RYTHM, Inc. Q1 FY2022 earnings call

• Revenue for Q1 2022 was $26M, up 271% y-o-y, with over $43M in new bookings and a total pipeline over $375M. • Extraction division made significant progress with strategic acquisitions, integrating teams, and launching the PX5. • VFU customers are showing strong performance, with one Nevada customer producing close to 50 pounds of dry flowers per VFU annually. • Progress with customer facilities, including beginning SaaS fees for some customers and commissioning VFUs for various TTK projects. • Plan to finance future cultivation facility construction with debt-based investment partners, having entered a term sheet with a first partner.

In the first quarter of 2022, Agrify's revenue was $26 million, which is slightly higher than the guidance of $25.5 million, representing a 271% increase from the prior period. The extraction division had record quarterly bookings of $20 million during the quarter. The cultivation side has contractual commitments of 4,569 VFUs powered by Agrify Insights cultivation and production software. Revenue contribution: Extraction division had $20M in bookings out of $43M total new bookings, and cultivation/TTK has significant pipeline and contractual commitments.

• Reiterated revenue expectation for 2022 between $140 million and $142 million, reflecting a ~134% increase from fiscal year 2021. • Expect more than 60% of projected revenue for 2022 to be achieved in the second half.

• Market risks related to fluctuations in cannabis market conditions. • Supply chain issues and inflationary pressures affecting inventory and construction costs. • Regulatory uncertainties in various markets where Agrify operates.

Q: About floor pricing and market pricing pressure, especially in Massachusetts.

A: Success hinges on customers' success; Agrify helps customers achieve high yields and low production costs, with new TTK programs in selective markets with high premium flower pricing.

Q: On VFU rapid deployment pack and MSO interest.

A: Developed rapid deployment program, leading to increased MSO interests with several more announcements near future.

Q: On TTK build-out timings and cash flow.

A: Treehouse in Nevada to start generating revenues next quarter; Washington and Colorado projects to start in Q3; Bud & Mary's in Massachusetts to start in Q1 2023.

Q: On REIT partnerships.

A: Term sheet signed for one project with capacity for more, structuring carefully to maximize shareholder value.

Q: On inventory investment and working capital.

A: Inventory build related to VFU production investment, with working capital flows to be managed as legacy contracts conclude and new engagements progress.

Q: On backlog and recognition timeframe.

A: Backlog is ~$923M, converting to revenue over 6-8 years.

Q: On REIT partnerships and scalability.

A: REIT partnerships can accelerate execution and expand pipeline once structured correctly, leveraging recurring revenues.

Q: On balance sheet cash burn and funding needs.

A: Ended Q1 with ~$93M in cash, tight but enough to get through 2022, with plans to strengthen balance sheet.

Q: On cost per pound and potency.

A: Average OpEx per pound ~$320 vs industry average ~$450-500, and customers are seeing THC as high as 34%.