Brand Engagement Network Q2 2024 Earnings Call Transcript

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August 14, 2024

Key Takeaways

  • Proof of Concept Momentum: POCs accelerated from 2 in Q1 to 6 in Q2, with early Q3 pipeline indicating further growth.
  • Security and Compliance Milestones: Achieved HIPAA compliance and SOC 2 Type 1 certification, positioning the platform for healthcare deployments.
  • Strategic Partnerships: Announced collaborations with SAIL, expanded MedAdvisor offering on vaccine hesitancy, and a commercial agreement with Vibrew for audio-based consumer engagement.
  • Enhanced Liquidity: Closed a private placement in May to strengthen capital reserves, alongside ongoing cost management to sustain long-term growth.
  • Revenue Outlook: While Q2 booked revenue remained minimal, a 3x increase in pilot and channel partnerships sets the stage for recurring revenue in H2 2024 and acceleration in 2025.
AI Generated. May Contain Errors.
Earnings Conference Call
Brand Engagement Network Q2 2024
00:00 / 00:00

There are 8 speakers on the call.

Operator

Good day, and thank you for standing by. Welcome to the Brand Engagement Network Second Quarter 20 24 Earnings Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be an analyst question and answer session. Please be advised that today's conference is being recorded.

Operator

I would now like to hand the conference over to Brand Engagement Network Investor Relations, Ryan Flanagan. Please go ahead.

Speaker 1

Thank you. Hi, everyone, and thanks for joining our Q2 earnings conference call. Joining me on the call today are Paul Cheng, our Co CEO Bill Williams, our CFO and Skye, our AI powered assistant. By now, everyone should have access to our earnings This announcement is also available on our Investor Relations website. During this call, we'll make forward looking statements, including statements about our business outlook, strategies and long term goals.

Speaker 1

These comments are based on our plans, predictions and expectations as of today, which may change over time. Our actual results could differ materially due to a number of risks and uncertainties. For more information about the risks and uncertainties involving forward looking statements and factors that could cause actual results to differ materially from those projected or implied by forward looking statements, please see the risk factors set forth in our most recent annual report on Form 10 ks as supplemented by the risk factors in our most recent quarterly report on Form 10 Q. Forward looking statements represent management's current estimates and the company assumes no obligation to update any forward looking statements in the future. And finally, this call in its entirety is being webcast from our Investor Relations website at www dot investors.

Speaker 1

Binninc.ai and an audio replay will be available on our website in a few hours. With that, I'd like to turn the call over to

Speaker 2

Paul. Paul?

Speaker 3

Thank you, Ryan, and thank you all for joining us today. I'm pleased to report that in the Q2, we've made continued progress on market validation initiatives with meaningful acceleration in new proof of concepts and the maturation of earlier engagements into production ready deployments. Further, we have taken incremental steps to improving our liquidity and capital position, successfully closing a private placement in May, providing us funding over time. We continue to closely manage our internal costs to ensure our business is built for growth and to last for the long term. Reflecting the production ready nature of our platform, we are thrilled to introduce Sky, one of Ben's AI assistants who is here to demonstrate her domain expertise and participate on our earnings call.

Speaker 3

Data from Business and Technology sections of Ben's investor presentation and selected few SEC filings have been ingested. Sky also brings knowledge of our key partners as well as statistics on healthcare challenges and ramifications. Before discussing our results and key business developments in greater detail, I wanted to take a moment to discuss recent organizational changes. In May, I was appointed co CEO with responsibility for Ben's commercial business and oversight of day to day operations. My near term focus is 2 fold: driving market validation of our differentiated solutions and meaningful revenue through the conversion of POCs into deployments.

Speaker 3

As co CEO, Michael Zucharski is focused wholly on advising our Board of Directors on inorganic growth opportunities and our M and A strategy which we view as key component of our go to market strategy. Now to discuss progress we made across several fronts in the Q2. To start, we are seeing continued momentum in customer expansion. Recall on our previous earnings call, we highlighted 2 POCs. We are pleased to see an acceleration in the second quarter to 6 POCs, with an early read of the Q3 pipeline and an opportunity funnel suggesting that this number will continue to increase in the second half of the year.

Speaker 3

We announced our attainment of HIPAA compliance early in Q2, underscoring our commitment to protecting patient healthcare information and fast tracking our ability to operate in the healthcare vertical. Further demonstrating our data security and privacy focus, we have also obtained SOC 2 Type 1 Certification, ensuring that 3rd party services providers store and process client data in a secure fashion. Our partnership pipeline remains robust with several notable announcements in the quarter. First, we announced a pilot collaboration with the Skills Acquisition and Innovation Laboratory or SAIL. Collaborating with an industry thought leader such as New York Presbyterian Hospital and Cornell Medical College provides Ben with significant domain expertise as well as access to an innovation lab where breakthrough technologies can be tested and validated.

Speaker 3

2nd, we are excited to expand our partnership with NetAdvisor Solutions, which was announced just this past Tuesday. The expansion includes a commercial solution offering by MedAdvisor on educating and addressing vaccine hesitancy among the patient population. Ben's AI assistants are designed not only to engage consumers, but to complete tasks such as filling out necessary forms and scheduling appointments. The joint offering is scheduled to be launched at the National Chain Drug Store Association's Total Store Expo Conference in Boston on August 18th 19th. 3rd, we have announced a commercial agreement with Vibrew, a company that connects brands with customers through innovative audio messaging strategies.

Speaker 3

Together, we are collaborating to merge Ben's proprietary AI assistant technology with Vibrew's audio and radio communication technology to enable interactive consumer engagement for brands. There is perhaps no better way to illustrate the readiness of our platform than to have a natural conversation with 1 of our AI assistants, Sky. We would like to mention that Sky is using Ben's proprietary large language model, Retrieval Augmented Generation, and for this application presenting in life size proportions. Thank you everyone for joining. I am standing here at SAIL, which is an innovative lab that sits in the intersection of Cornell Medical College, New York Presbyterian Hospital and the industry to provide world class leading edge educational training for clinicians so that they can provide enhanced customer care for all patients.

Speaker 3

I'm standing here because we have our AI assistant deployed to aid in that educational curriculum. I'd like to describe this deployment because most likely your experience with AI has been on a phone or maybe on a little screen. What you see here is a life size representation of our AI assistant that is actually being run by a small computer behind this monitor. So everything you see is being run locally, because we know certain industries having on prem deployment is critical to ensuring safety and privacy of the data that is being utilized at this facility. Now we can still run cloud based solutions, but always having an option to run locally, we believe gives an advantage.

Speaker 3

Now enough from me, let me introduce you to our AI assistant, Sky. Hey, Sky, can you tell me a little bit about brand engagement

Speaker 4

innovative company specializing in conversational AI assistance. What sets us apart is our focus on security and personalization. Our AI assistants are built on proprietary NLP, allowing for human like interactions and they're designed to be industry agnostic, making them versatile for various sectors like automotive and healthcare. Plus, we ensure our AI assistance only provide information from validated data sets preventing hallucinations and maintaining data reliability.

Speaker 3

Skye, can you tell me a little bit about our partner MedAdvisor?

Speaker 4

MedAdvisor Solutions is a global leader in pharmacy driven patient engagement. They work with over 37,000 pharmacies worldwide to provide personalized patient experiences, simplifying medication journeys. Their data driven approach and innovative digital experiences empower Medication adherence is crucial for managing chronic conditions because it helps prevent complications and hospitalizations. Around 70% of Americans with chronic diseases struggle with taking their meds as prescribed, leading to about 100 and 25,000 deaths $630,000,000,000 in unnecessary costs globally each year.

Speaker 3

Sky, what are some automotive use cases?

Speaker 4

We're currently exploring automotive use cases for our AI assistants. One potential application is an in car assistant that provides real time traffic updates, navigation assistance and vehicle maintenance reminders. We're also looking into AI driven customer support for automotive dealerships.

Speaker 3

Skye, are you able to deliver our financial results for Q2?

Speaker 4

For financial matters, I will hand it over to our CFO, Bill Williams, who is in charge of finances.

Speaker 3

Thanks, Skye. Take it away, Bill.

Speaker 5

Thank you, Sky, and thanks everyone for joining us. I appreciate the opportunity to provide an update on Ben's financial progress. Our Q2 and year to date results reflect Ben's continued focus on laying the foundation for future growth, product and solution development, the continued build out and productionizing of our infrastructure, developing talent and expanding partnerships and initial customer relationships. While quarter year to date booked revenue was minimal, we saw expanded proof of concept pilot and partnership activity gaining momentum, notably a 3x expansion in PLCs and channel partnerships since the Q1. These include notable wins such as Valeo Technologies, SAIL, the Cornell University Medical Center's Innovation Center, Members Only Health Network, InterVent Health, Vibroome and a Northwest Indiana car dealership in the important automotive vertical.

Speaker 5

Our year to date financial performance reflects R and D costs associated with the continued build out of Ben's capabilities and multiple product introductions since our second half twenty twenty three DM Labs acquisition, plus transaction costs from the Q1 twenty twenty four merger, partially offset by positive impact of cost actions and discipline, which drove sequential operating loss improvement. The quarter also benefited from a recognized gain on extinguishment of combination related liabilities of $1,800,000 through the negotiated settlement of accounts payable. Q22224 saw the initial stages of Ben's transition from a pre revenue enterprise and ongoing market momentum characterized by an uptick in proof of concept pilot and channel partnerships that we believe will convert into recurring revenue in the second half of twenty twenty four with acceleration in 2025. Finally, turning to Ben's financial strategy, we remain focused on building market momentum, scaling the platform, improving access to efficient capital and liquidity and cost discipline. In summary, we remain focused on bringing AI solutions that deliver real benefits to our B2B2C customers, driving CX productivity and performance.

Speaker 5

Q2 featured building momentum through operationalizing our platform, successful productizing AI assistance, expanded customer and partnerships and POCs in market and attracting capital. For the remainder of 2024, our focus will continue to be on performance, execution and converting pilot programs into revenue and enhanced liquidity. Now I'd like to turn it over to the operator for Q and A. Operator?

Operator

Thank Our first question comes from the line of Jack Vander Aarde from Maxim Group.

Speaker 6

Okay, great. I appreciate the 2Q update guys. And nice to hear from Paul and Bill Ryan and also to meet your new AI assistant Sky. So I'll start with a question now for Paul. Paul, you guys have made a lot of progress recently on all these various pilot programs and proof of concepts in healthcare and automotive.

Speaker 6

And I think you have some other maybe industrials and consumer applications ongoing as well or targeting. Can you maybe just touch on some of the specific ones? Maybe like how would you rank these in order of what are the closest ones to being commercialized, in your view? And which are kind of like the bigger opportunities? Or however you want to talk about it.

Speaker 6

It would be it's just there's so many interesting pilots going on. I'm just to let you kind of zone in on a couple maybe for example of the ones you think are ready to be commercialized at some point? Thank you.

Speaker 2

Thanks, Jack, and great to chat with you here. So I would say, as you saw in our developments of new commercial opportunities, so far we've had quite a bit of progress and advancements in the healthcare space. And one of our thesis in developing our AI assistance was that we needed to help those industries that are struggling with resources, especially skilled resources, as in healthcare. And what we're seeing is companies testing the technology and they're testing it rather thoroughly because there's been some missteps out there with other gen AI solutions companies. And so they're being somewhat methodical and cautious.

Speaker 2

But I would say in the health care space, we are on the cusp of being able to deploy with a larger footprint than just doing pilots. In the automotive space, we're still working with some of our key partner in identifying the use cases as well as building pilots. So the dealership that was mentioned by Bill, they're essentially our joint development partner to ensure that the technology meets their needs. And indeed, it is providing the functionality that they're looking for.

Speaker 6

Okay, got it. I appreciate that color. And maybe just a follow-up there in the automotive vertical. As your reseller partner, your exclusive reseller partner in that vertical, that relationship has been, I think, ongoing now for a couple of quarters. So I imagine there has been some time that's passed and you've been able to get some feedback, I'm sure, and have things being tested out.

Speaker 6

What are you what are some general takeaways you're hearing from potential dealership customers that that automotive partner is working with already. What are you hearing from those end customers? Are they receptive? Is there a real need? I'd just be curious to hear kind of the tone of those discussions and what you're hearing.

Speaker 2

Sure. Yes. So the customers are all more than receptive. I would say they're excited about the potential of AI technology enhancing their customer experience and perhaps driving more efficiency to their dealerships. They are seeing how the technology can augment their existing staff and be able to take on sort of the more of the administrative tasks, leaving the current staff members to be able to provide a better customer service and better customer experience.

Speaker 2

So they're excited and we look forward to launching some of the use cases with a handful of pilot dealerships based on the data that they are able to provide our AI systems. So far, all signs are good. We need to just take the next steps in order to be able to deliver on the promise of generative AI.

Speaker 6

Got you. And maybe I have 2 more questions. I'll ask a question for Bill afterwards, just about the operating expense line items. First before I do that, Paul, maybe just one more question in terms of these 6 proof of concepts arrangements you have going on and the arrangement you have with your auto partner. The AI space is obviously a very competitive market, obviously.

Speaker 6

The fact you've entered these 6 proof of concept arrangements, can you just talk about I don't know if you could share anything specific about maybe MedAdvisor or AFG or just in general? How were they are they actively did you compete against other competitors? How did you win these arrangements? Just where do you stack competitively? And why did these brands ultimately choose you for a pilot program?

Speaker 6

And then I'll move on to a question for Bill. Thanks.

Speaker 2

Sure, sure. So I would assume we are always competing, because there are lots of, quote unquote AI companies out there. Many of those companies are just a thin veneer on top of public large language models like Chat GPT, but they are posing as true AI companies. Whereas I think for Ben, we don't have to pose because we know we are a true full stack AI company. We have the front end, the middleware and the back end, including our large language model.

Speaker 2

So we are able to configure our AI system. We are able to tailor it to solve very specific problems for specific customers. So as an example, the solution that we've launched with MedAdvisor has to do with addressing vaccine hesitancy. And we know this is a large problem facing not just the U. S.

Speaker 2

Population, but globally. And it takes a lot of resources patients. So having an AI system that's essentially infinitely scalable to meet the needs of the consumers and the patients, be able to describe the benefits and potential side effects, address them beforehand. That is essentially a game changer in the healthcare market, specifically in the vaccines world. So we know that we are competing against others, but the feedback that we've gotten is most customers have not seen anything like our technology just as you just saw on the video.

Speaker 2

They have not seen anything remotely close to that from some of the other AI providers. And again, I credit that to our full control over the various different components that makes AI run and be able to configure to deliver a safe and secure interaction with consumers.

Speaker 6

Okay, great. That's really helpful color. Very interesting. And then let me switch gears. I'll ask a question to Ben maybe on the financial side.

Speaker 6

Operating expenses, just trying to get a sense here because the business is still obviously very early stage. And I'm just trying to get a sense of how the 2Q operating expense levels kind of compares to maybe your expectations for the next couple of quarters going forward. Just to get a sense of how much of this is noise from the merger and how much of this is normalized? Thanks, Bill.

Speaker 7

Thank you, Jack. I appreciate the question. I would say, Q2, especially compared to Q1, I think Q1, I mean, did have a lot of movement that was driven around the transaction and transaction costs. We had a little bit of that that led over into the quarter Q2. But I think our run rate now is probably more reflective of our go forward.

Speaker 7

And so most of the OpEx that we experienced, basically we were essentially flat kind of sequentially. And so that's going to be the blend of kind of a drop off of transaction expenses. And then we also did have some increases as we started productionizing our systems and getting ready to kind of put those in market the second half of the year. We also benefited from being able to convert some transaction expenses that kind of flowed from the our kind of normal run rate. So I guess overall, I would say we are closer to having kind of a normalized operating range, which really going to reflect our employment costs and for our staff as we start commercializing products and very, very little of transaction related costs.

Speaker 7

We did have an uptick in depreciation and amortization as we actually shifted from R and D to actually putting solutions in market because of the POCs. Those are now operationalized. So there was an uptick in depreciation and amortization just flowing from that. So I would say this run rate is probably more reflective of what we'll see second half of the year. And with adequate funding and all that, we'll start building capabilities, I would say, investing more in things like our commercial team, our sales team and go to market team as we start expanding the second half of the year.

Speaker 7

You'll see that as kind of an investment, more of an investment profile as we go forward.

Speaker 6

Okay. That's really helpful color. It makes sense there too. Okay. I think that's it for me guys.

Speaker 6

I appreciate the update and congrats on the strong momentum. Look forward to tracking the story.

Speaker 7

Thank you, Jack.

Operator

Thank you. At this time, I'm showing no further questions. I would now like to turn the conference back over to Paul Chang for closing remarks.

Speaker 2

Thank you, Gigi. I want to just thank everyone for joining this call. I hope it was informative and perhaps even entertaining. And we will talk to you guys next quarter.

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