NextTrip, Inc. Q3 FY2022 earnings call

Product: - Launched new software only suite, including machine health, process health, and part health modules. Machine health is based on machine log data, process health on camera-based image data, and part health on melt pool data. - Beta released machine health module, with plans to expand the digital quality ecosystem. ### Personnel: - Reduced overall headcount, focused on retaining key employees. Hired Ryan Hurley as application engineer and Stephan Kuehr as GM of European Operations. ### Partnerships: - Launched three-tiered OEM program. Collaborated with SLM Solutions to integrate PrintRite3D with SLM.Quality API, worked with Novanta on integrated scan heads, and partnered with Dyndrite. ### Strategic Investment and M&A: - Undertaking initiative to attract strategic corporate investment partner with synergies to accelerate market visibility and customer adoption.

In Q3 2022, revenue totaled $188,000, down from $700,000 in Q3 2021 due to shift from perpetual licenses. Order backlog for Q4 to date was $334,000, a 39% increase from Q2. Gross profit was $109,000 (58% of revenues) vs $535,000 (76%) in Q3 2021. Headcount was reduced to 25 from a peak of 35 in April, with expected stable headcount for next 12 months.

- Expect continued margin improvement in near-term. ### - Anticipate cash usage to decline by 10%-15% starting 2023. ### - Order backlog increased 39% from Q2. ### - Estimated $65M in annual recurring revenue by 2025 with 10% coverage of installed printer market, or $20M with 3% coverage.

- Forward-looking statements subject to risks and uncertainties causing actual results to differ. ### - Industry competition and execution of strategic plans pose risks.

Q: How should we think about the cadence of revenue delivery from the backlog?

A: Typically, contract structures are three-year subscription models with monthly revenue recognition.

Q: Where is the inflection point for partners manifesting in revenue?

A: From direct partners and software only solutions linking to large OEM APIs, with machine health product launched and more products coming to market in Q1/Q2 2023.

Q: Feedback on beta release of machine health module and expected wider launch date?

A: Positive reception at ASTM consortium standards convention; target to finish work in Q1 and have it readily available late Q1/early Q2.

Q: Are partners helping sell the product or just adding value via integration?

A: A little bit of both; e.g., with Aconity, it's an option on their website, and with SLM, it's certified to work with their API.

Q: Mix of retrofit vs new installs and impact of headcount reduction?

A: Still a lot of retrofit work transitioning to subscription models; headcount reduction involved restructuring for customer success, OEM and software integration, with retention of critical engineering expertise.