Urgent.ly Inc. (ULY) is a U.S.-based leading provider of digital roadside and mobility assistance technology and services. The company has been at the forefront of revolutionizing the traditional roadside assistance industry, leveraging its innovative platform to deliver exceptional customer experiences at scale.
Business Overview and History
Urgent.ly was incorporated in the State of Delaware in May 2013 with the mission of developing a leading connected mobility assistance software platform. The company aimed to match vehicle owners and operators with service professionals who deliver traditional roadside assistance, proactive maintenance, and repair services.
In its early years, Urgent.ly faced significant challenges as it worked to integrate its technology with customer systems and processes. The company invested heavily in research and development to enhance the functionality of its platform and ensure a seamless customer experience. Despite these initial hurdles, Urgent.ly steadily grew its customer base and expanded the geographical reach of its services.
By 2020, Urgent.ly had established partnerships with over 40 customer organizations across the United States and Canada. The company also diversified its service offerings, moving beyond traditional roadside assistance to include proactive vehicle maintenance and repair services.
In 2023, Urgent.ly made a strategic move to acquire Otonomo Technologies Ltd., a provider of automotive data services. This acquisition was intended to enhance Urgent.ly's data and analytics capabilities, enabling the company to better optimize its service network and deliver even more value to its customers. While the integration of Otonomo's technology and team presented challenges, Urgent.ly successfully navigated this process, emerging as a more resilient and capable organization.
Today, Urgent.ly's comprehensive technology stack enables its partners to offer exceptional user experiences, driving high customer satisfaction and loyalty. The company has established itself as a trusted partner to leading automotive, insurance, and transportation-focused brands, leveraging its digitally native software platform that combines location-based services, real-time data, AI, and machine-to-machine communication.
Financial Performance and Outlook
For the nine months ended September 30, 2024, Urgent.ly reported revenue of $110.88 million, a decline of 21% compared to the same period in the prior year. This decrease was primarily driven by the non-renewal of a major customer partner contract, partially offset by revenue contributions from new customer partners and expanded relationships with existing partners.
Despite the revenue decline, Urgent.ly made meaningful progress in improving its financial performance. The company reported a gross profit margin of 22% for the nine-month period, up from 20% in the prior year, reflecting the company's focus on operational efficiencies and margin expansion initiatives.
Urgent.ly's non-GAAP operating loss for the nine months ended September 30, 2024, improved by 17% year-over-year to $14.21 million, as the company continued to execute on its strategic plan to drive cost savings and operational leverage.
For the third quarter of 2024, Urgent.ly reported total revenue of $36.25 million, a decrease of 21% compared to the prior year period. This decrease was primarily driven by a reduction in dispatch volume from the non-renewal of one auto manufacturer Customer Partner, which resulted in an $11.9 million decrease in revenue. This was partially offset by increases in revenue from two new Customer Partners and $1.5 million in revenue from the Otonomo business.
Cost of revenue, excluding depreciation and amortization, decreased 23% year-over-year to $28.48 million in the third quarter of 2024, primarily due to the overall decline in dispatch volume. This resulted in a $9.1 million reduction in Service Provider fees. Gross profit for the quarter was $7.76 million, compared to $9.18 million in the prior year period.
For the full year 2023, Urgent.ly reported annual revenue of $184.65 million, net income of $74.73 million, annual operating cash flow of -$65.15 million, and annual free cash flow of -$65.29 million.
Looking ahead, Urgent.ly expects revenue in the range of $30 million to $33 million for the fourth quarter of 2024, and $141 million to $144 million for the full year 2024. The company is targeting a non-GAAP operating loss of approximately $2 million during Q4 2024, with a continued target of achieving non-GAAP operating breakeven during the first quarter of 2025. Urgent.ly expects its common stock shares outstanding at the end of Q4 2024 to be 13.5 million.
Liquidity and Capital Resources
As of September 30, 2024, Urgent.ly reported cash and cash equivalents of $17.12 million. The company's debt-to-equity ratio stood at -2.33, reflecting its current capital structure. Urgent.ly's current ratio and quick ratio were both 0.56, indicating potential liquidity challenges in the short term. The company did not disclose any available credit line in its financial reports.
Business Model and Revenue Streams
Urgent.ly generates substantially all of its revenue from its Mobility Assistance Services segment. The company's platform enables its Customer Partners, which include leading brands across the automotive and insurance industries, to outsource the delivery of roadside assistance services. Urgent.ly manages the entire roadside assistance process, from receiving the initial distress call or web-based request through final disposition.
The company offers two main service models to its Customer Partners:
- Full-service outsourcing of roadside assistance on a flat-rate basis
- Full-service outsourcing of roadside assistance on a claim cost pass-through basis
In the full-service flat-rate model, Urgent.ly negotiates fixed rates with subcontract Service Providers and charges Customer Partners or Consumers fixed rates based on each service provided. In the full-service claim cost pass-through model, Urgent.ly negotiates a flat dispatch fee directly with its Customer Partners, which is combined with the variable cost of subcontracted services.
Additionally, Urgent.ly generates revenue from Customer Partner membership programs and offers its platform as a software-as-a-service (SaaS) solution to enable certain of its Customer Partners' roadside assistance services.
Navigating Challenges and Strategic Initiatives
Urgent.ly has faced some challenges in 2024, including the non-renewal of a major customer partner contract. However, the company has demonstrated its resilience by securing several significant contract renewals and additions, including a three-year agreement with a global automotive fleet management company and a two-year renewal with a major vehicle rental company.
To further optimize its business and enhance profitability, Urgent.ly has undertaken various strategic initiatives. The company recently divested its Autonomous Business Unit, The Floow, as part of its effort to focus on its core roadside assistance platform. This divestiture will enable Urgent.ly to dedicate its resources to advancing its innovative technology and services.
Additionally, Urgent.ly has made significant progress in improving its operational efficiency. The company has reduced its total employee count by 46% since the fourth quarter of 2023, with a focus on optimizing its customer support operations. These efforts have contributed to a 16% year-over-year improvement in non-GAAP operating expenses for the third quarter of 2024.
Urgent.ly is also addressing a material weakness in its internal controls over financial reporting related to a lack of evidence of segregation of duties within the accounting and finance function. The company is in the process of implementing remediation efforts to address this issue, but it has not been fully resolved as of September 30, 2024.
Market Position and Growth Strategy
As of September 30, 2024, Urgent.ly has 55 customer partners and more than 75,000 participating service provider vehicle drivers in its network. The company primarily operates in the United States and Canada, positioning itself as a leading player in the North American roadside assistance market.
Urgent.ly continues to invest in innovation to broaden the functionality of its platform, improve the value of its offering to its customer partners, and incorporate additional offerings. The company is focused on expanding its existing B2B incident business through securing renewals, expanding relationships with existing partners, and developing new customer partner opportunities.
Risks and Catalysts
While Urgent.ly has made strides in transforming the roadside assistance industry, the company faces several risks that investors should consider. The highly competitive nature of the market, potential regulatory changes, and the company's reliance on a limited number of large customers could pose challenges to its long-term growth and profitability.
However, Urgent.ly's innovative technology, focus on exceptional customer experiences, and strategic partnerships with leading industry players position the company for potential catalysts. The company's recent recognition as the "Overall Transportation Tech of the Year" by the 2024 AutoTech Breakthrough Awards underscores its technological leadership and the value it brings to its partners.
Furthermore, Urgent.ly's ongoing efforts to enhance its capital structure and secure additional financing could provide the resources necessary to accelerate its growth and solidify its position as a dominant player in the evolving roadside assistance and mobility assistance market.
Conclusion
Urgent.ly Inc. (ULY) is a pioneering force in the roadside assistance industry, leveraging its digital platform and technological advancements to transform the way vehicle owners and operators receive assistance. Despite facing some challenges in 2024, the company has demonstrated its resilience and commitment to delivering exceptional customer experiences, improving operational efficiency, and driving long-term profitability. As Urgent.ly continues to execute on its strategic initiatives and navigate the evolving mobility landscape, the company's innovative approach and strong industry partnerships position it for potential success in the years to come.