CAMP4 Therapeutics Corporation Q2 FY2024 earnings call

• Expressed condolences to Jeff Gardner's family. - Q2 2024 results: $61.7M revenue (below guidance), $5.9M adjusted EBITDA (within guidance), strong cash flow from operations. - Cost savings initiatives contributing to adjusted EBITDA and cash flow, with expected incremental expense reductions in the back half. - Product initiatives: Launched ELD, commenced commercial shipments of Vision 2.0 Dash Cam Solution, secured new customer wins like Transportes Castores. - International Connected Car business strong, especially in Europe. - Leadership changes: Elevated two individuals to lead revenue function, CEO search ongoing, strategic alternatives exploration ongoing.

Consolidated Q2 revenue is $61.7 million. Revenue from TSPs was lower-than-expected, driving the revenue decline. Industrial and International Connected Car businesses had revenue increases. Recurring application subscription revenues in the quarter were $18.7 million, a $500,000 sequential decline due to prior period accounting cleanups. TSP revenue decline is attributed to customer inventory rebalancing and competitive pressures, expected to take longer than previously thought. Industrial and International Connected Car segments saw growth.

• Expect Q3 2024 revenues and adjusted EBITDA to be slightly down sequentially. - Anticipate normalization of TSP revenues as market stabilizes and grows. - Growth in recurring revenues from new solutions like Vision 2.0. - Margin improvements trending back to historical levels. - Continued focus on cost management.

• TSP customers continuing to rebalance inventories longer than expected. - Competitive pressures on TSP customers complicating inventory rebalancing. - Uncertainty around the timeline for TSP market recovery and customer performance.

Q: Please talk about the free cash flow trajectory and normalized free cash flow conversion.

A: Cash flow from operations excluding working capital changes has been in the $4 million range. Strong cost management and vigilance in cost control are key, but revenue normalization and continued cost management are needed for free cash flow stability.

Q: Unpack the sequential decline in revenue per subscriber in the software and subscription segment.

A: There was a $400,000 recurring revenue catch-up for prior period accounting corrections. Recurring revenue should be higher. Looking to grow recurring revenue with new applications like Vision and ELD, with pipeline and customer interest growing.

Q: Talk about normalized TSP levels, OpEx, and refinancing convertible debt.

A: TSP normalized levels were $104M in 2021, $91M in 2022, $110M in 2023. OpEx cost reductions implemented earlier, with more expected in the back half. To refinance convertible debt, need higher EBITDA from growth and continued cost vigilance.

Q: Give backlog metrics and talk about refinancing options.

A: RPO ended Q2 at $194 million and hardware backlog at $14 million. Refinancing options involve growing EBITDA and revenues to increase optionality, with goal to pay off 2% coupon convertible note at maturity and explore other financial instruments once EBITDA is high enough.