Welcome back, everyone. Next, we have Phunware, Inc., trades on the NASDAQ under the ticker PHUN. It is an enterprise software company specializing in mobile app solutions for hospitality, healthcare, and other large property-related customers with integrated intelligent capabilities. Happy to welcome its CEO, Dmitry Kroshka. Nice to see you, Dmitry. We are looking forward to hearing your presentation, whenever you are ready.
Good morning, Anna. Thank you for that intro. All right, let's jump in. Very briefly, let me tell you what I am presenting today. It is what we call Phunware 2.0. It is the reset of the business and the technology into what we believe will take us forward very well in the current market. These are the typical forward-looking statements. You guys probably know them better than I do. They are available on our site. This investor presentation is available on our investors site as well. Let me tell you a little bit about Phunware 2.0 and the transition that we are in the midst of right now. Historically, Phunware built mobile apps with certain features added on. It could be wayfinding, it could be content messaging, and that was the focus of the business.
What we have found is that there is a lot of interest in what we call Phunware 2.0, which is the beginning of a Guest Intelligence Platform. With this platform, all of these components are now modular. There is one platform subscription. AI is at the center of that. We have components that I will get into that allow us to interact with a guest, interact with a patient, speak to them about their needs, build an Itinerary Planner for them, make recommendations, anticipate their needs, and really use that to create a better experience overall and inform the data, the AI we have built at the center, and enable us to really improve both the experience for patients, for guests, for operators, and improve revenue all the way around.
The problem is something that many of you are probably familiar with if you have stayed at a property, if you have had to do a booking. Today, for example, when you book a hospitality experience, you are essentially playing your own travel agent. There is some data out there that says people look at 250 web pages or more to arrive at a trip. Then once you go, what happens? Sometimes the property does not know you. They do not always know your preferences. What do you do if you planned a sunny vacation day and it is raining? All of these things can disrupt that journey. What we are doing is we are connecting where somebody is at the moment, either through their location or through what we see live from the property data systems in terms of what they are doing.
We learn about their preferences, and we basically anticipate and fix the journey as it goes along in real time. Really what we are doing is there is this notion that started 10, 15 years ago that customer service is really reactive and customer success is proactive. What does proactive customer success mean? Well, in software, it means that the more a customer activates on your product, the better their experience, the stickier the product is, the better the opportunity is to upsell. What we are doing is we are bringing that to the guest experience. The more that a guest activates on property, goes to the pool, goes to the spa, uses the gym, plays golf, the more that a guest activates on that property, the greater the share of wallet that that property will retain.
The more the property will learn, and it becomes a feedback loop that continuously improves what we offer to guests, that continuously improves the share of wallet we receive, and continuously improves what that property knows about them. Not only is this about revenue generation, but again, Guest Intelligence Platform is at the heart of all of this. It is about also educating the operator on what makes this work. If you look at the wheel that we have, where we walk through guest intelligence, there is a component of this that you typically do not see, which is the discover section. What is key to our technology, what is key to our interactions, is actually discovering what the guest likes, what the guest needs, anticipating it, helping them discover it, engaging with them, all before we get to a transaction.
If you look at the competitive set, a lot of AI in hospitality is really candy wrapper for a transactional experience. We are really trying to get inside that guest's head to create that better experience, to take the pressure off of staff. Imagine if you are staying at a resort, it is a rainy day tomorrow, and 500 people are downstairs trying to figure out what they are doing. We clean all that up. We make that easy to respond to. We do that primarily in direct interaction with the guest. The guest gets a very real-time experience that helps them. The property has a much better time understanding that guest, anticipating their need, and filling it with minimal work on both parties' part. What does this actually look like when you are moving through the property with our technology is important to show.
We are taking in things like booking, Itinerary Planner, what we think of as the product catalog or the property catalog. Do they have golf? Do they have spa? How many pools? How many restaurants? What is it that makes the property unique? With a resort, it could be the wide variety of options. With an urban tower, it could be what makes that property unique, whether it is the history or it is some of the tours, or any of the other things that connect to that property. We are also taking in things like any preferences we already know about the guest, their loyalty program, et cetera. As they move through the property, we are looking at the POS data. What are they buying? What are they converting on? What is the campaign feedback?
If we push a recommendation that our intelligence engine has to make, for example, "Hey, we noticed that you don't have lunch booked today and the restaurant is filling up fast. May we make you a reservation?" We're looking at all of that, and we're calculating what does this guest need? How else are they interacting? We have an AI Concierge where a guest can say, "Hey, what's the best time to get a spot for golf?" Or, "I need a massage." All of that information we're taking in and we're learning from. We're also mapping it against how other guests interact with our system so that we're able to learn and continuously improve our models. Then any third-party booking data. I mentioned the example of rain. What happens if it rains tomorrow? How do we know that?
Well, we have third-party systems that we're listening to that are telling us there's going to be rain. There could be third-party data enrichment that the property has. There could be system integrators that are pulling in data. We get all of that. We compile that into an intelligent guest profile, and we use that intelligent guest profile to drive the guest experience. Now, we came out of mobile, and I had mentioned this at the intro. Part of that means that for many properties, we can interact either through our app, through their app, through their website, but we can provide notifications, we can do custom content, and of course, we have the recommendation engine. We're moving to integrate with things like digital signage. We can take the data that we are getting from that customer and enrich back into the reservation, into the CRM.
We can do notifications, not just to the guest, but to people operating, to staff on the property. We also plug into CRM and business intelligence systems. Again, if we can enrich that data back, we have data that can help a rebooking campaign happen much cleaner, much more personalized. We can help with some of the orchestration, and we have data feeds that we can push out. Whether that's to an internal stack or an external stack, we have the ability to begin to move all of that and move the needle for these properties. There's an agentic layer that's already proven. We deployed commercially, we were in beta before that, but we deployed AI Concierge to our largest property, almost 4,000 rooms. I believe 30 restaurants, 11 pools, a very large property. We saw incredible adoption there.
We saw 70% of guests using the app interacting with our AI Concierge. Those engagements were 40% above anything that we anticipated. These are helping to move the business forward as we roll out advancements. Our current retention rate for customers is running around 95%. So we hold onto our customers, we bring this added value to them, and we're continuing to do so. Of course, we have this long-term investment in wayfinding, which is what we're known for. The way to think about wayfinding is that it's essentially walking navigation, but it is not only outdoor and relying on GPS. We also have historically used Internet of Things, specifically beacons, to map and identify how somebody is moving through a physical space. That's a very differentiated data set. It's very real time. The interactions with it, such as how do I get somewhere?
I need a burger. Where is the closest restaurant? I am running late to the dolphin swim. How do I get there? All of these things are giving us information on that guest, not only about their interests, but where they physically are on property. Are they walking by the spa a lot? Are they at the pool a lot? We continue to build on this foundation. Even for guests and properties that don't have wayfinding or beacons, we can use other data points, such as did they key themselves into the room? Are they on the property Wi-Fi? In order to identify that they are on property and they are ripe for a recommendation, an anticipatory message, such as, like I mentioned, "Hey, you don't have lunch booked. You don't have dinner booked. Can we go ahead and make a reservation for you?" There is a property that we work with.
It is a very large, well-known property in Wailea. It has had 70% app adoption to help guests navigate a property.
I have six dogs.
It really has been a game changer for the property. It has been a game changer for their ancillary revenue. It is a flagship. We have AI Concierge that we have announced that we are rolling out to it. When you take a look at the competitive set, this competitive set, it is funny. I don't want to call it fully a competitive set because we are actually in conversation with virtually every one of these companies about integrating within them. The integrations flow for a couple of reasons. One, our AI Concierge is built around interaction, not transaction. In other words, the whole point of it is to improve and enable this guest experience. It is to drive higher guest satisfaction. It is not to immediately convert a guest. So you can interact with it in a very human way while still knowing that you are talking to an AI.
You can say, "Where's the nearest burger place?" You can say, "What is there to do on this property?" It can work through your interest with you and guide you specifically because it is an expert on the property. We also, of course, still have our wayfinding module that we are in discussions with many of these brands to integrate with. But between the wayfinding, between the proximity-driven monetization, in terms of knowing the guest is on property, what their interests are, what they are doing, and giving them that offer in real time. We also differentiate, as I said, by being much more experience-focused versus transaction-focused. Of course, the transaction is woven into that. The market that we are in has a very, very strong TAM for us to participate in.
Smart hospitality solutions are growing extraordinarily as operators deal with the crunch of cost for being part of a loyalty program, cost to OTAs for booking. They are giving up a lot of their revenue before somebody even walks in the door. Smart hospitality solutions like ours bring that revenue back, and that is why they are poised for explosive growth in the category. Similarly, as I mentioned, 90% of our technology works perfectly well in healthcare. If you think about navigating complex hospital systems, we are very well-positioned to assist with that. If you think about it, not only from the patient perspective, but also from the physician and staff perspective, some of these systems have tens of thousands of employees. Some of them work with about 70% freelance talent. These are people that are not familiar with the system. They are not familiar with the campus.
We help them move around and do that better. Because we have shifted away from this app model into a platform with modules that can do what you want. For example, in guest experience, we have apps, we have wayfinding. In guest intelligence, we have mobile and location-informed push. We have AI Concierge that interacts with the guest, and we have an Itinerary Planner that can build based on guest preferences, that can build entirely without the guest involved, that can learn from the choices that the guest makes and what they agree to, and can improve that experience. Those are all available as modules, so you could really have it your way. We do have a managed services component. We have a phenomenal history of launching quickly, of taking a lot of burden off of staff.
Not only front desk staff with, "Hey, where do I go? What do I eat?" But also in terms of the staff that manages these guest experiences in the background, marketing, information systems. We take a lot of this burden off and our managed services team can run it. What we are doing with this is not only are we shifting how we price, not only are we shifting to a real SaaS platform, we are also now targeting flags versus individual properties, because we are finding that the conversations take about the same time, and in fact, may be faster with a flag. It gives us a multi-property opening where we are not talking to one, we are talking to 20, 30, 40. It gives us a great opportunity for scale. To do this, we have an extraordinarily strong balance sheet. We are not carrying debt.
We don't anticipate a dilutive event. We are entirely able to self-fund this, and we have many years of runway. To execute this, we've had to change the team around a little bit and bring in some advisors. In our core team, we've added the gentleman to the right of me, I guess, on this, a guy named Nick Farrell. Nick is a very strong hospitality tech sales leader. He's been in this business for over 20 years. He brings a tremendous Rolodex. Although, to be fair, he had to look up what a Rolodex was, which made me feel a little old. But he brings a tremendous Rolodex. He brings strong relationships. He most recently worked for IDeaS, which was revenue optimization. He's also been at Expedia.
He's a tremendous addition to the team, and he's really bringing in both those relationships and real depth of knowledge domain expertise around the industry for us. To build the platform and to expand this offering, we've had to really go out and find some Silicon Valley-level talent. And it's unusual for this category to be able to recruit the talent. We've had a lot of success. The gentleman that's running product for us today, Michael Senda, has an incredible backstory. He was one of the adults in the room. He built at Facebook. He built Facebook News Feed. He also built Disney+, a streaming service, Univision, and he was the Chief Product Officer for Marcus by Goldman Sachs. Aaron Burcell is a storied Silicon Valley marketer and operations exec. He's worked with VCs. He's worked with public company boards. He's got startup exits. He's a tremendous asset.
Michael Crooks comes to us as an expert in the hospitality and AI space. He was a partner at PwC on their healthcare practice. He is helping shape our channel strategy. He is helping to expand our ICPs. And then lastly, Aaron Holloway has been working with healthcare data and healthcare systems for over 20 years. He's also an AI expert. He's coming to us to help shape our healthcare business to help ensure that we are dealing with that data appropriately, and also working closely with our engineering team to make sure that everything that we're building, whether it's hospitality, healthcare, and beyond, is one system with flexibility and modularity. To round it out, we believe that we're very well positioned for growth.
We have AI Concierge, we have mobile informed push, and we're rolling out Itinerary Planner, and that group is really informing and driving our Guest Intelligence. Our AI capability is very much grounded in real skills. Michael Senda has brought an AI forward building process into the company. And if you think about it, there are over 1 billion people today that are using algorithmic products that he's built. We're expanding our customer portfolio by moving from individual properties to flags with multiple properties. And then lastly, our vertical expansion, which we'll announce in greater detail soon. It's taking 90% of what we've built for hospitality, adapting it further for healthcare, and we're already in some major healthcare systems today, and then expanding over into senior living. With that, I'll stop. I want to make sure that we have time for Q&A.
Anna, I think it's over to you.
Perfect. Thank you, Dmitry. Yes, let's see what we can answer today. So let's talk about your latest announcement identifies healthcare and senior living as potential markets for your Guest Intelligence Platform. Are you already conducting pilot programs in these industries, and could the same technology be deployed with relatively little additional development expense?
Yeah. We already are in healthcare systems today. We're in a number of them, and we're now going out to them and beginning the whole pilot program with them. There's some additional development to be done, but it's funny, when I looked at what the incremental cost would be, it's pretty de minimis. That's partly because when we built this, we built it to be modular from the get-go. We're actually somewhat agnostic in terms of the category. We're limiting ourselves to these two and soon to be three with assisted living ICPs verticals simply to maintain focus, not because of a limit on the capability.
Large hotel software providers and AI companies are introducing their own digital concierge and products. What proprietary technology, data integrations give you a competitive advantage? What would prevent a larger competitor from offering similar functionality?
Yeah. I think a number of things that we've observed are that AI primarily in hospitality works two ways. Either somebody is doing something agentic across silos, so optimizing food and beverage, optimizing check-in process, transactional, get me a toothbrush, let me order room service. What we're not seeing is anybody that is looking at the entire story of that guest journey and doing something to improve it. Then again, two, we have this heritage in wayfinding and location-based services. That is a data set that most properties and most technologies don't really have the time to develop. Somebody can go out and build it, but it'll take them a few years to get it right. It's not even a cost issue.
It's really time and volume of people moving through the system issue, and we have the advantage of having done that for years. We're much more focused on what's happening now in that guest experience versus what's happening two, three weeks from now after we crunch the numbers. I think that's a big differentiator. These guys know who the guest is. They know what the guest has booked. We know what the guest wants and what they're doing. That, I think, is the biggest differentiator.
Can you talk a little bit more about that? Specifically, what measurable financial benefits have your customers experienced, and how quickly can a typical hotel recover its investment?
Yeah. We were actually talking about this amongst ourselves yesterday, and what we're seeing is somewhere in the neighborhood from 7% to 20%-plus ROI on the investment into our technology among our customer base. What's important for properties is something called TRevPAR, total revenue per available room. Historically, properties really cared about something called an ADR, average daily rate. I'm getting $200 a night for my room. I'm getting $500 a night for my room. But then when you take out OTA fees, brand fees, et cetera, that number is really pared down. Now they're focused on what is the additional incremental revenue I can get out of every room. With Phunware 2.0 and the integrations we have into booking systems, into PMS, we can now track and report on it, both in aggregate and down to the individual customer level back to the property.
They get that visibility more or less in real time, something that's not readily available today. It takes them weeks to crunch the data in most cases.
Now, you've spent much of 2026 repositioning Phunware around your AI-powered guest platform. What's the timeline for converting this technology into meaningful subscription revenue? If you can, talk about what annual revenue level you believe the platform could realistically achieve. Maybe give us the next two or three years timeline.
Yeah. I unfortunately can't get into that detail right now. We're in a blackout period. I don't want to make forward-looking statements that'll get into MNPI. What I can tell you is this. Since rolling out 2.0, we already have some product built in terms of Itinerary Planner, and starting next week, we are demoing the full platform with the tracking and the metrics to a number of prospects. The number of prospects that have raised their hand are 3X to 4X our current installed base. The traction that we're getting in terms of lead volume since June is at least 10X what we got for all of last year. We have a lot of pent-up demand and we're rolling out demos starting next week and that's the best timeline I can indicate at the moment just given where we are with reporting.
With these developments, will customers pay separately for these products and how much could they increase annual recurring revenue per property once all three are available?
We, again, getting into revenue stuff, but I'll tell you that there is a rough benchmark that you see with these technologies, which is that you're somewhere in a range of $40,000-$80,000, $50,000-$75,000 per property per year, and that is the approximate benchmark for them. Now, again, we're doing multi-property deals now where we're talking to flags and not individual properties. The smallest flag that we're talking to is over 30 properties, and so you can get an understanding of the scale. Right now in our pipeline, thanks to Nick, thanks to other hires on the sales team, we have a pretty significant list of prospects and we're starting to knock them down like dominoes. Again, that starts next week for us. This is very timely.
Can you address the recent proxy filings that the shareholders nominated competing candidates for the board at your December annual meeting? What concerns are the shareholders raising about where you are now and what are you doing to address that?
I think without getting into the proxy, Phunware was quiet for a while and the reason that we were quiet was we needed to align around a vision. In the last year or so, we've done that. We've not only aligned internally philosophically around a vision, we've aligned in terms of funding product, funding marketing, resetting those teams, and so now we're rolling out the story. It's why I'm participating in this conference. It's why we just released a shareholder letter this morning that outlines the strategy and connects all of the dots. Our goal right now is really one, we announce product that we know we can release, which we've done. We did Itinerary Planner in June. We then show a demo very quickly. Again, these AI forward development practices are helping us accelerate.
Four to six weeks we're able to demo product with real code and then at the end of the quarter we begin our pilot work. So far that's happened with AI Concierge. It's happened with Itinerary Planner. We expect it to happen with Operator Console and we report all of this via PR to our shareholders so that they are aware every step of the way. I think if I were to have a critique is that Phunware was quiet for a while. We were quiet because we had to rebuild and retool. Now we're coming out. This is our debutante ball, so to speak.
Lots of finance questions, but let's talk about your expansion. Are you currently negotiating any multi-property agreements you can mention?
Multiple. In hospitality it's difficult because brands have locked down messaging very tightly. What I can tell you is that we are in discussions with four multi-property flags. I hope to announce at least one of them soon. These are really interesting because, again, they're a divergence from what we've historically done. Historically, we've had a very large install into one property. That becomes almost an enterprise sale. It takes a long time to close. With Phunware 2.0, we're getting to the conversation much more quickly. The smallest of the property groups, I want to stand corrected, is actually 20 properties, but it's a premier brand. That allows us to deploy in modules. That allows us to pay off what I'm talking about here in terms of how we're structuring our agreements.
I'm also happy to say that now when we are doing our renewals, we've had success in raising rates year-over-year because we're now really providing incremental value on top of what we historically did to the platform. I think this is good news for shareholders. I can't announce a lot. Again, we're in a blackout period, but as these deals come live, we will again let all of our shareholders know via PR. We'll let them know the specifics of those deals.
Perfect. Well, thank you so much, Dmitry, for your time with your presentation. We would love to have you back on the conference and follow along with your journey.
Thanks Anna. Pleasure.
All right, everyone, stay with us. We will be right back.