Press release·03/31/2025 23:40:19

Phunware’s Financial Performance: Navigating Challenges and Investing for the Future

Phunware, a mobile-application cloud-based platform company, has released its financial results for the fiscal years ended December 31, 2024 and 2023. The report provides insights into the company’s financial performance, key business metrics, and outlook for the future.

Revenue and Gross Profit

Phunware’s total revenue decreased by 34% in 2024 compared to 2023, from $4.8 million to $3.2 million. This decline was driven by a 39.6% decrease in software subscriptions and services revenue, as well as a 23.5% drop in advertising revenue.

The company’s gross profit also decreased by 13.8% in 2024, from $1.7 million to $1.5 million. However, Phunware’s gross margin improved, increasing from 34.9% in 2023 to 45.6% in 2024. This improvement was due to lower costs associated with customer projects, as the company delivered a large customer project in 2023.

Key Business Metrics

Phunware tracks several key business metrics to measure its performance, including bookings, backlog, and deferred revenue.

Bookings, which represent the actual contracted value for a period, increased from $928,000 in 2023 to $3.1 million in 2024, reflecting improved sales and marketing efforts.

Backlog, which represents future amounts to be invoiced under active contracts, increased from $2.8 million in 2023 to $3.6 million in 2024. Deferred revenue, which consists of amounts that have been invoiced but not yet recognized as revenue, decreased from $1.9 million in 2023 to $1.6 million in 2024.

The total of backlog and deferred revenue, which represents the total billed and unbilled contract value yet to be recognized as revenue, increased from $4.7 million in 2023 to $5.2 million in 2024, providing visibility into future revenue streams.

Non-GAAP Financial Measures

Phunware uses certain non-GAAP financial measures, including adjusted gross profit, adjusted gross margin, and adjusted EBITDA, to provide additional information to users of the financial statements. These measures exclude certain non-cash and one-time expenses to give a better understanding of the company’s ongoing performance.

In 2024, Phunware’s adjusted gross profit was $1.6 million, with an adjusted gross margin of 51.2%, compared to $2.1 million and 44.1% in 2023. Adjusted EBITDA, which excludes interest, taxes, depreciation, and other non-cash items, improved from a loss of $15.5 million in 2023 to a loss of $10.3 million in 2024.

Operating Expenses

Phunware’s operating expenses decreased significantly in 2024 compared to 2023, from $47.4 million to $15.3 million, a 67.6% reduction.

Sales and marketing expenses decreased by 21.7% due to lower headcount, while general and administrative expenses decreased by 24.0%, primarily due to a reduction in stock-based compensation, payroll, and facilities costs. Research and development expenses also decreased by 49.1%, again due to lower headcount.

In 2023, Phunware recorded a $25.8 million impairment of goodwill, a non-cash charge related to the decline in the company’s market value. No such impairment was recorded in 2024.

Other Income and Expenses

Phunware recorded $3.6 million in other income in 2024, primarily due to $1.7 million in interest income and $1.4 million from the write-off of aged accounts payable. This was partially offset by a $0.4 million loss on the disposal of a subsidiary.

In 2023, the company recorded $3.8 million in other income, mainly from a $5.3 million gain on the sale of digital assets, which was partially offset by $1.7 million in interest expense related to the 2022 Promissory Note.

Liquidity and Capital Resources

As of December 31, 2024, Phunware held $113 million in cash, a significant increase from the prior year. This was primarily due to $122.3 million in net cash provided by financing activities, which included proceeds from the sale of common stock through various financing arrangements.

The company has a history of operating losses and negative cash flows from operations, which it expects to continue in the foreseeable future as it focuses on growing its revenue. However, management believes the company has sufficient cash on hand to fund its operations for at least the next year.

Phunware has entered into various financing agreements, including an at-the-market offering program and a common stock purchase agreement, to raise additional capital as needed to fund its growth and operations.

Outlook and Future Investments

Phunware is continuing to invest in the development and improvement of its products and services, including the expansion of its ability to market and sell its offerings globally. The company is also investing in the development of a new generative AI-driven software development platform, which it believes will enable businesses to design, create, and deploy custom mobile applications more quickly and at a lower cost.

While the company does not expect to be profitable in the near future, it is focused on long-term growth and believes its investments in technology and infrastructure will position it for success in the future.

Conclusion

Phunware’s financial results for 2024 reflect a challenging year, with declines in both revenue and gross profit. However, the company has taken steps to reduce its operating expenses and improve its financial position, including raising significant capital through various financing arrangements.

Looking ahead, Phunware is focused on investing in its technology and platform to drive long-term growth, including the development of its new generative AI-driven software development platform. While the company’s near-term profitability remains uncertain, its strong cash position and strategic investments position it to navigate the challenges ahead and capitalize on future opportunities in the mobile application market.