Hello, and welcome to Presto Automation First Quarter 20 24 Earnings Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. You will then hear an automated message advising your hand is raised. I would now like to hand the conference over To Guy Laferreux, you may begin.
Thank you. Good afternoon, everyone. I would like to welcome all of you to the Presto Automation Fiscal First Quarter 2024 Earnings Conference Call. Today's call will include recorded comments from our Chairman, Krishna Gupta Our Chief Executive Officer, Xavier Casanova and our Interim Chief Financial Officer, Nathan Cook. After the recorded comments, we will open the call for questions.
A replay of this call will be made available and information to access the replay is listed in today's press release. Before we Again, I would like to remind everyone that during today's call, we will be making forward looking statements regarding future events and financial performance, including our guidance for fiscal Q2 2024. These forward looking statements are subject to known and unknown risks and uncertainties. Presto cautions that these statements are not guarantees of future performance. We encourage you to review our most recent reports or any applicable filings Finally, we are not obligating ourselves to revise our results or these forward looking statements in light of our new information or events.
Also, during today's call, we will refer to certain non GAAP financial measures. Reconciliations of non GAAP Two GAAP measures and certain additional information are included in today's press release. This press release can be viewed and downloaded from our website. And with that, we'll begin by turning the call over to our Chairman, Krishna Gupta.
Can everyone hear me?
Yes, we can hear you now.
Perfect. I'm speaking to you today not only as the Chairman of Presto, but also as its founding investor and of course its former CEO. I've seen this company go through many phases of change and growth. However, I have greater conviction in Presto today than I've ever had before. And the proof is in the pudding.
Last week, I led a Remus Capital affiliated syndicate of investors to make a further $7,000,000 investment in Presto, I speak to them all the time. It's also clear to me that we are rapidly accelerating our commercial progress at Presto to extend our market leadership position. And for me, that's most visibly shown by the $17,000,000 number we cite as immediate revenue opportunity in franchisees or brands That we have already signed, but not yet installed. So I've said it before and I'll say it again. I believe Presto is one of the most immediately actionable and scalable vertical applications of AI today, even though I know it will take some time to reflect in the numbers.
The market for automated solutions in the restaurant industry is shifting from a lead adopter to a fast follower 1, which gives me incredible optimism and energy. As part of our investment, I brought on a couple of entrepreneurial operators to the Board in a way that further aligns us towards growth and maximizing shareholder value. I want to turn my attention to our CEO, Xavier, whom I've worked with over the past 4 months since his appointment as CEO. I've watched Xavier hone the management team, the product, the business approach to ensure that we are ideally positioned to capture the immediate opportunity in front of us that I alluded to earlier. I look forward to working in partnership with him to execute our plans at lightning speed and ultimately deliver maximal value for our shareholders.
With that, it's my great pleasure to introduce our CEO and my friend, Xavier Casanova.
Thank you, Krishna, and thanks to everyone for joining our fiscal Q1 earnings call. Even that I have been previously the Chief Operating Officer of Presto, I know this business well. I have directly witnessed the improvements that our AI and automation solutions make to our customers' businesses and their guests' These experiences energize and empower me as CEO as we look ahead over both the near and long term. I echo Krishna's view that this is an incredibly exciting time for Presto. The market opportunity for Presto Voice It's enormous, and we have every intention of leveraging our market leading product to take advantage of this opportunity.
The key theme of the last quarter has been momentum. We've delivered a game changing shift in sales, deployments And technology advancements in a systematic manner, which sets us up to deliver on our ambitions of 2024. I will provide further detail on all three of these as I provide my business overview. Over the next few minutes, I intend to cover the following. 1st, a recap of the plans I laid out in our last earnings call and the progress we've made In delivering against those aims.
2nd, an update on the business achievements over the last quarter as well as the market opportunity available to us. And finally, an overview of our plans and ambitions for the year ahead. It is incredibly important to me that we deliver against the targets and ambitions that we communicated to our customers and investors. So when I last spoke to you a month ago, I outlined my robust plan for the business, which had 3 key goals: Scale the press to voice business in a sustainable way, continue to engage with the customer base of leading restaurant brands and their guests And focus on reducing our operating expenses and cash burn. And I am proud to say that We've already started delivering against all three of these.
Let me first talk about scaling Presto Voice. As I mentioned before, we've seen a step change in the scaling of our voice business over the previous quarter. So far this quarter, the sales team led by our brilliant Chief Revenue Officer, Justin Foster, has signed 4 new franchisees With a total of 365 locations, we've fully expanded. They've also signed 1 major corporate pilot With over 2,000 global locations, where Presto is the sole vendor. This progress indicates the size of the revenue opportunity within our existing customer base And the pace at which we will be able to add to our pipeline of future deployments.
What's more, Our speed of deployment at new locations has increased significantly in the past few months. Under the leadership of my fantastic colleague, Catherine Lofman, Fred. The operations team has accelerated the pace of new store deployments in a materially meaningful way. We are now deploying a new store every business day, and we expect this pace to accelerate further in the months ahead. A lot of success has come from a significant reduction in the lead time to installation and the introduction of new hardware.
Just recently, we successfully went live with a new franchisee inside 15 business days. Previously, it has taken us months to get from Signature to go live. The combination of the progress we've made in both sales and deployments As contributed to the fact that our voice product is now live in over 400 locations across the United States. With a healthy pipeline of new deployments currently being executed on. So now let me turn to reducing operating expenses.
While we aggressively pursue the substantial market opportunity available to us, it is also essential that we ensure the business is run in an efficient and strategic manner. We're dedicated to ensuring that your investments in Presto or carefully deployed to deliver maximum shareholder value. With this in mind, over the past 2 months, We have executed on a clear and rigorous reduction in our operating expenses, while at the same time delivered accelerated growth as outlined above. As a result, we've now reduced our global full time employee base by approximately 17%. This initiative, along with other cost saving measures, will reduce expenditures by around $400,000 per month, Rising to approximately $1,200,000 per month in the middle of calendar 2024.
These reductions will not impact our scaling of Presto Voice. Now let me turn to the business and market opportunity I'll provide you with further details on why we're so excited about this opportunity for Presto Voice. There are about 130,000 drive thru quick service restaurants in the United States. Approximately 56,000,000 people in the U. S.
And Canada visit dry through daily, with the average American spending 1,000 And $200 annually at the drive thru lane. These QSR restaurants are and will continue to be a core part of American culture. However, while robust and growing, the QSR industry faces a myriad of operating challenges, including increasing labor costs, which have historically accounted for 30% of sales in restaurants. The other major challenges the industry faces Or the need to generate higher average order values through upsell and the need to achieve higher efficiency in drive thru to enhance The guest experience and increased revenues. Presto Voice solves these challenges and drives ROI for our customers Through lever optimization, additional revenue through upsell and decision and accurate order taking.
The combination of these customer benefits and the sheer scale of the North American QSR market are the core reasons Why the addressable market for Presto Voice is estimated to be in excess of $3,000,000,000 annually? Of that $3,000,000,000 we estimate that our current approachable revenue opportunity is over $100,000,000 annually. That estimate represents the total revenue from locations of restaurants, groups with which we have a master service or pilot agreement, But we do not have yet deployed PRAZTO voice. The point about this is that it demonstrates both the success of our sales team today, But also the exceptional near term defined revenue opportunity, which exists in this market for us to target. Capturing this opportunity will be made possible through our market leading technology, which comprehensively addresses the key challenges of restaurant operators And seamlessly integrates into the restaurant's existing technology stack.
Turning to our plans for 2024. We're seeking to accelerate our rollout of Presto Voice across locations that are both expandable and approachable Through existing agreements with both restaurant groups and franchisees, our goal for 2024 is to be deployed At over 1200 rescue locations, growing to more than 2,600 by the end of 2025. What gives me great confidence in this growth strategy is the acute needs of the QSR industry, the quality of our technology solutions And the continued support of our investors. With that, I would like to hand it over to our Interim Chief Financial Officer, Nathan Cook, To review our financial performance for Q1 2024.
Thank you, Xavier. And once again, thank you everyone for joining us today. It's a pleasure to speak with you today as the Interim Chief Financial Officer of Presta Automation. I joined the team last month And I look forward to building on the strong trajectory Presto is on and helping to scale the business. Today, I will walk you through our fiscal 1st quarter results and then cover our guidance for fiscal Q2 of 2024.
I will talk about certain results on a non GAAP basis, And we show reconciliation to GAAP measures in our recent press release, which is available in the Investor Relations section of our website at presto.com. For the fiscal Q1 of 2024, we reported revenue of $4,900,000 which is in line with the previous guidance of 4.8 to $5,000,000 Breaking out revenue, platform revenue decreased to $2,100,000 as compared to $4,800,000 from a for the prior year comparison. The decrease is primarily attributable to lack of upgrades to the Presto Flex by certain franchisee customers with the corresponding lack of hardware revenue that would be associated with those contracts. It should be noted that this Decline was expected and factored into the previous guidance. Transaction revenue decreased to $2,800,000 in Q1 as compared to $3,000,000 for Q1 of fiscal 2023.
This is primarily attributable to contract terminations by certain franchisee customers of existing enterprise and small business customers, partially offset by increases in pricing for our gaming fees. This decline was also expected and factored into the previous guidance. Q1 fiscal 'twenty four operating expenses were $13,500,000 compared to $14,700,000 for Q1 in the prior year, down primarily from a decrease in salaries and employee benefits expenses as a result of the decrease in headcount. And as previously mentioned by Xavier, we have taken strategic steps over the past year As well as in just the past week to reduce operating expenses and our cash burn. This is part of our goal to get the business to profitability combined with voice fueled growth.
We will continue to focus on closely managing our headcount and vendor costs, along with the streamlining of our operations to allow us to maximize the rollout of new voice AI locations. On an adjusted EBITDA basis for the quarter, We had a loss of $8,800,000 compared to a loss of $8,900,000 in the same quarter last year. And lastly, now I'd like to finish with our guidance for our Q2 of fiscal 2024. We expect fiscal 2nd quarter 2024 revenue to be between $4,800,000 $5,000,000 That concludes our prepared remarks. Thank you all for joining us today and we look forward to continuing the dialogue as we move forward through the remainder of fiscal 2024.
With that, Xavier, Christian and I are ready to take questions. Operator, please open up the lines for any questions.
Thank you. Our first question comes from the line of Mike Latimore with Northland Capital Markets. Your line is open.
All right, great. Thanks very much. Yes, it's great to see the deployment acceleration there. Can you just elaborate a little bit more Why that's occurring? How much do you have to devote more resources to this?
Or is it more from your customer side? And if it further accelerates, what are some of the drivers of that?
Yes, I'll take that question. Thanks For your question, Mike. So I think the speed of deployment is something that we've been focusing on for quite some time now. But finally, we're I think benefiting from all these efforts in speeding up the deployments, how many locations we can deploy on a weekly basis. And 3, the result of I think 3 key initiatives.
Number 1, we've invested in our processes And making sure that when someone is ready to sign, we can bring them online on our solution much quicker than ever before. So I mentioned Earlier that, it now takes 16 days, 16 business days between the signature of a contract with the franchisee And seeing their first location go live. And that's in part due to better processes and better resources internally. The other important aspect of this is that we've made some pretty good improvements to our hardware. Our hardware is More stable and more compatible with the assistance of a typical drive through and that helps, because you Definitely, when I come up with some sort of cookie cutter process and hardware for bringing those locations online, and that was a big part of it.
And then finally, we have a healthy backlog of locations to install. With these new franchisees that we signed Over the quarter, the backlog is going to continue to improve and that really helps with the pace of deployment.
Great. And then I think, the other plan is to improve automation by Over time, but I think getting it up to 50% by June of 'twenty four. I guess what gives you confidence And being able to improve the automation, is it just internal R and D or is it just having more interactions on your platform for training models or Like how do you get confidence in the further automation here?
Again, I think it boils down to 3 things. So first of all, our investments in AI are again paying off. We learned a lot over the last 18 months in building our AI NLU And integrating that with the HITL human in the loop component of our solution and that is paying off. I would say the other thing is the accumulation of data that we use also as a way to train the AI Even further and make it more and more efficient over time. And then I would say also the experience that we had with our systems Currently processing orders live on a limited basis autonomously.
And so We think that we will be able to increase the accuracy over time, up to the level you mentioned and also make this solution scalable to the All the locations that we have deployed.
Great. And just last one, I think you've mentioned Being at 1200 plus stores by the end of 24, just wanted to confirm you mentioned that. And then does that equate to $25,000,000 or so of ARR or how should we think about the ARR level at that store level?
Yes. So the $1200,000,000 number is The target number for the number of installed locations for Presto Voice by the end of 2024, we're Quite focused on that and relatively confident we'll hit that number based on the traction that we're seeing. We have A few things that are helping us, especially here in California, and these new laws that are increasing the minimum wage And putting a lot of pressure on these operators to adopt technology to further automate their drive through. And then I'll say that when it comes to revenue projections, We do not share forecasts for the year. The numbers For the company are basically up to you.
We will do everything we can to target
Our next question comes from the line of Brian Dobson with Chardan Capital Markets. Your line is open.
Hi, good evening. So you undertook significant workforce Reduction as you raised capital. Did your investors dictate that you take that action before they committed that capital?
No, no, they didn't. So these changes, these operational reductions in operational costs Our very thoughtful step the management team took to really align the business with The future growth and our future needs. We're focused on Presto Voice. This is our future. We continue to invest in more R and D, more deployment processes and really Prepare the business for 2024 2025, which is going to these 2 are going to be big years for us.
Yes, excellent. And I certainly agree that voice is the future of the company. And I guess To that point, do you think that you could give us a little bit of color on the level of human intervention in your voice AI product And how you expect that that might change over the next year? And also do you have as you see it now, do you have the capital necessary to continue to improve that product?
Yes, good question. So, as you know, our solution uses a hybrid of AI automation and then humans in the loop to deliver the maximum accuracy in terms of taking orders at the drive thru. And this is important Because our customers really value the accuracy of our solution and then the speed of service. This is really important for them and it's important for us. So over the last 18 months, we've been investing in bringing more and more AI to do the automation End to end and take orders autonomously.
At this time, less than 30% of the orders are taken autonomously by the AI. This is something that's improving and we're targeting about a 60 actually a 50 percent automation rate autonomously, I think, by the end Of the Q2 calendar quarter for 2024. And this portion is going to keep increasing over time as the AI gets better And also as we're more efficient in allocating those human resources to work with the AI.
Yes. And how do you expect margin To change as you are either scaling back on your human Intervention resources or you're simply not needing to grow those as you add new restaurants?
Yes. So we're expecting margins to improve as the need for Humidase is less and less. And there's two levels of Margin improvement. 1 is the efficient allocation of those human resources, right. You want to be Efficient in using labor that is not too expensive, but also allocating resources properly Across a wide range of stores.
That's one. And then the second one is you want to use the AI to take more and more orders Autonomously and then over time and I think we calculate this internally as something that we'll achieve within the next 2 years. Over time, reach traditional gross margins that you expect from a company in our space.
Yes, thanks. And then do you think you could give us an update on Client renewals within the touch business and how you feel about That unit as you're heading into your end, this would be your lender agreement?
Yes. So as you probably saw from our previous filings, we have 3 main customers on the touch side. One of them, the contract ends on December 31st this year, 2023 calendar 2023. 3, this customer has asked for an extension till the end of March of 2024. Then we have another client Whose contract is coming for renewal at the end of February of 2024 calendar.
And then finally, a third client that's Also extended until June of 2024. We have a pilot for our Flex hardware For that last client, we also have a client, like I said, 2 of our 3 clients that have already asked for extensions. For us, the important thing right now is to focus on voice, focus the company on voice And really decide how to what path to take to maximize shareholders' value On the touch side. And so we're considering a number of options. We still have not adopted a specific alternative.
What we know is that 2024 is going to be the year of Presto Voice and that's really how we're thinking about resource allocation at this time.
Right. Your agreement with Metropolitan Partners will require you to wind down that business if you don't get all 3 of them to renew by the end of the year, right?
Yes. So if I can just jump in for a second there. I mean, I think our agreement with Metropolitan requires us to have a plan to sort of Address the touch business, I think everyone understands that with limited resources at the company, we need to make some choices and invest in voice. But I think we are ultra focused and I think Metropolitan is in agreement here that we want to maximize value for shareholders. And there's a lot of different paths Doing that, we have a great product, Inflex.
We have a product that I've spent a lot of time talking to customers with that really want the product. And so how can we sort of enable that value proposition to flourish in a way that maximizes shareholder value without distracting us Or taking away resources from PrestaVoice is a question of strategy and corporate finance, and it's something that we're walking through and working through right now. But it is a sort of joint strategy that we've developed with the Board as well as with Metropolitan.
Yes, very good. Thanks for that color. And how long will you have to develop that plan if that third client doesn't renew by year end?
I think we are I believe there's no time like the present. We have very high conviction in what we need to do both at voice and at touch, And we are in the process of executing against that, and I'm sure you'll hear more from us soon.
Great. Thanks very much.
I'm showing no further questions in the queue. I would now like to turn the call back over to Guy for closing remarks.
Thank you very much. So that concludes the Presto Automation fiscal Q1 2024 earnings conference call. Thank you all for your participation, and we would encourage you to please do refer to our latest press release for further details. Many thanks, and good evening.
Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.