed Consolidated Statements of Stockholders’ Deficit |
3 |
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4 |
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Notes to Unaudited Condensed Consolidated Financial Statements |
5 |
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
15 |
Item 3. |
26 |
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Item 4. |
26 |
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PART II. |
28 |
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Item 1. |
28 |
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Item 1A. |
28 |
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Item 2. |
29 |
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Item 3. |
29 |
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Item 4. |
29 |
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Item 5. |
29 |
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Item 6. |
29 |
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31 |
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i
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
In this Quarterly Report on Form 10-Q, unless the context requires otherwise, “Urgently,” “Company,” “we,” “our,” and “us” means Urgent.ly Inc. and, where appropriate, its subsidiaries.
This Quarterly Report on Form 10-Q contains or may contain “forward-looking statements” within the meaning of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Exchange Act of 1934, as amended (the “Exchange Act”), which statements involve substantial risks and uncertainties. Forward-looking statements generally relate to future events or our future financial or operating performance. Forward-looking terms such as “may,” “will,” “could,” “should,” “would,” “plan,” “potential,” “intend,” “anticipate,” “project,” “predict,” “target,” “believe,” “continue,” “estimate” or “expect” or the negative of these words or other words, terms and phrases of similar nature are often intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Forward-looking statements contained in this Quarterly Report on Form 10-Q include statements related to:
ii
We caution you that the foregoing list may not contain all of the forward-looking statements made in this Quarterly Report on Form 10-Q.
You should not rely upon forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, results of operations, and prospects. The outcomes of the events described in these forward-looking statements are subject to risks, uncertainties, and other factors, including those described in the section titled “Risk Factors” in this Quarterly Report on Form 10-Q, in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on March 14, 2025, as amended by our Annual Report on Form 10-K/A filed with the SEC on April 17, 2025 (as amended, the “Annual Report”) and in other filings we may make from time to time with the SEC. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report on Form 10-Q. We cannot assure you that the results, events, and circumstances reflected in the forward-looking statements will be achieved or occur, and actual results, events, or circumstances could differ materially from those described in the forward-looking statements.
The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, or investments we may make.
In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.
iii
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
URGENT.LY INC.
Condensed Consolidated Balance Sheets
(in thousands, except share and par value data)
(unaudited)
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September 30, 2025 |
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December 31, 2024 |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Restricted cash |
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Accounts receivable, net of allowance for expected losses of $ |
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Prepaid expenses and other current assets |
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Total current assets |
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Right-of-use assets |
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— |
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Property, equipment and software, net of accumulated depreciation of $ |
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Capitalized software costs, net of accumulated amortization of $ |
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Intangible assets, net of accumulated amortization of $ |
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Other non-current assets |
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Total assets |
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$ |
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$ |
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Liabilities and Stockholders’ Deficit |
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Current liabilities: |
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Accounts payable |
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$ |
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$ |
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Accrued expenses |
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Deferred revenue, current |
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Current lease liabilities |
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— |
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Revolving credit facility, net |
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— |
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Current portion of long-term debt, net |
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Total current liabilities |
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Long-term lease liabilities |
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— |
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Long-term debt, net |
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— |
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Other long-term liabilities |
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— |
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Total liabilities |
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Stockholders’ deficit: |
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Common stock, par value $ |
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Additional paid-in capital |
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Accumulated deficit |
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( |
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( |
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Total stockholders’ deficit |
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( |
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( |
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Total liabilities and stockholders’ deficit |
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$ |
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$ |
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See accompanying notes to the unaudited condensed consolidated financial statements.
1
URGENT.LY INC.
Condensed Consolidated Statements of Operations and Comprehensive Loss
(in thousands, except share and per share data)
(unaudited)
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Three Months Ended September 30, |
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Nine Months Ended September 30, |
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2025 |
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2024 |
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2025 |
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2024 |
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Revenue |
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$ |
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$ |
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$ |
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$ |
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Cost of revenue (excluding depreciation and amortization) |
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Gross profit |
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Operating expenses: |
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Research and development |
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Sales and marketing |
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Operations and support |
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General and administrative |
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Depreciation and amortization |
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Total operating expenses |
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Operating loss |
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( |
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( |
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( |
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( |
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Other income (expense), net: |
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Interest expense |
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( |
) |
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( |
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( |
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( |
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Interest income |
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— |
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Change in fair value of derivative liability |
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— |
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— |
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( |
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— |
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Change in fair value of contingent purchase consideration |
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Loss on debt extinguishment |
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— |
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— |
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— |
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( |
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Loss on divestiture |
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— |
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( |
) |
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— |
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( |
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Income (loss) from equity method investment |
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( |
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— |
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— |
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Other income (expense), net |
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( |
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( |
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Total other expense, net |
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( |
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( |
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( |
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( |
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Loss before income taxes |
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( |
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( |
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( |
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( |
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Provision for income taxes |
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— |
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— |
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Net loss attributable to common stockholders |
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( |
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( |
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( |
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( |
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Other comprehensive income (expense): |
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Foreign currency translation adjustments |
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— |
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— |
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Unrealized gains on marketable securities |
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— |
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( |
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— |
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( |
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Other comprehensive income |
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— |
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— |
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Comprehensive loss |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
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$ |
( |
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Loss per share attributable to common stockholders: |
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Basic and diluted |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
( |
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Weighted average shares outstanding: |
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Basic and diluted |
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See accompanying notes to the unaudited condensed consolidated financial statements.
2
URGENT.LY INC.
Condensed Consolidated Statements of Stockholders’ Deficit
(in thousands, except share data)
(unaudited)
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Accumulated |
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Additional |
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Other |
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Total |
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Common Stock |
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Paid-In |
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Accumulated |
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Comprehensive |
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Stockholders’ |
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Shares |
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Amount |
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Capital |
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Deficit |
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Loss |
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Deficit |
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Balance, December 31, 2024 |
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$ |
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$ |
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$ |
( |
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$ |
— |
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$ |
( |
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Vesting of stock-based awards, net of shares withheld for taxes |
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— |
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( |
) |
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— |
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— |
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( |
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Issuance of common stock in connection with Highbridge loan amendment (Note 7) |
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— |
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— |
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— |
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Stock-based compensation expense |
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— |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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( |
) |
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— |
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( |
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Balance, March 31, 2025 |
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$ |
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$ |
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$ |
( |
) |
$ |
— |
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$ |
( |
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Vesting of stock-based awards |
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— |
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— |
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— |
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— |
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— |
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Stock-based compensation expense |
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— |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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( |
) |
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— |
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( |
) |
Balance, June 30, 2025 |
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$ |
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$ |
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$ |
( |
) |
$ |
— |
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$ |
( |
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Vesting of stock-based awards |
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— |
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— |
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— |
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— |
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— |
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Issuance of common stock in connection with Highbridge loan amendment (Note 7) |
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— |
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— |
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— |
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Issuance of common stock in connection with ATM offering, net |
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— |
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— |
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Stock-based compensation expense |
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— |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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( |
) |
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— |
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( |
) |
Balance, September 30, 2025 |
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$ |
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$ |
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$ |
( |
) |
$ |
— |
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$ |
( |
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Balance, December 31, 2023 |
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$ |
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$ |
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$ |
( |
) |
$ |
( |
) |
$ |
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Vesting of stock-based awards, net of shares withheld for taxes |
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— |
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( |
) |
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— |
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— |
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( |
) |
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Stock-based compensation expense |
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— |
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— |
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— |
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— |
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Comprehensive income (loss) |
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— |
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— |
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— |
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( |
) |
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( |
) |
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Balance, March 31, 2024 |
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$ |
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$ |
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$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
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Vesting of stock-based awards |
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— |
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— |
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— |
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— |
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— |
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Stock-based compensation expense |
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— |
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— |
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— |
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— |
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Comprehensive loss |
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— |
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— |
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— |
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( |
) |
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( |
) |
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( |
) |
Balance, June 30, 2024 |
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$ |
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$ |
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$ |
( |
) |
$ |
( |
) |
$ |
( |
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Vesting of stock-based awards |
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— |
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— |
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— |
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— |
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— |
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Stock-based compensation expense |
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— |
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— |
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— |
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— |
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Comprehensive income (loss) |
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— |
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— |
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— |
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( |
) |
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( |
) |
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Balance, September 30, 2024 |
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$ |
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$ |
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$ |
( |
) |
$ |
— |
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$ |
( |
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See accompanying notes to the unaudited condensed consolidated financial statements.
3
URGENT.LY INC.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
|
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Nine Months Ended September 30, |
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2025 |
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2024 |
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Cash flows from operating activities: |
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Net loss |
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$ |
( |
) |
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$ |
( |
) |
Adjustments to reconcile net loss to net cash used in operating activities: |
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Depreciation and amortization |
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Amortization of right-of-use assets |
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Amortization of costs to obtain contracts |
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Amortization of costs to fulfill contracts |
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Amortization of debt issuance costs |
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Stock-based compensation |
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Bad debt expense |
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Gain on derecognition of right-of-use asset and lease liabilities |
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( |
) |
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— |
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Foreign currency loss (gain) |
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( |
) |
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Interest receivable |
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( |
) |
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( |
) |
Loss on debt extinguishment |
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— |
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Loss on divestiture |
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— |
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Loss on disposal of property, equipment and software |
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Change in fair value of contingent consideration and derivative liabilities |
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|
|
|
|
( |
) |
|
Noncash interest expense |
|
|
|
|
|
|
||
Paid-in-kind interest capitalized |
|
|
|
|
|
— |
|
|
Income from equity method investment |
|
|
( |
) |
|
|
— |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
||
Accounts receivable |
|
|
( |
) |
|
|
|
|
Prepaid expenses and other current assets |
|
|
|
|
|
|
||
Other assets |
|
|
( |
) |
|
|
( |
) |
Accounts payable |
|
|
|
|
|
( |
) |
|
Accrued expenses |
|
|
|
|
|
|
||
Deferred revenue |
|
|
( |
) |
|
|
( |
) |
Lease liabilities |
|
|
( |
) |
|
|
( |
) |
Long-term liabilities |
|
|
( |
) |
|
|
( |
) |
Net cash used in operating activities |
|
|
( |
) |
|
|
( |
) |
Cash flows from investing activities: |
|
|
|
|
|
|
||
Purchases of property, equipment and software |
|
|
( |
) |
|
|
( |
) |
Investment in capitalized software |
|
|
( |
) |
|
|
( |
) |
Proceeds from short-term deposits and sale of marketable securities |
|
|
— |
|
|
|
|
|
Divested cash |
|
|
— |
|
|
|
( |
) |
Net cash provided by (used in) investing activities |
|
|
( |
) |
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
||
Repayment of term loan |
|
|
( |
) |
|
|
( |
) |
Payments of debt issuance costs |
|
|
( |
) |
|
|
( |
) |
Proceeds from revolving credit facility |
|
|
|
|
|
— |
|
|
Payments on revolving credit facility |
|
|
( |
) |
|
|
— |
|
Proceeds from issuance of common stock, net |
|
|
|
|
|
— |
|
|
Net cash used in financing activities |
|
|
( |
) |
|
|
( |
) |
Effect of exchange rate changes on cash, cash equivalents and restricted cash |
|
|
— |
|
|
|
|
|
Net decrease in cash, cash equivalents and restricted cash |
|
|
( |
) |
|
|
( |
) |
Cash, cash equivalents and restricted cash, beginning of period |
|
|
|
|
|
|
||
Cash, cash equivalents and restricted cash, end of period |
|
$ |
|
|
$ |
|
||
Supplemental disclosure of cash flow information: |
|
|
|
|
|
|
||
Cash paid for interest |
|
$ |
|
|
$ |
|
||
Net cash paid (received) for income taxes |
|
$ |
( |
) |
|
$ |
|
|
See accompanying notes to the unaudited condensed consolidated financial statements.
4
URGENT.LY INC.
Notes to Unaudited Condensed Consolidated Financial Statements
(in thousands, except share and per share data)
1. Organization
Urgent.ly Inc. (collectively along with other wholly-owned subsidiaries, “Urgent.ly” or the “Company”), headquartered in Ashburn, Virginia, was incorporated in the State of Delaware in May 2013. Urgent.ly is a leading connected mobility assistance software platform that matches vehicle owners and operators with service professionals who deliver traditional roadside assistance, proactive maintenance and repair services.
Liquidity Risk and Going Concern
The accompanying unaudited condensed consolidated financial statements have been prepared assuming the Company will continue to operate as a going concern, which contemplates the realization of assets and liabilities and commitments in the normal course of business.
The Company has a history of recurring operating losses and has required debt and equity financing to finance its operations. The Company reported an accumulated deficit of $
Liquidity risk is the risk that suitable sources of funding for the Company’s business activities may not be available. The Company has a planning and budgeting process to monitor operating cash requirements including amounts projected for capital expenditures and capitalized software which are adjusted as input variables change. These variables include, but are not limited to, operating cash flows and the availability of other sources of debt and capital. As these variables change, the Company may be required to seek funding through additional equity issuances and/or additional debt financings.
In the event the Company is unable to improve its operating results during the next twelve months from the date of issuance of the condensed consolidated financial statements, the Company may not have sufficient cash flows and liquidity to finance its business operations as currently contemplated. The condensed consolidated financial statements do not include any adjustments of the amounts and classification of assets and liabilities that might be necessary should the Company be unable to continue as a going concern. Such adjustments could be material.
2. Summary of Significant Accounting Policies
There have been no material changes to the Company’s significant accounting policies from its audited consolidated financial statements for the year ended December 31, 2024 included in its Annual Report.
Principles of Consolidation
The accompanying condensed consolidated financial statements include the accounts of Urgent.ly Inc. and its wholly-owned subsidiaries Roadside Innovation Inc., Roadside Innovation (Arkansas) Inc., Urgently Canada Technologies ULC, and Otonomo Technologies Ltd. (“Otonomo”) and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.
Basis of Presentation
The accompanying condensed consolidated balance sheet as of September 30, 2025 and the condensed consolidated statements of operations and comprehensive loss and stockholders’ deficit for the three and nine months ended September 30, 2025 and 2024, and cash flows for the nine months ended September 30, 2025 and 2024 are unaudited. These condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information. Accordingly, they do not include all of the financial information and footnotes required by U.S. GAAP for complete financial statements.
5
In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements contain all material adjustments, including normal recurring adjustments, necessary for the fair presentation of its financial position as of September 30, 2025 and its results of operations and changes in stockholders’ deficit for the three and nine months ended September 30, 2025 and 2024, and cash flows for the nine months ended September 30, 2025 and 2024.
The results for the three and nine months ended September 30, 2025 are not necessarily indicative of the results to be expected for any subsequent quarter or for the fiscal year ending December 31, 2025. The condensed consolidated balance sheet at December 31, 2024 was derived from audited financial statements for the year ended December 31, 2024 included in the Annual Report but does not contain all of the footnote disclosures from the annual financial statements. The accompanying unaudited condensed consolidated financial statements and related financial information should be read in conjunction with the audited consolidated financial statements and the related notes thereto for the fiscal years ended December 31, 2024 and 2023 included in the Annual Report.
Use of Estimates
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, as well as reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Concentrations of Credit Risk
Financial instruments that subject the Company to credit risk consist primarily of cash, cash equivalents, restricted cash and accounts receivable. The Company places its cash, cash equivalents and restricted cash in an accredited financial institution and the balances are above federally insured limits. Management monitors the creditworthiness of its customers and believes that it has adequately provided for any exposure to potential credit losses.
During the three months ended September 30, 2025 and 2024,
Capitalized Software
The Company incurs costs to develop, modify, or implement software for internal use as it delivers on significant contracts for which its product offering has expanded. The Company’s objective is to enhance the functionality of the platform to accommodate multiple client applications and interfaces across different customer systems with varying degrees of complexity. Costs incurred for computer software developed or obtained for internal use are capitalized for application development activities and expensed as incurred for preliminary project activities and post-implementation activities. Capitalized costs include external direct costs of materials and services consumed in developing or obtaining internal-use software, payroll and payroll-related costs for employees who are directly associated with the internal-use software project, and interest costs incurred, when material, while developing internal-use software. Capitalized costs are amortized over the estimated useful asset life of
Modification of Debt Instruments
Modifications or exchanges of debt, which are not considered a troubled debt restructuring, are considered extinguishments if the terms of the new debt and the original instrument are substantially different. The instruments are considered substantially different when the present value of the cash flows under the terms of the new debt instrument are at least
Segment Reporting
The Company has determined that its Chief Executive Officer is its chief operating decision maker (the “CODM”).
6
income (loss) to measure segment profit or loss, allocate resources and assess performance. Further, the CODM reviews and utilizes departmental expenses (cost of revenue, research and development, sales and marketing, operations and support, and general and administrative) at the consolidated level to manage the Company’s operations. The measure of segment assets is reported on the consolidated balance sheet as total assets.
Equity Method Investment
The Company utilizes the equity method to account for investments when the Company possesses the ability to exercise significant influence, but not control, over the operating and financial policies of the investee. The Company accounts for its equity method investment in The Floow Limited at cost, adjusted for the Company’s share of the investee’s earnings or losses, which are reflected within Other income (expense), net in the condensed consolidated statements of operations on a three-month lag. Equity method investments are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If it is determined that a loss in value of the equity method investment is other than temporary, an impairment loss is measured based on the excess of the carrying amount of an investment over its estimated fair value. As of September 30, 2025 and December 31, 2024, the carrying value of its equity method investment was $
New Accounting Pronouncement
In December 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which provides for improvements to income tax disclosures primarily related to the effective tax rate reconciliation and income taxes paid information. This guidance is effective for annual periods beginning after December 15, 2024, and the adoption of this standard is not anticipated to have a significant impact on the Company’s consolidated financial statements other than adding new disclosures, which the Company is currently evaluating.
3. Revenue
The Company generates substantially all its revenues from roadside assistance services (“RAS”) initiated through its software platform primarily in the United States and Canada. The Company’s platform enables its customers (“Customer Partners”) to outsource delivery for all or portions of their roadside assistance programs. The Company manages the RAS process after receiving the initial distress call or web-based request through final disposition. The Company also offers RAS directly to motorists via pay-per-use or direct membership offerings. In addition, revenue is earned from platform license fees, whether delivered via cloud or traditional license delivery, professional services, and memberships.
The Company’s policies for recognizing revenues have not changed from those described in the Annual Report. In summary:
The Company recognizes revenue when there is evidence of a contract, probable collection of the consideration to which the Company expects to be entitled to receive, and completion of the performance obligations. The Company recognizes revenue on a gross basis (as the principal) or net basis (as the agent) depending on the nature of the Company’s role with respect to the Customer Partner to deliver RAS.
The Company has applied the right to invoice practical expedient to all its RAS, membership, and software licensing arrangements and, therefore, recognizes revenue over time for the amount it invoices its Customer Partner.
The Company recognizes revenues derived from professional services on a straight-line basis over the term of the agreements. Efforts to deliver on the performance obligations are expensed evenly throughout the performance period.
For further details regarding revenue recognition, see Note 4 “Revenue” to the audited consolidated financial statements in the Annual Report.
Cost of revenue, exclusive of depreciation and amortization, consists primarily of fees paid to Service Providers. Other costs included in cost of revenue are specifically the technology hosting and platform-related costs, certain personnel costs related to direct call center support to Consumers as part of platform authentication, and amortization of costs to fulfill.
7
Revenue on a disaggregated basis is as follows:
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
Full-service outsourcing—flat rate |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Full-service outsourcing—claim cost pass-through |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Membership |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Software licensing arrangements |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Professional services |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|||
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Contract Assets
The Company capitalizes costs to obtain contracts with Customer Partners, primarily employee sales commissions. Sales commissions relating to revenues recognized over a period longer than one year are considered incremental and recoverable costs of obtaining a contract and are deferred as other non-current assets and are amortized on a straight-line basis over the initial contract term. Commission expenses are included in sales and marketing expense in the condensed consolidated statements of operations and comprehensive loss.
Capitalized contract costs associated with the costs to fulfill certain contracts are deferred as other non-current assets and are amortized, on a straight-line basis, over the expected period of benefit for contracts with an amortization period that exceeds one year. Amortization cost is included in cost of revenue in the condensed consolidated statements of operations and comprehensive loss.
|
|
2025 |
|
|
2024 |
|
||
Contract assets as of January 1 |
|
$ |
|
|
$ |
|
||
Additional contract costs to fulfill |
|
|
|
|
|
|
||
Amortization of contract costs to obtain |
|
|
( |
) |
|
|
( |
) |
Amortization of contract costs to fulfill |
|
|
( |
) |
|
|
( |
) |
Contract assets as of September 30 |
|
$ |
|
|
$ |
|
||
4. Fair Value Measurements
The Company measures certain financial assets and liabilities at fair value. Fair value is determined based on the exit price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is estimated by applying the following hierarchy:
Level 1 - |
Quoted prices in active markets for identical assets or liabilities. |
|
|
Level 2 - |
Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. |
|
|
Level 3 - |
Inputs that are generally unobservable and typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability. |
The Company’s population of financial assets and liabilities subject to fair value measurements on a recurring basis is as follows:
|
|
Fair Value as of September 30, 2025 |
|
|||||||||||||
Recurring fair value measurements |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||
Contingent purchase consideration (1) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
( |
) |
|
$ |
( |
) |
8
|
|
Fair Value as of December 31, 2024 |
|
|||||||||||||
Recurring fair value measurements |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||
Money market funds |
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
||
Contingent purchase consideration (1) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
$ |
|
|
$ |
— |
|
|
$ |
( |
) |
|
$ |
|
||
(1) Contingent purchase consideration represents a liability recorded at fair value in connection with the acquisition of Otonomo, and thus represents a Level 3 measurement within the fair value hierarchy. The fair value of the contingent purchase consideration was estimated based on the fair value of the Company’s shares issuable on a contingent basis. Contingent purchase consideration is included in Accrued expenses in the condensed consolidated balance sheets.
The following table sets forth a summary of the changes in the fair value of the contingent purchase consideration:
|
|
Contingent Purchase Consideration |
|
|
Derivative Liability |
|
||
Fair value as of January 1, 2025 |
|
$ |
|
|
$ |
— |
|
|
Issuance |
|
|
— |
|
|
|
|
|
Change in fair value |
|
|
( |
) |
|
|
|
|
Settlement |
|
|
— |
|
|
|
( |
) |
Fair value as of September 30, 2025 |
|
$ |
|
|
$ |
|
||
The carrying values for cash and cash equivalents, restricted cash, accounts receivable, accounts payable and long-term debt approximated fair value as of September 30, 2025 and December 31, 2024.
5. Intangible Assets
Intangible assets consist of the following as of the periods presented:
|
|
Life (in years) |
|
September 30, 2025 |
|
|
December 31, 2024 |
|
||||||||||||||||||
|
|
|
|
Gross Carrying Amount |
|
|
Accumulated Amortization |
|
|
Net Carrying Amount |
|
|
Gross Carrying Amount |
|
|
Accumulated Amortization |
|
|
Net Carrying Amount |
|
||||||
Acquired technology |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||||
Domain name |
|
Indefinite |
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
||||
|
|
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||
Amortization expense was $
The following table sets forth the remaining estimated amortization expense for intangible assets for the next five years:
For the year ending December 31, |
|
|
|
|
2025 |
|
$ |
|
|
2026 |
|
|
|
|
2027 |
|
|
|
|
2028 |
|
|
— |
|
2029 |
|
|
— |
|
|
|
$ |
|
|
9
6. Accrued Expenses
Accrued expenses consist of the following as of the periods presented:
|
|
September 30, |
|
|
December 31, |
|
||
Accrued service provider costs |
|
$ |
|
|
$ |
|
||
Accrued compensation |
|
|
|
|
|
|
||
Accrued interest |
|
|
|
|
|
|
||
Contingent purchase consideration |
|
|
|
|
|
|
||
Accrued lender fees |
|
|
|
|
|
|
||
Accrued VAT and income taxes |
|
|
|
|
|
|
||
Other accrued liabilities |
|
|
|
|
|
|
||
|
|
$ |
|
|
$ |
|
||
7. Debt Arrangements
The Company’s debt arrangements consist of the following as of the periods presented:
|
|
September 30, |
|
|
December 31, |
|
||
Structural Capital term loan with an interest rate at the greater of |
|
$ |
— |
|
|
$ |
|
|
Highbridge Capital term loan with an interest rate of |
|
|
|
|
|
|
||
MidCap Financial revolving credit facility with an interest rate of plus |
|
|
|
|
|
— |
|
|
2022 convertible promissory notes with an interest rate of |
|
|
|
|
|
|
||
Total principal debt |
|
|
|
|
|
|
||
Less: revolving credit facility (1) |
|
|
( |
) |
|
|
— |
|
Less: current portion (2) |
|
|
( |
) |
|
|
( |
) |
Less: debt issuance costs and discounts, long-term |
|
|
— |
|
|
|
( |
) |
Total long-term debt, net |
|
$ |
— |
|
|
$ |
|
|
(1) Excludes debt issuance costs of $
(2) Excludes debt issuance costs and discounts of $
Structural Capital Term Loan
On January 31, 2025, the Company entered into an amendment to the Third Amended and Restated Loan and Security Agreement (as amended, the “Structural Loan Agreement”) with a consortium led by lending affiliates of Structural Capital (“Structural”), which extended the maturity date thereunder to
Highbridge Capital Term Loan
On January 31, 2025, the Company entered into the Sixth Amendment to Loan and Security Agreement (the “Sixth Amendment”), with a consortium led by lending affiliates of Highbridge Capital Management, LLC (“Highbridge”). The Sixth Amendment amended the Loan and Security Agreement, dated as of December 16, 2021 (the “Highbridge Loan Agreement”), among the Company, the other loan parties party thereto, the lenders from time to time party thereto and Alter Domus (US) LLC, as administrative and collateral agent, to, among other things, extend the maturity date thereunder to
10
entered into a Seventh Amendment to Loan and Security Agreement to extend the maturity date thereunder to
On February 26, 2025, the Company entered into an Eighth Amendment to Loan and Security Agreement (the “Eighth Amendment”) with Highbridge, to, among other things, (i) permit the Company’s entry into the MidCap Credit Agreement (as defined below), (ii) modify the interest rate to permit the Company to pay interest in kind for a specified period of time at a rate of
On February 26, 2025, the Company entered into a Purchase Agreement (the “Purchase Agreement”) with the investors party thereto (the “Investors”). Pursuant to the Purchase Agreement, in consideration of the Eighth Amendment, the Company issued
The Company determined that the contingent promise to issue the Subsequent Eight Amendment Premium Shares is an embedded derivative that is required to be bifurcated from the debt host contract as it is not considered to be solely indexed to the Company’s own stock. The derivative liability is remeasured at fair value at each balance sheet date with changes in fair value reported in earnings. The fair value of the derivative liability on February 26, 2025 of $
The Company incurred $
MidCap Financial Revolving Credit Facility
On February 26, 2025, the Company and certain of its subsidiaries entered into a new asset based revolving credit facility (the “MidCap Credit Agreement”) with the lenders party thereto and MidCap Funding IV Trust, as agent, in an aggregate principal amount not to exceed the lesser of a $
Loans borrowed under the MidCap Credit Agreement bear an interest rate equal to Term plus
The Company incurred and paid debt issuance costs of $
2022 Convertible Promissory Notes
The 2022 convertible promissory notes were not repaid on the maturity date of
11
8. Stockholders’ Equity
At-the-Market Offering
On July 11, 2025, the Company entered into a sales agreement (the “Sales Agreement”) with A.G.P./Alliance Global Partners (“A.G.P.”) to sell shares of common stock having an aggregate offering price of up to $
Equity Plans
On June 16, 2023, the Board of Directors of the Company (the “Board”) approved the 2023 Equity Incentive Plan (the “2023 Plan”), which became effective upon the filing of the Company’s Form 8-A with the SEC on October 18, 2023. The 2023 Plan provides for the granting of stock options, restricted stock, restricted stock units, stock appreciation rights, performance units and performance shares to employees, directors and consultants and any of the Company’s future subsidiary corporations’ employees and consultants.
On June 16, 2023, the Board approved the 2023 Employee Stock Purchase Plan (the “ESPP”), which was effective upon approval. The ESPP allows for the sale of
During the three and nine months ended September 30, 2025, the Company granted
Stock-based Compensation Expense
The Company accounts for all stock-based payment awards made to employees, directors and advisors based on their fair values and recognizes compensation expense over the vesting period using the straight-line method over the requisite service period for each award as required by FASB Accounting Standards Codification (“ASC”) Topic 718, Compensation-Stock Compensation.
Non-cash stock-based compensation expense related to stock options and restricted stock units was recorded in the condensed consolidated financial statements as follows:
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
Research and development |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Sales and marketing |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operations and support |
|
|
|
|
|
|
|
|
|
|
|
|
||||
General and administrative |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
9. Income Taxes
The Company accounts for income taxes as required by FASB ASC Topic 740, Income Taxes (“ASC 740”). ASC 740 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. ASC 740 requires an entity to recognize the financial statement impact of a tax position when it is more likely than not that the position will be sustained upon examination. The amount recognized is measured as the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. In addition, ASC 740 permits an entity to recognize interest and penalties related to tax uncertainties as either income tax expense or operating expenses. The Company has chosen to recognize interest and penalties related to tax uncertainties as income tax expense. Management evaluated the Company’s
12
tax positions and concluded that the Company has taken no uncertain tax positions that require adjustment to the condensed consolidated financial statements to comply with the provisions of this guidance.
The Company assesses whether a valuation allowance should be recorded against its deferred tax assets based on the consideration of all available evidence, using a “more likely than not” realization standard. The four sources of taxable income that must be considered in determining whether deferred tax assets will be realized are: (1) future reversals of existing taxable temporary differences (i.e., offset of gross deferred tax liabilities against gross deferred tax assets); (2) taxable income in prior carryback years, if carryback is permitted under the applicable tax law; (3) tax planning strategies; and (4) future taxable income exclusive of reversing temporary differences and carryforwards.
In assessing whether a valuation allowance is required, significant weight is to be given to evidence that can be objectively verified. A significant factor in the Company’s assessment is the Company’s
10. Commitments and Contingencies
Litigation
The Company from time to time may be involved in various claims and legal proceedings that arise in the ordinary course of business. It is the opinion of management that there are no unresolved claims and litigation in which the Company is currently involved that will materially affect the financial position or operations of the Company.
11. Leases
The Company leases office space, and prior to 2025, certain office space was subleased. Management determines if a contract is a lease at the inception of the arrangement and reviews all options to extend, terminate, or purchase its right-of-use assets at the inception of the lease and accounts for these options when they are reasonably certain of being exercised.
Leases with an initial term of greater than twelve months are recorded on the condensed consolidated balance sheets. Lease expense is recognized on a straight-line basis over the lease term. The Company’s lease contracts generally do not provide a readily determinable implicit rate. For these contracts, the estimated incremental borrowing rate is based on information available at the inception of the lease.
During the second quarter of 2025, the Company recognized a net early termination loss of $
During the third quarter of 2025, the Company entered into a new lease for office space in Ashburn, Virginia with a term of
Operating lease cost consists of the following:
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
Lease cost |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Sublease income |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
12. Subsequent Events
The Company considers events or transactions that occur after the balance sheet date but before the financial statements are issued to provide additional evidence relative to certain estimates or to identify matters that require additional disclosure. The following events were noted:
On September 16, 2025, the Listing Qualifications Department of The Nasdaq Stock Market LLC (“Nasdaq”) notified the Company that, based upon the Company’s continued non-compliance with Nasdaq Listing Rule 5550(b) (the “Rule”) as of September 15, 2025,
13
the Company’s securities were subject to delisting from Nasdaq at the open of business on September 25, 2025 unless the Company timely requested a hearing before the Nasdaq Hearings Panel (the “Panel”). The Company formally requested a hearing that took place on October 23, 2025 where the Company presented its plan to evidence compliance with the Rule and requested an extension to do so. Following the hearing, on November 5, 2025, the Panel notified the Company that its request to continue listing on Nasdaq was granted subject to demonstrating compliance with the Rule on or before February 16, 2026. There can be no assurance, however, that the Company will be able to regain compliance with the Rule or otherwise maintain compliance with all other applicable criteria for continued listing on Nasdaq. In such case, the Company’s securities would be subject to delisting.
14
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and the related notes to those statements included elsewhere in this Quarterly Report on Form 10-Q. The following discussion and analysis contains historical financial information and forward-looking statements regarding our expectations of future performance, liquidity and capital resources, our plans, estimates, beliefs and expectations that involve risks, uncertainties and assumptions. Our actual results and timing of selected events may differ materially from those anticipated or implied in these forward-looking statements as a result of many factors, including those discussed in the sections titled “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” in this Quarterly Report on Form 10-Q.
Overview
We are a leading connected mobility assistance software platform, matching vehicle owners and operators with service professionals who deliver traditional roadside assistance, proactive maintenance and repair services. The traditional experience of a vehicle breakdown is often stressful and inconvenient for stranded drivers, compounded by processes that lack transparency and lead to long wait times. We offer an innovative alternative to this traditional experience, leveraging our digitally native software platform to match supply and demand in our network and deliver exceptional mobility assistance experiences at scale.
We offer a digitally native software platform that combines location-based services, real-time data, AI and machine-to-machine communication to deliver quick, safe and innovative roadside assistance services for leading brands across the automotive and insurance industries, and other transportation-focused verticals. We collect signals from distressed vehicles and match those needs with local roadside assistance professionals to create a connected service network. Our platform enables our partners to deliver exceptional user experiences that drive high customer satisfaction and loyalty. With 59 Customer Partners and more than 74,000 participating Service Provider vehicle drivers in our network as of September 30, 2025, we deliver innovative, transparent and exceptional connected mobility assistance experiences at scale.
We generate substantially all of our revenue from our Customer Partners, who contract with us to fulfill roadside assistance service requests for Consumers. We connect Consumers with nearby Service Providers who provide the requested roadside assistance. We enter into multi-year contracts with our Customer Partners, which are typically three years, and we generate revenue on a per-incident basis, including negotiated rates customized for each Customer Partner. We also generate revenue from Customer Partner membership programs, which are typically offered to Consumers through an out-of-warranty vehicle maintenance program or bundled with other subscription membership offerings, on a fixed fee basis. We recognize subscription revenue from our Customer Partner membership programs ratably over the term of service, which is typically one year. We also offer our platform as a SaaS solution to enable certain of our Customer Partners’ roadside assistance services. We believe the integration of Otonomo’s Mobility Platform has further enhanced the customer service experience for Consumers on our platform by improving data capabilities, features, and data ingest capacity. We recognize revenue from our SaaS offering ratably over the life of the contract, which is typically one to three years. We make payments to our Service Providers on a per-job basis, typically within three weeks from job completion.
Our Sales and Partner Management Department works closely with our Customer Partners to ensure that Consumers receive an exceptional assistance experience, and we have a strong track record in Customer Partner retention, Consumer satisfaction with our platform and the reliability of our service. Prospective Customer Partners typically engage us for a pilot program and enter into a multi-year contract once they are satisfied with our platform’s performance. As Customer Partner contracts expire, we typically undergo a request-for-proposal process for each contract renewal. While we employ a targeted marketing program, many of our new Customer Partners are referred to us by satisfied existing Customer Partners.
Key Factors Affecting Our Performance
New Customer Partner Acquisition
Our ability to add and retain Customer Partners is a key factor in our ability to generate new revenue, grow existing accounts, improve margins and push towards profitability. We attract enterprises seeking frictionless, digital roadside assistance solutions for Consumers with our emphasis on a well-designed and easy-to-use interface. Due to the relative concentration of the mobility assistance market, new Customer Partner acquisition can result in significant expansion of our footprint within the market.
We believe the continued focus on exceptional Consumer experiences will continue to drive demand for our platform and broaden our number of Customer Partners. Historically, our ability to engage new Customer Partners has been limited primarily by our ability to effectively service the existing demand. However, as our Service Provider network grows and our support capabilities are streamlined and automated, we anticipate that our platform capabilities will also grow to meet the demands of new Customer Partners.
15
Through September 2025, we were successful in launching one Customer Partner and scaling up volume of another Customer Partner, each of which was previously announced in the fourth quarter of 2024.
Continued Investment in Innovation
Our success depends, in part, on our ability to sustain innovation and maintain a competitive advantage in the verticals in which we operate and expand to meet new and evolving needs in roadside and mobility assistance. We believe that the emerging need for mobility assistance is a transformational opportunity that will bridge historically siloed and fragmented industries including insurance, collision, vehicle sales and service, the automotive aftermarket and logistics. These market transformations are creating new opportunities for roadside assistance providers to extend services into adjacent markets to increase revenue opportunities. We believe that our platform is differentiated from other offerings and has broad applicability to a variety of use cases, and we will continue to invest in developing and enhancing platform features and functionality to further extend adoption of our platform. We expect to continue to invest in research and development efforts to broaden the functionality of our platform, improve the value of our offering to our Customer Partners, and incorporate additional offerings. We will also continue to evaluate from time to time strategic opportunities to acquire or invest in businesses, offerings, technologies or talent that we believe could complement or expand our platform, enhance our technical capabilities, or otherwise provide potential growth opportunities.
Investing in Business Growth
Our ability to support our existing Customer Partners and engage with new Customer Partners is impacted by our ability to rapidly scale and expand. Historically, we have been resource constrained and unable to commit to technology improvements because of our incremental funding history. We are now focused on investing in our proprietary technology, machine learning and data analytics models in order to streamline and digitize the high-touch aspects of our operations. These investments will enable us to optimize our Service Provider supply models, calibrate Service Provider pricing and streamline our operational processes. Our ability to manage expenses, and to effectively invest our resources to enable a better Consumer experience, will impact our operating results and future profitability. We expect to continue reducing our operating expenses and, over the longer term, we anticipate fluctuations in operating expenses will align with targeted investments in growth.
For the nine months ended September 30, 2025, we capitalized $4.1 million in costs associated with internal development of our technology platform and Customer Partner implementations and expect to invest approximately $1.0 to $1.5 million during the last quarter of 2025.
Seasonality
Historically, we generate higher levels of roadside assistance service requests during the summer and holiday seasons when a greater proportion of Consumers are traveling for holidays and in winter when Consumers may be adversely impacted by weather events Seasonality can drive variances in both service event volume and service network costs.
We also experience increased roadside assistance service requests during periods of economic downturn. During these times Consumers may be less likely to allocate resources to vehicle maintenance, and we have observed that delaying vehicle maintenance typically increases the likelihood of a vehicle breakdown.
Key Business Metrics
We regularly monitor a number of operating metrics, including the following key metrics, in order to measure our current performance and estimate our future performance.
Consumer Ratings
Exceptional Consumer service is a cornerstone of our business. We measure Consumer sentiment through a variety of surveys but primarily measure completed jobs on a 1-to-5-star scale, with 5 stars being the highest. We have historically averaged 4.5 out of 5 stars. We are proud of how highly Consumers rate their service experiences with us given the fact that no one aspires to have a breakdown. It’s often stressful, nearly always unexpected, and often unsafe. Our aspirational goal is 100% Consumer satisfaction. We use Consumer ratings to improve the service experience by improving networks, technology, and training. For the three months ended September 30, 2025 and 2024, our consumer satisfaction score was 4.6 and 4.5, respectively. For the nine months ended September 30, 2025 and 2024, our consumer satisfaction score was 4.6 and 4.5, respectively.
16
Number of Dispatches
We believe that our ability to increase the number of dispatches is an indicator of our Customer Partner penetration, the growth of our business and potential future business opportunities. We define the number of dispatches as the number of completed service requests in a given period. We expect the number of dispatches to fluctuate as seasonality is reflected on a period-over-period basis, as the summer and winter months typically contain more Consumer travel and roadside assistance events.
For the three months ended September 30, 2025 and 2024, we completed approximately 194,000 dispatches and 219,000 dispatches, respectively. For the nine months ended September 30, 2025 and 2024, we completed approximately 574,000 dispatches and 656,000 dispatches, respectively.
Non-GAAP Financial Measures
In addition to our financial information presented in accordance with GAAP, we believe the following non-GAAP financial measures are useful to investors in evaluating our operating performance. We use the following non-GAAP financial measures to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that the non-GAAP financial measures, when taken together with the corresponding GAAP financial measures, may be helpful to investors because they provide consistency and comparability with past financial performance and meaningful supplemental information regarding our performance by excluding certain items that may not be indicative of our business, results of operations, or outlook. The non-GAAP financial measures are presented for supplemental informational purposes only, have limitations as analytical tools, and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP and may be different from similarly-titled non-GAAP financial measures used by other companies. In addition, other companies, including companies in our industry, may calculate similarly-titled non-GAAP financial measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as a tool for comparison. A reconciliation is provided below for each non-GAAP financial measure to the most directly comparable financial measure stated in accordance with GAAP. Investors are encouraged to review the related GAAP financial measures and the reconciliations of the non-GAAP financial measures to our most directly comparable GAAP financial measures, and not to rely on any single financial measure to evaluate our business.
Non-GAAP Operating Expenses
We define non-GAAP operating expenses as operating expenses, excluding depreciation and amortization expense, stock-based compensation expense, and non-recurring charges (or income) such as transaction and restructuring costs. We use non-GAAP operating expenses in conjunction with GAAP financial measures as part of our overall assessment of our performance, including the preparation of our annual operating budget and quarterly forecasts, to evaluate the effectiveness of our business strategies, and to communicate with our Board of Directors concerning our financial performance.
The following table provides a reconciliation of non-GAAP operating expenses to the most comparable GAAP measure, operating expenses, for each of the periods presented:
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
|
|
(in thousands) |
|
|||||||||||||
Operating expenses |
|
$ |
9,880 |
|
|
$ |
13,656 |
|
|
$ |
30,402 |
|
|
$ |
47,025 |
|
Less: Depreciation and amortization expense |
|
|
(1,204 |
) |
|
|
(1,130 |
) |
|
|
(3,269 |
) |
|
|
(3,336 |
) |
Less: Stock-based compensation expense |
|
|
(293 |
) |
|
|
(609 |
) |
|
|
(1,213 |
) |
|
|
(1,765 |
) |
Less: Non-recurring transaction costs |
|
|
(419 |
) |
|
|
(638 |
) |
|
|
(972 |
) |
|
|
(1,571 |
) |
Less: Restructuring costs |
|
|
24 |
|
|
|
(569 |
) |
|
|
(465 |
) |
|
|
(1,693 |
) |
Non-GAAP operating expenses |
|
$ |
7,988 |
|
|
$ |
10,710 |
|
|
$ |
24,483 |
|
|
$ |
38,660 |
|
Non-GAAP Operating Income (Loss)
We define non-GAAP operating income (loss) as operating loss, excluding depreciation and amortization expense, stock-based compensation expense, and non-recurring charges (or income) such as transaction and restructuring costs. We use non-GAAP operating income (loss) in conjunction with GAAP financial measures as part of our overall assessment of our performance, including the preparation of our annual operating budget and quarterly forecasts, to evaluate the effectiveness of our business strategies, and to communicate with our Board of Directors concerning our financial performance.
17
The following table provides a reconciliation of non-GAAP operating income (loss) to the most comparable GAAP measure, operating loss, for each of the periods presented:
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
|
|
(in thousands) |
|
|||||||||||||
Operating loss |
|
$ |
(1,769 |
) |
|
$ |
(5,891 |
) |
|
$ |
(6,369 |
) |
|
$ |
(22,579 |
) |
Add: Depreciation and amortization expense |
|
|
1,204 |
|
|
|
1,130 |
|
|
|
3,269 |
|
|
|
3,336 |
|
Add: Stock-based compensation expense |
|
|
293 |
|
|
|
609 |
|
|
|
1,213 |
|
|
|
1,765 |
|
Add: Non-recurring transaction costs |
|
|
419 |
|
|
|
638 |
|
|
|
972 |
|
|
|
1,571 |
|
Add: Restructuring costs |
|
|
(24 |
) |
|
|
569 |
|
|
|
465 |
|
|
|
1,693 |
|
Non-GAAP operating income (loss) |
|
$ |
123 |
|
|
$ |
(2,945 |
) |
|
$ |
(450 |
) |
|
$ |
(14,214 |
) |
Components of Results of Operations
Revenue
We generate substantially all of our revenues from roadside assistance services (“RAS”) initiated through our software platform primarily in the United States and Canada. We contract with Customer Partners to provide the outsourced delivery for all or portions of their roadside assistance plans for Consumers. We manage the entire RAS process after receiving the initial motorist distress call or web-based request through final disposition. We currently operate under two different service models for our Customer Partners: (i) full-service outsourcing of RAS-flat rate and (ii) full-service outsourcing of RAS-claim cost pass-through.
For additional discussion related to our revenue, see Note 2 “Summary of Significant Accounting Policies - Revenue Recognition” and Note 4 “Revenue” to our audited consolidated financial statements for the years ended December 31, 2024 and 2023 contained in the Annual Report.
Cost of Revenue
Cost of revenue, exclusive of depreciation and amortization, consists primarily of fees paid to Service Providers. Other costs included in cost of revenue are specifically the technology hosting and platform-related costs, certain personnel costs related to direct call center support to Consumers as part of platform authentication, and amortization of costs to fulfill.
Gross Profit and Gross Margin
Gross profit represents revenue less cost of revenue, and gross margin is gross profit expressed as a percentage of revenue. Our gross margin may fluctuate from period to period as our revenue fluctuates and has been and will continue to be affected by various factors, including seasonality, mix of services provided, Customer Partner pricing and Service Provider costs. We expect our gross profit to increase and our gross margin to increase modestly over the long term due to platform enhancements resulting in more cost effective and competitive Service Provider costs, although our gross margins could fluctuate from period to period depending on the interplay between the factors described above.
Research and Development
Research and development expenses primarily consist of compensation expenses, including equity-based compensation, for engineering, product development, product management and design employees, expenses associated with ongoing improvements to, and maintenance of, our platform offerings and other technology that have not been capitalized. Research and development expense also includes software expenses and technology consulting fees.
18
Sales and Marketing
Sales and marketing expenses primarily consist of compensation expenses, including equity-based compensation, in support of new business capture, Customer Partner management and marketing such as commissions, salaries, and related benefits. Sales and marketing expense also includes expenses associated with advertising, promotions of our services, Customer Partner advocacy management and brand-building.
Operations and Support
Operations and support expenses primarily consist of compensation expenses, including equity-based compensation, in support of customer support operations such as salaries, related benefits, contractors we use to manage customer support workload and related technology costs to support such operations. Operations and support expenses also include expenses associated with Service Provider network management.
General and Administrative
General and administrative expenses primarily consist of compensation expenses, including equity-based compensation and related benefits for our executive, finance, human resources, information technology, legal and other personnel performing administrative functions. General and administrative expense also includes corporate office rent expense, third-party professional fees, public company expenses and any other cost or expense incurred not deemed to be related to cost of revenue, sales and marketing expense, research and development expense, or operations and support expense.
Depreciation and Amortization
Depreciation and amortization expenses primarily consist of depreciation of capitalized property, equipment and software and amortization of acquired finite-lived intangible assets.
Other Income (Expense), net
Other income (expense), net primarily includes the following items:
Provision for Income Taxes
Income tax expense or benefit is related to the provision for federal, state, and foreign taxes imposed upon our results of operations.
19
Results of Operations
The following table is a summary of our condensed consolidated statements of operations data for the periods indicated:
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
|
|
(in thousands) |
|
|||||||||||||
Total revenue |
|
$ |
32,943 |
|
|
$ |
36,246 |
|
|
$ |
95,902 |
|
|
$ |
110,875 |
|
Cost of revenue |
|
|
24,832 |
|
|
|
28,481 |
|
|
|
71,869 |
|
|
|
86,429 |
|
Gross profit |
|
|
8,111 |
|
|
|
7,765 |
|
|
|
24,033 |
|
|
|
24,446 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Research and development |
|
|
1,786 |
|
|
|
3,069 |
|
|
|
5,436 |
|
|
|
11,109 |
|
Sales and marketing |
|
|
719 |
|
|
|
1,518 |
|
|
|
2,114 |
|
|
|
5,153 |
|
Operations and support |
|
|
2,504 |
|
|
|
2,997 |
|
|
|
7,254 |
|
|
|
10,890 |
|
General and administrative |
|
|
3,667 |
|
|
|
4,942 |
|
|
|
12,329 |
|
|
|
16,537 |
|
Depreciation and amortization |
|
|
1,204 |
|
|
|
1,130 |
|
|
|
3,269 |
|
|
|
3,336 |
|
Total operating expenses |
|
|
9,880 |
|
|
|
13,656 |
|
|
|
30,402 |
|
|
|
47,025 |
|
Operating loss |
|
|
(1,769 |
) |
|
|
(5,891 |
) |
|
|
(6,369 |
) |
|
|
(22,579 |
) |
Other expense, net |
|
|
(3,410 |
) |
|
|
(4,722 |
) |
|
|
(9,881 |
) |
|
|
(12,567 |
) |
Loss before income taxes |
|
|
(5,179 |
) |
|
|
(10,613 |
) |
|
|
(16,250 |
) |
|
|
(35,146 |
) |
Provision for income taxes |
|
|
— |
|
|
|
— |
|
|
|
25 |
|
|
|
149 |
|
Net loss |
|
$ |
(5,179 |
) |
|
$ |
(10,613 |
) |
|
$ |
(16,275 |
) |
|
$ |
(35,295 |
) |
The following table is a summary of our condensed consolidated statements of operations data expressed as a percentage of revenue for the periods indicated:
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
Total revenue |
|
|
100 |
% |
|
|
100 |
% |
|
|
100 |
% |
|
|
100 |
% |
Cost of revenue |
|
|
75 |
% |
|
|
79 |
% |
|
|
75 |
% |
|
|
78 |
% |
Gross margin |
|
|
25 |
% |
|
|
21 |
% |
|
|
25 |
% |
|
|
22 |
% |
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Research and development |
|
|
5 |
% |
|
|
8 |
% |
|
|
6 |
% |
|
|
10 |
% |
Sales and marketing |
|
|
2 |
% |
|
|
4 |
% |
|
|
2 |
% |
|
|
5 |
% |
Operations and support |
|
|
8 |
% |
|
|
8 |
% |
|
|
8 |
% |
|
|
10 |
% |
General and administrative |
|
|
11 |
% |
|
|
14 |
% |
|
|
13 |
% |
|
|
15 |
% |
Depreciation and amortization |
|
|
4 |
% |
|
|
3 |
% |
|
|
3 |
% |
|
|
3 |
% |
Total operating expenses |
|
|
30 |
% |
|
|
38 |
% |
|
|
32 |
% |
|
|
42 |
% |
Operating loss |
|
|
(5 |
)% |
|
|
(16 |
)% |
|
|
(7 |
)% |
|
|
(20 |
)% |
Other expense, net |
|
|
(10 |
)% |
|
|
(13 |
)% |
|
|
(10 |
)% |
|
|
(11 |
)% |
Loss before income taxes |
|
|
(16 |
)% |
|
|
(29 |
)% |
|
|
(17 |
)% |
|
|
(32 |
)% |
Provision for income taxes |
|
|
0 |
% |
|
|
0 |
% |
|
|
0 |
% |
|
|
0 |
% |
Net loss |
|
|
(16 |
)% |
|
|
(29 |
)% |
|
|
(17 |
)% |
|
|
(32 |
)% |
Comparison of the Three Months Ended September 30, 2025 and 2024
Revenue
Revenue decreased by $3.3 million, or 9%, to $32.9 million in the three months ended September 30, 2025 from $36.2 million in the three months ended September 30, 2024. The decrease was primarily driven by a $2.4 million reduction in revenue resulting from the early termination of a top 5 global original equipment manufacturer Customer Partner, a reduction in revenue from the Otonomo business of $1.5 million, and a $0.2 million reduction in revenue from existing accounts. This was offset by an increase in revenue from two new Customer Partners and a Customer Partner expansion, which together accounted for an increase of $0.8 million in revenue.
20
Cost of Revenue
Cost of revenue decreased by $3.6 million, or 13%, to $24.8 million in the three months ended September 30, 2025 from $28.5 million in the three months ended September 30, 2024. The decrease was primarily related to an overall decline in dispatch volume resulting in a $3.0 million reduction in Service Provider fees. The decrease in dispatch volume was primarily due to the early termination of a top 5 global original equipment manufacturer Customer Partner, partially offset by increases in dispatch volume from two new Customer Partners and a Customer Partner expansion. In addition, we had a reduction in cost of revenue attributed to the Otonomo business of $0.5 million and a reduction in first call support and platform costs of $0.3 million, offset by a slight increase in Service Provider fees per dispatch of $0.2 million.
Gross Profit
Our gross profit for the three months ended September 30, 2025 was $8.1 million, compared to $7.8 million for the three months ended September 30, 2024. This $0.3 million increase in gross profit was driven by an improvement in unit economics per dispatch despite a decrease in volume related to the early termination of a top 5 global original equipment manufacturer Customer Partner.
Operating Expenses
Research and Development
Research and development expense decreased by $1.3 million, or 42%, to $1.8 million in the three months ended September 30, 2025 from $3.1 million in the three months ended September 30, 2024. The decrease was driven by a reduction in Otonomo research and development expenses of $0.8 million and a reduction in employee and employee-related expenses of $0.8 million, offset by a $0.3 million decrease in capitalized software due to a reduction in employees and a reduction in projects that require capitalization in the current period compared to the prior comparable period. There were 67 and 77 research and development employees as of September 30, 2025 and 2024, respectively.
As a percentage of total revenue, research and development expense decreased by 3% to 5% in the three months ended September 30, 2025 from 8% in the three months ended September 30, 2024 due to the reduction in Otonomo-related expenses and the implementation of operational efficiencies across the Company.
Sales and Marketing
Sales and marketing expense decreased by $0.8 million, or 53%, to $0.7 million in the three months ended September 30, 2025 from $1.5 million in the three months ended September 30, 2024. The decrease was primarily driven by a reduction in Otonomo sales and marketing expenses of $0.7 million and a $0.1 million reduction in employee and employee-related expenses. There were 17 and 18 sales and marketing employees as of September 30, 2025 and 2024, respectively.
As a percentage of total revenue, sales and marketing expense decreased by 2% to 2% in the three months ended September 30, 2025 from 4% in the three months ended September 30, 2024. The decrease was primarily driven by the reduction in Otonomo-related expenses and the implementation of operational efficiencies across the Company.
Operations and Support
Operations and support expense decreased by $0.5 million, or 16%, to $2.5 million in the three months ended September 30, 2025 from $3.0 million in the three months ended September 30, 2024. The decrease was primarily related to the optimization of customer support representative resources and processes resulting in a cost reduction of $0.6 million offset by slightly higher overall net operating costs of $0.1 million. There were 29 and 44 operations and support employees as of September 30, 2025 and 2024, respectively, and 186 and 223 full-time customer support representative employees as of September 30, 2025 and 2024, respectively.
As a percentage of total revenue, operations and support expense remained flat at 8% in the three months ended September 30, 2025 compared to the three months ended September 30, 2024.
General and Administrative
General and administrative expense decreased by $1.3 million, or 26%, to $3.7 million in the three months ended September 30, 2025 from $4.9 million in the three months ended September 30, 2024. The decrease was driven by a $0.4 million reduction in Otonomo general and administrative expenses, a $0.4 million reduction in employee related expenses, a $0.2 million reduction in professional services, a $0.2 million reduction in rent expense, a $0.1 million reduction in insurance expense, and a $0.1 million
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reduction in franchise and other taxes. These reductions were offset by an increase of $0.1 million in expenses related to being a public company. There were 38 and 49 general and administrative employees as of September 30, 2025 and 2024, respectively.
As a percentage of total revenue, general and administrative expense decreased by 3% to 11% in the three months ended September 30, 2025 from 14% in the three months ended September 30, 2024. The decrease is primarily driven by the reduction in Otonomo-related expenses and the implementation of operational efficiencies across the Company.
Depreciation and Amortization
Depreciation and amortization expense increased by less than $0.1 million, or 7%, to $1.2 million in the three months ended September 30, 2025 from $1.1 million in the three months ended September 30, 2024. The increase was due primarily to an increase of $0.5 million in the amortization of capitalized software offset by a decrease of $0.4 million in the amortization of intangible assets resulting from the divestiture of Otonomo’s wholly-owned subsidiary, The Floow Limited, in September 2024.
Other Expense, net
Other expense, net decreased by $1.3 million, or 28%, to $3.4 million in the three months ended September 30, 2025 from $4.7 million in the three months ended September 30, 2024 due primarily to a $3.3 million loss on divestiture of The Floow Limited in the prior year, offset by a $0.2 million increase in interest expense, a $0.2 million decrease in interest income, a $0.5 million reduction in income from the change in the fair value of the contingent purchase consideration liability, a $0.1 million decrease in income from our equity investment in The Floow Limited, and a $0.9 million decrease in other income relating to foreign currency.
Comparison of the Nine Months Ended September 30, 2025 and 2024
Revenue
Revenue decreased by $15.0 million, or 14%, to $95.9 million in the nine months ended September 30, 2025 from $110.9 million in the nine months ended September 30, 2024. The decrease was primarily driven by the reduction in dispatch volume from the non-renewal of one auto manufacturer Customer Partner which resulted in a decrease in revenue of $4.5 million, a reduction in dispatch volume from existing Customer Partners which resulted in a decrease in revenue of $3.5 million, a reduction in revenue from the Otonomo business of $4.8 million, a $5.1 million reduction in revenue resulting from the early termination of a top 5 global original equipment manufacturer Customer Partner, and a $0.5 million reduction in revenue from an electric vehicle (“EV”) Customer Partner in bankruptcy. This was offset by an increase in revenue from two new Customer Partners and a Customer Partner expansion, which together accounted for an increase of $3.4 million in revenue.
Cost of Revenue
Cost of revenue decreased by $14.6 million, or 17%, to $71.9 million in the nine months ended September 30, 2025 from $86.4 million in the nine months ended September 30, 2024. The decrease was primarily related to an overall decline in dispatch volume resulting in a $10.2 million reduction in Service Provider fees and a $1.3 million reduction in Service Provider fees per dispatch driven by margin improvement initiatives. The decrease in dispatch volume was primarily due to the non-renewal of one auto manufacturer Customer Partner, the early termination of a top 5 global original equipment manufacturer Customer Partner, the EV Customer Partner bankruptcy, and a decrease in dispatch volume from existing Customer Partners, partially offset by increases in dispatch volume from two new Customer Partners and a Customer Partner expansion. In addition, we had a reduction in cost of revenue attributed to the Otonomo business of $2.0 million and a reduction in first call support and platform costs of $1.1 million.
Gross Profit
Our gross profit for the nine months ended September 30, 2025 was $24.0 million, compared to $24.4 million for the nine months ended September 30, 2024. The improvement in unit economics per dispatch nearly offset the impact of volume decrease. The decrease was primarily driven by the loss in volume related to the non-renewal of one auto manufacturer Customer Partner, the early termination of a top 5 global original equipment manufacturer Customer Partner, the EV Customer Partner bankruptcy, and a decrease in dispatch volume from existing Customer Partners.
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Operating Expenses
Research and Development
Research and development expense decreased by $5.7 million, or 51%, to $5.4 million in the nine months ended September 30, 2025 from $11.1 million in the nine months ended September 30, 2024. The decrease was driven by a reduction in Otonomo research and development expenses of $4.3 million, a reduction in employee and employee-related expenses of $2.2 million and a reduction in business tools and services of $0.1 million, offset by a $0.9 million decrease in capitalized software due to a reduction in employees and a reduction in projects that require capitalization in the current period compared to the prior comparable period. There were 71 and 77 research and development employees as of September 30, 2025 and 2024, respectively.
As a percentage of total revenue, research and development expense decreased by 4% to 6% in the nine months ended September 30, 2025 from 10% in the nine months ended September 30, 2024 due to the reduction in Otonomo-related expenses and the implementation of operational efficiencies across the Company.
Sales and Marketing
Sales and marketing expense decreased by $3.0 million, or 59%, to $2.1 million in the nine months ended September 30, 2025 from $5.2 million in the nine months ended September 30, 2024. The decrease was primarily driven by a reduction in Otonomo sales and marketing expenses of $2.5 million and a $0.5 million reduction in employee and employee-related expenses. There were 17 and 18 sales and marketing employees as of September 30, 2025 and 2024, respectively.
As a percentage of total revenue, sales and marketing expense decreased by 3% to 2% in the nine months ended September 30, 2025 from 5% in the nine months ended September 30, 2024. The decrease was primarily driven by the reduction in Otonomo-related expenses and the implementation of operational efficiencies across the Company.
Operations and Support
Operations and support expense decreased by $3.6 million, or 33%, to $7.3 million in the nine months ended September 30, 2025 from $10.9 million in the nine months ended September 30, 2024. The decrease was primarily related to the optimization of customer support representative resources and processes resulting in a cost reduction of $2.6 million, and a reduction in employee-related costs of $1.0 million. There were 29 and 44 operations and support employees as of September 30, 2025 and 2024, respectively, and 186 and 223 full-time customer support representative employees as of September 30, 2025 and 2024, respectively.
As a percentage of total revenue, operations and support expense decreased by 2% to 8% in the nine months ended September 30, 2025 from 10% in the nine months ended September 30, 2024. The decrease was primarily driven by customer support center transformation initiatives.
General and Administrative
General and administrative expense decreased by $4.2 million, or 25%, to $12.3 million in the nine months ended September 30, 2025 from $16.5 million in the nine months ended September 30, 2024. The decrease was driven by a $2.4 million reduction in Otonomo general and administrative expenses, a $0.7 million reduction in employee and employee related expenses, a $0.6 million reduction in bad debt, a $0.6 million reduction in professional services, a $0.3 million reduction in IT infrastructure costs, a $0.2 million reduction in insurance expenses, and a $0.1 million reduction in rent expense. These reductions were offset by $0.4 million in expenses related to being a public company, an increase in service fees and charges of $0.2 million, and a $0.1 million increase in transaction related expenses. There were 38 and 49 general and administrative employees as of September 30, 2025 and 2024, respectively.
As a percentage of total revenue, general and administrative expense decreased by 2%, to 13% in the nine months ended September 30, 2025 from 15% in the nine months ended September 30, 2024. The decrease is primarily driven by the reduction in Otonomo-related expenses and the implementation of operational efficiencies across the Company.
Depreciation and Amortization
Depreciation and amortization expense remained flat at $3.3 million in the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024.
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Other Expense, net
Other expense, net decreased by $2.7 million, or 21%, to $9.9 million in the nine months ended September 30, 2025 from $12.6 million in the nine months ended September 30, 2024 due primarily to: a $3.3 million loss on divestiture of The Floow Limited in the prior year; a $1.0 million decrease in interest expense, which was offset by a $0.9 million decrease in interest income; a $1.4 million loss on debt extinguishment in the prior year; and $0.2 million in income from our equity investment in The Floow Limited in the current year. These decreases were offset by a decrease in other income related to foreign currency loss of $0.7 million, and $1.6 million in additional expense resulting from changes in the fair values of derivative and contingent consideration liabilities.
Liquidity and Capital Resources
Due to our history of recurring losses from operations, negative cash flows from operations, and our dependency on debt and equity financing to fund operating shortfalls, management concluded that there is substantial doubt about our ability to continue as a going concern. Refer to Note 1 “Organization” of our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q. In addition, our independent registered public accounting firm has included an explanatory paragraph in their audit report for the year ended December 31, 2024 as to the substantial doubt about our ability to continue as a going concern. Our condensed consolidated financial statements have been prepared in accordance with GAAP, which contemplates that we will continue to operate as a going concern. Our interim condensed consolidated financial statements do not contain any adjustments that might result if we are unable to continue as a going concern.
As of September 30, 2025, we had $4.0 million in cash, cash equivalents and restricted cash. Our principal sources of liquidity have historically consisted of financing activities, including proceeds from the issuance of preferred stock, borrowings under debt financing arrangements and credit facilities, and operating activities. As of September 30, 2025, our principal debt balance totaled $61.0 million with maturity dates through July 31, 2026.
In January 2025, we amended our Structural Loan Agreement and Highbridge Loan Agreement to extend the maturity dates thereunder to February 15, 2025 and March 17, 2025, respectively. In February 2025, we amended our Structural Loan Agreement and Highbridge Loan Agreement to extend the maturity dates thereunder to February 28, 2025 and March 31, 2025, respectively.
In February 2025, we entered into the MidCap Credit Agreement in an aggregate principal amount not to exceed the lesser of a $20.0 million commitment amount and the available borrowing base thereunder. As of February 26, 2025, we fully repaid the amount outstanding under the Structural Loan Agreement. The remainder of the available revolving loans were used for working capital needs and for general corporate purposes.
In February 2025, we also entered into an eighth amendment to the Highbridge Loan Agreement (the “Eighth Amendment”), to, among other things, (i) permit our entry into the MidCap Credit Agreement, (ii) modify the interest rate to permit the Company to pay interest in kind for a specified period of time at a rate of 16.0% per annum, and thereafter, pay interest in cash at a rate of 13.0% per annum, subject to certain conditions, (iii) extend the maturity date thereunder from March 31, 2025 to July 31, 2026 and (iv) provide for the payment of an amendment fee in an amount of $2,600,000 at the earlier of the maturity date of the loan or the date the loan is paid off.
In February 2025, we also entered into a Purchase Agreement (the “Purchase Agreement”) with the investors party thereto (the “Investors”). Pursuant to the Purchase Agreement, in consideration of the Eighth Amendment, we issued 113,170 shares of common stock (the “Eighth Amendment Premium Shares”). We also agreed that unless all Obligations (as defined in the Highbridge Loan Agreement) were repaid in full prior to July 1, 2025, we would issue 112,038 shares of common stock (the “Subsequent Eighth Amendment Premium Shares”) to the Investors. On July 1, 2025, because certain Obligations were still outstanding, we issued the Subsequent Eighth Amendment Premium Shares to the Investors.
In February 2025, we and the Investors also entered into a Registration Rights Agreement (the “Registration Rights Agreement”), pursuant to which we have agreed to use our commercially reasonable efforts to file a registration statement with the SEC for the resale of the Eighth Amendment Premium Shares and any Subsequent Eighth Amendment Premium Shares. Under the Registration Rights Agreement, the Investors are also entitled to piggyback registration rights.
In July 2025, we filed a prospectus supplement to the prospectus which forms a part of our effective shelf registration statement on Form S-3 (File No. 333-288523), dated July 11, 2025, which registers the offering, issuance, and sale of up to $4,025,821 of common stock pursuant to the ATM Program. Through September 30, 2025, we sold 180,912 shares of common stock pursuant to the ATM Program and received proceeds, net of commissions and expenses, of $0.3 million.
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Since inception, we have consistently maintained a working capital deficit, in which our current liabilities exceed our current assets. This is due to the nature of our business model, in that we pay our Service Providers generally within two to three weeks of performance, but our collection cycle is longer for most of our Customer Partners. Our cash needs vary from period to period primarily based on our growth: in periods of fast growth our cash needs are accelerated as we invest into the operations and servicing of new Customer Partners. Our cash needs can also vary from period to period depending upon the gross margin performance we are able to attain. Our primary liquidity needs are to fund working capital requirements, invest into our growth through spending on technology and people, and fund our debt service obligations. We believe factors that could affect our liquidity include our rate of revenue growth, changes in demand for our services, competitive pricing pressures, the timing and extent of spending on research and development and other growth initiatives, our ability to achieve further reductions in operating expenses, and overall economic conditions.
If we are unable to raise additional capital or generate cash flows necessary to expand our operations and invest in new technologies, our competitive position could weaken, and our business and results of operations could be adversely affected. The incurrence of additional debt financing would result in debt service obligations, and any future instruments governing such debt could provide for operating and financing covenants that could restrict our operations. In addition, we may seek additional capital due to favorable market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans. To the extent that our current liquidity is insufficient to fund future activities, we may need to raise additional funds. In the future, we may attempt to raise additional capital through the sale of equity securities or through debt financing arrangements. For additional detail, see Note 7 “Debt Arrangements” to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.
Cash Flows
The following table is a summary of our cash flows for the periods presented:
|
|
Nine Months Ended September 30, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
|
|
(in thousands) |
|
|||||
Net cash provided by (used in): |
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|
|
|
|
|
||
Operating activities |
|
$ |
(5,593 |
) |
|
$ |
(28,847 |
) |
Investing activities |
|
|
(3,950 |
) |
|
|
25,950 |
|
Financing activities |
|
|
(633 |
) |
|
|
(18,066 |
) |
Operating Activities
Net cash used in operating activities for the nine months ended September 30, 2025 was $5.6 million primarily due to a net loss of $16.3 million, excluding the impact of non-cash expenses totaling $14.1 million, an increase in accounts receivable of $0.4 million, a decrease in long-term liabilities of $9.6 million, and a decrease in lease liabilities of $0.3 million. Sources of cash from operating activities resulted primarily from an increase in accrued expenses of $5.7 million and a net decrease in prepaid expenses and other assets of $1.1 million. We anticipate that we will continue to use our existing capital to fund operating activities through the remainder of 2025.
Net cash used in operating activities for the nine months ended September 30, 2024 was $28.8 million primarily due to a net loss of $35.3 million, excluding the impact of non-cash expenses totaling $13.5 million, a decrease in accounts payable of $0.8 million, a decrease in long-term liabilities of $12.4 million, a decrease in deferred revenue of $0.1 million, an increase in other assets of $0.6 million, and a decrease in lease liabilities of $0.7 million. Sources of cash from operating activities resulted primarily from a decrease in accounts receivable of $5.6 million, an increase in accrued expenses of $1.5 million, and a decrease in prepaid expenses and other assets of $0.4 million.
Investing Activities
Net cash used in investing activities for the nine months ended September 30, 2025 was $4.0 million due to $3.8 million in investments in capitalized software and $0.1 million in purchases of equipment and software.
Net cash provided by investing activities for the nine months ended September 30, 2024 was $26.0 million due to $32.2 million in proceeds from short-term deposits and the sale of marketable securities, offset by $4.1 million in investments in capitalized software, $1.6 million in purchases of equipment and software, and divested cash of $0.6 million in connection with the divestiture of The Floow.
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Financing Activities
Net cash used in financing activities for the nine months ended September 30, 2025 was $0.6 million due to $10.0 million in payments on the Structural term loan, $2.6 million in payments of debt issuance costs related to the Highbridge Loan Agreement and MidCap Credit Agreement, $84.8 million in proceeds and $73.2 million in payments under the MidCap Credit Agreement, and net proceeds of $0.3 million from the issuance of common stock in connection with the ATM Program.
Net cash used in financing activities for the nine months ended September 30, 2024 was $18.1 million due to $17.5 million in payments on the Structural term loan and $0.6 million in payments of deferred financing fees related to the Structural and Highbridge amendments.
Contractual Obligations and Commitments
Our principal commitments consist of contractual cash obligations under our credit facilities, long-term debt, and operating leases. Our obligations under our credit facilities and long-term debt are described in Note 7 “Debt Arrangements” and for further information on our leases, see Note 11 “Leases” of the condensed consolidated financial statements contained elsewhere in this Quarterly Report on Form 10-Q.
Emerging Growth Company Status
As an “emerging growth company,” the JOBS Act allows us to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies. We have elected to use this extended transition period under the JOBS Act. As a result, our interim condensed consolidated financial statements may not be comparable to the financial statements of issuers who are required to comply with the effective dates for new or revised accounting standards that are applicable to public companies, which may make our common stock less attractive to investors.
Critical Accounting Estimates
Our management’s discussion and analysis of our financial condition and results of our operations is based on our consolidated financial statements and accompanying notes, which have been prepared in accordance with GAAP. Certain amounts included in or affecting the condensed consolidated financial statements contained elsewhere in this Quarterly Report on Form 10-Q and related disclosure must be estimated, requiring management to make assumptions with respect to values or conditions which cannot be known with certainty at the time the consolidated financial statements are prepared.
Management believes that there are no material changes to the critical accounting estimates set forth in the critical accounting estimates section “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Estimates” contained in the Annual Report. A “critical accounting estimate” is one which is both important to the portrayal of our financial condition and results of operations and that involves difficult, subjective, or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.
Recent Accounting Pronouncements
See Note 2 “Summary of Significant Accounting Policies” of the condensed consolidated financial statements contained elsewhere in this Quarterly Report on Form 10-Q for a description of new accounting standards.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
We are a smaller reporting company, as defined by Rule 12b-2 under the Exchange Act and are not required to provide the information under this item.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Principal Executive Officer and Principal Financial Officer, evaluated, as of the end of the period covered by this Quarterly Report on Form 10-Q, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on that evaluation, and as a result of the material weaknesses in internal control over financial reporting described below, our Principal Executive Officer and Principal Financial Officer concluded that, as of September 30, 2025, our disclosure controls and procedures were not effective at the reasonable assurance level. In light of
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this fact, our management has performed additional analyses, reconciliations, and other post-closing procedures and has concluded that, notwithstanding the material weaknesses in our internal control over financial reporting, the unaudited condensed consolidated financial statements for the periods covered by and included in this Quarterly Report on Form 10-Q fairly state, in all material respects, our financial position, results of operations and cash flows for the periods presented in conformity with GAAP.
Material Weaknesses in Internal Control over Financial Reporting
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
In connection with the audit of our financial statements for the years ended December 31, 2024 and 2023, management identified two material weaknesses in our internal control over financial reporting that have not been remediated as of September 30, 2025. The material weaknesses are related to (i) a lack of evidence of segregation of duties within the accounting and finance function, and (ii) the design and maintenance of effective control over IT general controls for information systems and user privileges related to the applications relevant to the preparation of our consolidated financial statements.
Remediation Plans for Material Weaknesses in Internal Control over Financial Reporting
In order to remediate the previously-identified material weakness related to the design and maintenance of effective control over IT general controls for information systems and user privileges related to the applications relevant to the preparation of our consolidated financial statements, we are in the process of implementing our remediation plan, which includes steps to design and maintain new or revising existing controls to prevent or detect inappropriate user and privileged access to our IT systems.
We have made progress toward remediation of the previously-identified material weakness related to a lack of evidence of segregation of duties within the accounting and finance function. We are in the process of reorganizing our finance department, including the expansion of our accounting, control and compliance functions to develop and implement continued improvements and enhancements to address the overall deficiencies that led to the material weakness.
Our management believes that these actions will enable us to address the material weaknesses in a timely manner and maintain a properly designed and effective system of internal control over financial reporting and provide appropriate segregation of duties. However, these material weaknesses cannot be considered remediated until the applicable remedial controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.
Changes in Internal Control over Financial Reporting
Other than the remediation efforts underway with respect to the material weaknesses described above, there were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the nine months ended September 30, 2025, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Inherent Limitations on Effectiveness of Controls and Procedures
Our management, including our Principal Executive Officer and Principal Financial Officer, believes that our disclosure controls and procedures and internal control over financial reporting were designed to provide reasonable assurance of achieving their objectives. However, management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Due to inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
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PART II—OTHER INFORMATION
Item 1. Legal Proceedings.
From time to time, we may become involved in actions, claims, suits and other legal proceedings arising in the ordinary course of our business, including assertions by third parties relating to breaches of contract, employment-related matters or intellectual property infringement as well as governmental and other regulatory investigations and proceedings. We are not currently a party to any actions, claims, suits or other legal proceedings the outcome of which, if determined adversely, would individually or in the aggregate have a material adverse effect on our business, financial condition or results of operations. Future litigation may be necessary to defend ourselves, our partners, and our customers by determining the scope, enforceability, and validity of third-party proprietary rights, or to establish our proprietary rights. The results of any current or future litigation cannot be predicted with certainty, and regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, and other factors.
Item 1A. Risk Factors.
There have been no material changes to our principal risks that we believe are material to our business, results of operations and financial condition, from the risk factors previously disclosed in our Annual Report other than as set forth below.
We may fail to continue to meet the listing standards of Nasdaq, and as a result our common stock may be delisted, which could have a material adverse effect on the liquidity and trading price of our common stock and on our ability to raise capital, and other adverse consequences.
On March 19, 2025, we received a notification letter (the “Notice”) from the Listing Qualifications Department of Nasdaq notifying us that our net income from continuing operations had fallen below the minimum requirement for continued listing on the Nasdaq Capital Market under Nasdaq Listing Rule 5550(b)(3) (the “Minimum Net Income Requirement”). The Notice also noted that we do not meet the alternatives of market value of listed securities or stockholders’ equity (collectively with the Minimum Net Income Requirement, the “Continued Listing Standards”).
In accordance with Nasdaq Listing Rule 5810(c)(2)(C), we had 45 calendar days, or until May 5, 2025, to provide Nasdaq with a plan to regain compliance with the Continued Listing Standards (the “Compliance Plan”). We submitted the Compliance Plan to Nasdaq within the required time period. On September 16, 2025, Nasdaq notified us that, based upon our continued non-compliance with the Continued Listing Standards as of September 15, 2025, the Company’s securities were subject to delisting from Nasdaq at the open of business on September 25, 2025 unless the Company timely requests a hearing before the Panel. We formally requested a hearing that took place on October 23, 2025, where we presented an amended plan to evidence compliance (the “Amended Compliance Plan”) and requested an extension to regain compliance. Following the hearing, on November 5, 2025, the Panel notified us that our request to continue listing on Nasdaq was granted subject to demonstrating compliance with the Rule on or before February 16, 2026. There can be no assurance, however, that we will be able to regain compliance with the Rule or otherwise maintain compliance with all other applicable criteria for continued listing on Nasdaq. In such case, our securities would be subject to delisting.
If we fail to regain and maintain compliance with the Continued Listing Standards, our common stock could be delisted from Nasdaq. If that occurs, the liquidity of our common stock would be adversely affected, and its market price could decrease. It could cause other adverse consequences, such as difficulties in raising capital and in providing stock-based incentives to attract and retain personnel. Delisting could also impair our reputation and our relationships with Customer Partners, which could adversely affect our business, financial condition and results of operations. In addition, our common stock could be deemed to be a “penny stock,” which could result in reduced levels of trading in our common stock, and we would also become subject to additional states’ securities regulations in connection with any sales of our securities.
A sale of a significant portion of our total outstanding shares into the market may cause the market price of our common stock to drop significantly, even if our business is doing well.
Sales of a substantial number of shares of our common stock in the public market could occur at any time, including pursuant to the ATM Program. These sales, or the perception in the market that the holders of a large number of shares intend to sell shares, could reduce the market price of our common stock.
We maintain a shelf registration statement on Form S-3 pursuant to which we may, from time to time, sell up to an aggregate of $4,025,821 of our common stock, preferred stock, debt securities, depositary shares, warrants, subscription rights, purchase contracts, or units, subject to the limitations of General Instruction I.B.6 of Form S-3 so long as the aggregate market value of our common stock
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held by non-affiliates is less than $75.0 million. We have also filed registration statements with the SEC to register shares of our common stock for certain stockholders who have rights, subject to certain conditions, to require us to file registration statements covering their shares or to include their shares in registration statements that we may file for ourselves or other stockholders. We have also filed registration statements with the SEC to register shares reserved for future issuance under our equity compensation plans. Registration of these shares under the Securities Act results in the shares becoming freely tradable in the public market, subject to the restrictions of Rule 144 in the case of our affiliates.
Any issuance of securities under the shelf registration statement may cause stockholders to experience significant dilution of their ownership interests and any sales of securities by us or our stockholders under the registration statements could have a material adverse effect on the market price for our common stock. Sales of our common stock pursuant to the exercise of registration rights may make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate. These sales also could cause the trading price of our common stock to fall and make it more difficult for you to sell shares of our common stock at a time and price that you deem appropriate.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities.
Not applicable.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
Securities Trading Plans of Directors and Executive Officers
During the fiscal quarter ended September 30, 2025,
Item 6. Exhibits.
The exhibits listed below are filed as part of this Quarterly Report on Form 10-Q, or are incorporated herein by reference, in each case as indicated below.
Exhibit Number |
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Description |
3.1 |
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3.2 |
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3.3 |
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10.1 |
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31.1* |
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32.1# |
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101.INS |
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Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document. |
101.SCH |
|
Inline XBRL Taxonomy Extension Schema Document with Embedded Linkbases Document |
104 |
|
Cover Page Interactive Data File (embedded within the Inline XBRL document) |
* Filed herewith.
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# These exhibits are furnished with this Quarterly Report on Form 10-Q and are not deemed filed with the SEC and are not incorporated by reference in any filing of the registrant under the Securities Act or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language contained in such filings.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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URGENT.LY INC. |
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Date: November 13, 2025 |
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By: |
/s/ Matthew Booth |
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Matthew Booth |
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Chief Executive Officer |
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(Principal Executive and Financial Officer) |
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31
Exhibit 31.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER
PURSUANT TO RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Matthew Booth, certify that:
Date: November 13, 2025 |
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By: |
/s/ Matthew Booth |
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Matthew Booth |
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|
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Chief Executive Officer (Principal Executive Officer and Principal Financial Officer) |
Exhibit 32.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Urgent.ly Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2025 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Matthew Booth, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:
Date: November 13, 2025 |
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By: |
/s/ Matthew Booth |
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|
Matthew Booth |
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Chief Executive Officer (Principal Executive Officer and Principal Financial Officer) |