Executive Summary / Key Takeaways

• Technology-Driven Transformation: Urgent.ly is leveraging its digitally native, AI-powered platform, including innovations like SPARK and dynamic pricing, to enhance operational efficiency, reduce wait times, and improve customer satisfaction, positioning itself as a technology leader in the evolving mobility assistance market.
• Significant Financial Turnaround: Following a strategic rationalization post-Otonomo merger, Urgent.ly achieved non-GAAP operating breakeven in March 2025 and reported its best-ever non-GAAP operating loss of approximately $200,000 in Q2 2025, demonstrating strong progress towards profitability through cost optimization and margin expansion.
• Strategic Growth Re-acceleration: The company is re-entering the insurance market with a "Champion Challenger" model, securing new contracts with a premium insurance provider and an EV manufacturer, alongside successful renewals and expansions with existing partners, targeting 20-30% growth post-Otonomo digestion.
• Liquidity and Risk Management: While facing "substantial doubt about going concern" due to historical losses and debt, Urgent.ly has secured a new $20 million credit facility and extended existing debt maturities, actively managing its capital structure and addressing Nasdaq listing compliance.
• Competitive Differentiation: Urgent.ly differentiates itself from larger, more traditional competitors like Allstate (ALL) and Progressive (PGR) through its agile, specialized technology platform, which offers superior efficiency and adaptability to emerging trends like EV support, aiming to capture market share through innovation and service quality.

The Digital Road Ahead: Reshaping Mobility Assistance

Urgent.ly Inc. (NASDAQ:ULY) operates at the forefront of the connected mobility assistance industry, transforming traditional roadside services through its digitally native software platform. Founded in 2013, the company has consistently pursued a technology-first, data-driven approach, aiming to match vehicle owners and operators with service professionals for roadside assistance, proactive maintenance, and repair. This mission addresses a critical need in an industry historically characterized by inefficiency and a lack of transparency, offering a modern alternative that leverages real-time data and advanced analytics.

The broader mobility assistance market is undergoing a significant transformation. The increasing adoption of electric vehicles (EVs), the demand for seamless digital experiences, and the convergence of historically siloed industries like insurance, automotive, and logistics are creating new opportunities. Urgent.ly's strategy is to capitalize on these shifts by providing a platform that not only delivers traditional services but also extends into adjacent markets, enhancing customer satisfaction and operational efficiency for its partners.

A Technological Moat: AI and Real-Time Data as Differentiators

Urgent.ly's core competitive advantage lies in its proprietary technology platform, which integrates location-based services, real-time data, artificial intelligence (AI), and machine-to-machine communication. This sophisticated architecture allows Urgent.ly to create predictive models that enhance performance for its partners, utilizing temporal-spatial and network data to optimize service delivery. The company's decade-long history of data collection forms a valuable asset, continually leveraged to drive value across the entire service ecosystem.

A prime example of this technological differentiation is SPARK, Urgent.ly's proprietary AI-powered market analyzer, launched in Q2 2025. SPARK elevates service performance across key urban markets by analyzing real-time and historical data, including Net Promoter Score (NPS), customer satisfaction scores, job acceptance rates, response times, and estimated arrival time accuracy. Crucially, SPARK's scalable AI models factor in dynamic conditions like traffic and weather, enabling real-time provider comparisons and strategic volume allocation. The tangible benefits are compelling: since its launch in Miami Beach, average wait times have been reduced by over 20 minutes, with improvements of 5 to 10 minutes observed in Fort Lauderdale and Boca Raton. This directly translates to faster, safer assistance for consumers.

Further enhancing its technological edge, Urgent.ly has developed AI-driven dynamic pricing technology. This innovation, recognized with the Auto Tech Breakthrough Award for overall Transportation Tech of the Year in October 2024, reliably predicts and optimizes job prices for roadside assistance services. This capability not only leads to higher quality customer experiences but also allows Urgent.ly to better manage surges in demand, akin to surge pricing in ride-hailing services, and offers differentiated VIP services. The company's location aggregation system, tested nationwide, has also demonstrated success in increasing digital engagement with service providers, reducing service costs, and improving time to assign and reducing wait times for stranded drivers. This system has been rolled out to 15% of Urgent.ly's network for all roadside service dispatches.

These technological advancements are not merely features; they are foundational to Urgent.ly's strategy, contributing directly to its competitive moat. They enable superior operational execution, drive higher customer satisfaction (reaching an all-time high of 4.7 out of 5 stars in Q2 2025), and ultimately support better unit economics and margin expansion.

Competitive Landscape: A Tech Specialist in a Field of Giants

Urgent.ly operates in a competitive arena, facing both established industry giants and emerging indirect threats. Its primary direct competitors include large insurance providers like Allstate Corporation and Progressive Corporation, as well as diversified financial services companies like Ameriprise Financial (AMP) and the insurance arm of Berkshire Hathaway (TICKER:BRK.A, TICKER:BRK.B) via GEICO, and the traditional membership-based services of AAA.

Compared to these larger players, Urgent.ly positions itself as an agile, technology-driven specialist. While competitors like Allstate and Progressive benefit from immense scale, brand recognition, and integrated ecosystems that bundle insurance with roadside services, Urgent.ly's differentiation lies in its innovation speed and specialized focus. For instance, Allstate's TTM Gross Profit Margin of 24% and Progressive's 100% (reflecting different revenue recognition for insurance premiums) highlight their established profitability, while Urgent.ly's TTM Gross Profit Margin stands at 23.47%. However, Urgent.ly's operating profit margin of -11.51% compared to Allstate's 10% and Progressive's 14% underscores the significant profitability gap it is working to close.

Urgent.ly's AI and data platform provides a distinct advantage in operational execution, potentially offering notably faster response times and more efficient service dispatch than its more traditional rivals. This technological edge is particularly crucial in emerging areas like electric vehicle (EV) towing, where Urgent.ly's platform is designed to provide knowledgeable support, as evidenced by its renewed contracts with a worldwide vehicle rental company and a global automotive OEM, and a new contract with an EV manufacturer in 2025.

The company's strategic re-entry into the insurance market is a direct response to competitive dynamics. Urgent.ly believes the industry is shifting from single-source roadside contracts to a "Champion Challenger" model, where two providers will be common. This allows Urgent.ly to leverage its technology to demonstrate superior performance, even against larger incumbents, by offering optimization simulations to prospective partners using their own data. This strategy aims to capture market share by proving quantifiable improvements in pricing, wait times, and customer satisfaction.

Indirect competitors include in-car telematics systems and ride-sharing platforms, which could erode demand for traditional roadside services. Urgent.ly's focus on predictive and preventative maintenance solutions for aging fleets, leveraging connected vehicle data, helps mitigate these threats by extending its value proposition beyond reactive assistance.

Strategic Evolution and Financial Performance

Urgent.ly's journey has been marked by significant strategic shifts, particularly following its merger with Otonomo in late 2023. This period initiated a comprehensive "rationalization" of the business, prioritizing unit economics and profitability over top-line revenue growth. This involved a substantial 50% reduction in total headcount within 12 months post-merger and a streamlining of operational processes. In September 2024, Urgent.ly strategically divested The Floow, Otonomo's autonomous business unit, retaining a 49% equity stake and a perpetual royalty-free license to integrate its software for driver behavior, scoring, crash detection, and analytics. This move allowed Urgent.ly to shed non-core assets and focus resources on its core mobility assistance platform.

The impact of these strategic decisions is evident in recent financial performance. For the second quarter ended June 30, 2025, Urgent.ly reported revenue of $31.7 million, an 8% decrease from $34.5 million in Q2 2024. The six months ended June 30, 2025, saw revenue of $63.0 million, down 16% from $74.6 million in the prior year period. These declines were primarily driven by the reduction in revenue from the Otonomo business and the early termination of a top 5 global OEM customer partner, partially offset by volume and rate increases from new and existing customer partners. Notably, Q2 2025 marked the eighth consecutive quarter of meeting revenue guidance and achieved modest sequential quarterly revenue growth versus Q1 2025, signaling a stabilization post-restructuring.

Gross profit for Q2 2025 was $7.9 million, an increase of $0.6 million from Q2 2024, resulting in a gross margin of 25%. This represents a 4-point improvement year-over-year and places the company within its midterm target of 25% to 30% gross margin. This improvement is a direct result of technology optimizations and a favorable mix of service dispatches, allowing for better management of service provider costs.

Operating expenses saw significant reductions. In Q2 2025, operating expenses decreased by 36% to $10.1 million from $15.7 million in Q2 2024. For the six months ended June 30, 2025, operating expenses were $20.5 million, a 38% reduction from $33.4 million in the prior year. These reductions were primarily due to lower Otonomo-related expenses, optimization of customer support resources (e.g., 179 full-time customer support representatives as of June 30, 2025, down from 220 in Q2 2024), and overall operational efficiencies.

A key milestone was achieved in Q1 2025, with Urgent.ly reaching non-GAAP operating breakeven for the month of March. For Q2 2025, the non-GAAP operating loss was approximately $200,000, the best reported to date and better than the company's guidance of $500,000. This loss was attributed to a one-time cost associated with the remaining portion of the Otonomo business.

Liquidity, Capital Structure, and Risks

As of June 30, 2025, Urgent.ly reported cash, cash equivalents, and restricted cash of $4.8 million, against a principal debt balance of $55.3 million. The company's history of recurring operating losses and reliance on debt and equity financing has led management to conclude there is "substantial doubt about the Company's ability to continue as a going concern." This is a critical risk factor for investors.

However, Urgent.ly has taken proactive steps to address its capital structure. In February 2025, it secured a new asset-based revolving credit facility of up to $20 million with MidCap Financial, which was used to repay existing indebtedness and provides working capital flexibility, with an additional $5 million available as accounts receivable increase. Concurrently, the credit agreement with Highbridge Capital Management was extended through July 31, 2026, with modified interest terms and an amendment fee of $2.6 million. An At-The-Market (ATM) equity offering program was established in July 2025, allowing for the sale of up to $4.03 million of common stock, though no shares had been sold as of the 10-Q filing. These measures are designed to enhance liquidity and provide financial runway.

The company also faces Nasdaq listing compliance challenges, having received a notification in March 2025 regarding non-compliance with the Minimum Net Income Requirement. A 1-for-12 reverse stock split was effected in March 2025 to address the minimum bid price rule, but the net income requirement remains a factor. Furthermore, Urgent.ly has identified material weaknesses in internal control over financial reporting related to segregation of duties and IT general controls, with remediation efforts underway. These operational risks, if not fully addressed, could impact financial reporting accuracy and investor confidence.

Outlook and Strategic Initiatives

Urgent.ly's management is focused on returning to profitable growth. For the third quarter of 2025, the company expects revenue to be between $31 million and $34 million and targets maintaining non-GAAP operating breakeven. Management anticipates positive sequential revenue growth starting in Q3 and Q4 2025, targeting 20% to 30% growth post-Otonomo business digestion. This growth is expected from:

• Renewals and Expansions: Approximately 40% of 2025 renewals have been secured, including a two-year contract with a rideshare partner and a long-term fleet management company. The company is also expanding services with existing partners, such as offering VIP programs and geographic expansion into markets like Canada.
• New Customer Acquisition: Urgent.ly has signed a new contract with a premium insurance provider and a new EV manufacturer in 2025, with additional insurance providers in contract negotiations. The company is actively targeting mid-market insurance companies, believing the "Champion Challenger" model will drive new business.
• Continued Operational Efficiency: Management expects operating expenses to continue to slightly decrease throughout 2025, albeit at a slower pace than in 2024, as the company continues to optimize its business processes and leverage technology.

The company's ongoing investment in capitalized software, with approximately $1.5 million expected in Q3 2025, underscores its commitment to platform enhancements and technological leadership. While seasonality typically drives variances in service event volume and costs, Urgent.ly believes its AI and machine learning work is flattening this curve, contributing to more predictable performance.

Conclusion

Urgent.ly is undergoing a significant transformation, evolving from a growth-at-all-costs model to a leaner, technology-driven enterprise focused on profitable expansion. Its core investment thesis hinges on the power of its AI-powered platform to deliver superior, efficient, and transparent mobility assistance services, differentiating it in a competitive market. The company's recent achievement of non-GAAP operating breakeven and consistent gross margin expansion are tangible results of its strategic rationalization and technological investments.

While substantial doubt about its going concern status and material weaknesses in internal controls present notable risks, Urgent.ly's proactive measures to strengthen its capital structure and its clear roadmap for growth in the insurance and EV sectors offer a compelling narrative. Investors should closely monitor the company's ability to execute its growth strategy, particularly the ramp-up of new customer contracts and the sustained achievement of non-GAAP operating breakeven, as these will be critical indicators of its long-term viability and potential for value creation. The company's technological leadership, particularly its AI-driven efficiencies, positions it to capture an increasing share of the transforming mobility assistance market.