Greetings, and welcome to the Phunware Second Quarter 2019 Earnings Audiocast. This call has been pre-recorded, so there will be no question-and-answer session upon its completion. I would now like to turn things over to your host, Marcus Chan, Phunware’s Director of FP&A and a member of its Investor Relations team.

Thank you and welcome to Phunware's inaugural Earnings Audiocast presenting our financial results for the second quarter of 2019. I am Marcus Chan, Phunware’s Director of FP&A. Joining me today are Alan Knitowski, Co-Founder, Chief Executive Officer and President; Randall Crowder, Chief Operating Officer; and Matt Aune, Chief Financial Officer. The format today will include prepared remarks by Alan, Randall and Matt. Today’s discussion will include forward-looking statements. These forward-looking statements reflect our current views as of today and are based on various assumptions that are subject to risks and uncertainties disclosed in the Risk Factors section of our SEC filings. Actual results may differ materially, and undue reliance should not be placed on them. Additionally, the matters we will be discussing today may include Non-GAAP financial measures. Reconciliation of GAAP to Non-GAAP financial information is set forth in our earnings press release, which is available on the investor relations section of our website at investors.phunware.com. I further encourage you to visit investors.phunware.com to access not only our earnings press release, but also our current investor presentation, our SEC filings, this pre-recorded Earnings Audiocast and to learn more about Phunware. At this time, it's my privilege to turn it over to Alan.

Thank you, Marcus. Good afternoon everyone and thank you for joining us on our first Earnings Audiocast as a public company. I want to welcome many of you who we have met over the last 10 years and have supported Phunware on our journey first as a private company and now as a publicly company trading on Nasdaq as PHUN. For those new to our story, I’d first like to give a quick overview of what Phunware does, including the capabilities of our platform and our overall business model and strategy. Phunware is the pioneer of Multiscreen-as-a-Service, or MaaS, a fully integrated enterprise cloud platform for mobile that provides companies the products, solutions, data and services necessary to engage, manage and monetize their mobile application portfolios and audiences globally at scale. Phunware helps the world’s most respected brands create category-defining mobile experiences, with approximately one billion active devices touching our platform each month. Founded in February 2009, Phunware helps brands transition from the web to mobile by enabling enterprise-level mobile applications through its MaaS platform, including the software, data and infrastructure needed to support these mobile application portfolios on Apple iOS and Google Android devices, including smartphones, tablets, wearables, smart televisions and digital signage. Our ideal customer is a Fortune 1000 brand that standardizes on our MaaS offerings for all of their mobile initiatives and needs, much like they would standardize on Microsoft Office for their productivity software or Salesforce for their CRM. Over the past 10 years, Phunware raised over $100 million in private financing from notable investors including Cisco Systems, Samsung, PLDT, WWE, Firsthand Technology Value Fund, Wavemaker Partners, Maxima Ventures, Fraser McCombs Ventures, Khazanah and the Central Texas Angel Network amongst many others, while providing Fortune 1000 brands everything they would need to succeed on mobile. We…

Thanks, Alan. Q2 was a continuation of our corporate strategy to grow responsibly while ensuring that we are operationally efficient. Our current strategy actually dates back several years when we exited over $24 million of low-margin application transaction business and focused on backfilling that with higher margin platform subscription and services deals, as well as data enriched application transaction campaigns. To that end, we finished 2018 with approximately $25 million of backlog, which represented a complete replacement of the prior low-margin application transaction business, even though we require one to five years for forward revenue recognition against these contract wins and terms. Throughout 2019, we have accelerated our efforts to reduce our burn rate and streamline our operations, which ultimately reduced our OPEX spend by 11% year-over-year. Our cash used in operations improved 57% quarter-over-quarter as we continue our efforts toward reaching break-even on both operating cash and adjusted EBITDA. Many brands struggle to transition from having a mobile application to having a true mobile strategy because they are managing numerous vendor relationships, with numerous point solutions, that were never designed to be interoperable. Phunware enables brands to power their entire mobile strategy, with a single vendor relationship to ensure accountability and responsiveness. With MaaS, a brand can access all of the proven features and capabilities that we have developed over the past decade to deliver everything you need to succeed on mobile. During the quarter, Frost & Sullivan recognized Phunware with its 2019 North American Company of the Year Award for MaaS. A Frost & Sullivan executive commented: “Phunware extended MaaS to a range of verticals, offering turnkey native solutions to address various industry-specific needs. Leveraging its experience across industries, it created an exceptional ‘one-stop-shop’ suite of offerings designed to appeal to newcomers and incumbents in the mobile space.”…

Thanks, Randall and good afternoon everyone. In addition to our second quarter results, I would like to take a few minutes to share more about Phunware and how we engage with our customers. Our business is geared toward driving platform subscription bookings while building our deferred revenue and backlog. We license our MaaS platform to customers under one to five-year contracts, consistent with a Software-as-a-Service business model, in which we typically invoice annually, prepaid in advance. If a customer engages us to enhance an application with our SDKs, Application Programming Interfaces or custom services, we provide software licensing, application development services and support and maintenance subscriptions which are then invoiced in advance and added to deferred revenue. Revenue is then recognized in accordance with ASC 606, once the company has satisfied its performance obligations. The timing of revenue recognition is determined by the period over which these obligations are met, either on a one-time basis or ratably over time, often representing 12 to 60 months for one to five-year contract terms. We implemented ASC 606 effective the first quarter of 2019. The new revenue standard has allowed us to recognize the application development services at the time of delivery to the customer versus ratably over time as we did under the old revenue standard, ASC 605. We typically pay sales commissions upon bookings, but with the implementation of ASC 606, the costs are matched with the timing of revenue recognition, aligning sales commissions over the period commensurate with the revenue. The net effect of these changes is that we removed $718,000 from deferred revenue, added $369,000 to prepaid expenses for sales commissions and added $1.087 million to accumulated deficit. As a result, we will not recognize $718,000 in net revenues over the applicable contracts’ terms. Backlog represents future amounts to…

We have reached the end of today's prepared remarks. As a reminder, there will be no question and answer session, so this concludes today’s Earnings Audiocast. Please visit and monitor investors.phunware.com for the latest information on the company. Additionally, please visit Phunware executives at the Essex House in New York City from September 16th through September 17th for the Fall Investor Summit. Thank you. End of Q&A: