Zapata Computing Holdings Inc. (“Zapata AI” or “the Company”)
(Nasdaq: ZPTA), a leading provider of industrial-grade software for
enterprise AI, today announced its financial results for the second
quarter of 2024 and provided a business update.
Business Highlights
- Significantly expanded partnership
with D-Wave Quantum Inc. to accelerate the development and delivery
of integrated quantum and generative AI solutions in D‑Wave’s Leap
cloud platform
- Successfully collaborated with KPMG
on a project to streamline the compliance models of a leading
global insurance firm
- Alongside its project
collaborators, published select research findings from its
participation in Phase II of the Defense Advanced Research Projects
Agency (DARPA) Quantum Benchmarking program, a critical milestone
in the project’s initiative
- Announced a strategic collaboration
with Tech Mahindra that leverages Zapata AI's quantum-based
generative AI to improve network operations and customer service
for Tech Mahindra's global telecom customers
- Bolstered the senior leadership
team with the additions of Sumit Kapur, an accomplished technology
industry finance leader, as Chief Financial Officer, and Derron
Blakely, who brings a strong legal background at fast-growing
public companies in the AI and defense industries, as General
Counsel
- Subsequent to Q2 2024-end,
announced a Cooperative Research and Development Agreement with the
U.S. Department of Defense’s (“DOD”) U.S. Special Operations
Command ("USSOCOM") to collaborate on real-time intelligence
Financial highlights
- Revenue of $2.00 million in Q2 2024
versus $1.43 million in Q2 2023
- Gross margin of 36.0% in Q2 2024
versus 19.7% in Q2 2023
- Operating loss of $7.37 million in
Q2 2024 versus $4.14 million in Q2 2023
- Net cash used by operating
activities of $6.11 million in Q2 2024 versus $3.61 million in Q2
2023
- Cash and cash equivalents of $7.16
million, excluding $0.14 million of restricted cash, as of June 30,
2024 versus $7.25 million, excluding $0.14 million, at March 31,
2024
- $6.06 million in net cash provided
from financing activities during Q2 2024
- Qualified pipeline of more than $30
million1
Executive Commentary“Zapata AI
is solving AI’s biggest challenges, which include addressing the
deficiencies of Large Language Models (LLMs), the cost burden and
accessibility challenges of AI compute, and the inherent risks
posed to data privacy and security from AI platforms today, through
our ensembles of small, quantum-inspired, highly tailored AI
models,” said Christopher Savoie, CEO and Co-founder of Zapata AI.
“This message has been well received by the market, and we made
strong progress during the second quarter in building awareness and
appreciation for our technology, evolving our partnerships, and
growing our qualified pipeline of customers, which today stands at
more than $30 million and spans across several focus
industries.”
“During the second quarter, we expanded our
commercial partnership with D-Wave to speed up the development and
delivery of advanced AI systems that combine traditional and
quantum computing. D-Wave is a complimentary partner for us, and we
believe this expansion of our collaborative engagement demonstrates
the value of our AI offering, and specifically how we are able to
bolster the capability of their cloud service to create more
efficient and powerful AI models. In insurance, we collaborated
with KPMG to significantly improve a leading global insurance
firm's risk and compliance modeling. By using advanced AI and
optimization techniques, we managed to reduce the time needed to
run complex models by more than 1,000 times while still maintaining
accuracy. Defense remains a compelling market for our technology,
and we were proud to publish our research findings from the second
phase of Defense Advanced Research Projects Agency (“DARPA”)
Quantum Benchmarking program. Alongside our project partners, we
demonstrated how quantum computing can bring significant economic
benefits by solving complex industrial problems faster and more
efficiently. Further, our expertise in rapidly deploying AI
solutions in challenging environments helped us to deepen our work
with the DOD through the agreement we announced this week with
USSOCOM to collaborate on AI-driven solutions that can enhance
situational awareness, real-time decision-making and operational
readiness. In telecom, our partnership with Tech Mahindra is
enabling us to have conversations with their portfolio of service
providers as we demonstrate how we can more accurately anticipate,
predict, and respond to service disruptions and high-traffic events
while optimizing network and operations management.”
“As we look ahead, we are excited by the robust
level of dialogue we are having with prospective customers. We have
seen significant growth in customer interest since the beginning of
the year and especially in Q2, as evidenced by strong growth in our
qualified pipeline in our target verticals. We are optimistic about
an acceleration in our business and converting on this pipeline as
we go through the second half of 2024 and beyond,” concluded
Savoie.
Financial and Operating Results
Revenues in Q2 2024 were $2.00 million, which compares to revenues
of $1.43 million in Q2 2023. The period over period improvement
primarily reflects an increase in software license deliveries.
Gross margin of 36.0% in Q2 2024 compares with 19.7% in Q2 2023 as
the Company continues to see advances in its ability to drive
profitability with increases in scale. Operating loss of $7.37
million in Q2 2024 compares to an operating loss of $4.14 million
in Q2 2023 as general and administrative expenses increased by
$3.01 million. A significant portion of this change is due to
one-time fees that resulted from the Company’s Nasdaq public
markets listing and the filing of a registration statement on Form
S-1 in connection with the Company’s equity line of credit
(“ELOC”), which drove higher professional services fees. Net loss
in Q2 2024 was $15.58 million versus $4.72 million in Q2 2023. Q2
2024 net loss was impacted by a non-cash charge of $8.23 million
loss related to the fair value change of a forward purchase
agreement derivative liability.
Net cash used by operating activities in Q2 2024
was $6.11 million, which included $0.89 million in cash from
working capital, and compares with $3.61 million used in Q2 2023.
As of June 30, 2024, cash and cash equivalents stood at $7.16
million, excluding restricted cash of $0.14 million. This compares
with $7.25 million, excluding restricted cash of $0.14 million,
at March 31, 2024. Zapata AI generated $6.06 million in cash
from financing activities during Q2 2024, which was primarily
comprised of $5.30 million raised via the issuance of common stock
from the ELOC. Subsequent to Q2 2024-end, the company entered into
an additional purchase agreement with Lincoln Park Capital Fund,
LLC pursuant to which Lincoln Park has elected to purchase from the
company, at the company’s option, up to $10 million of shares of
common stock subject to certain conditions.
Conference call
informationZapata AI will host a conference call today,
August 14, 2024 at 8:30am ET to discuss its financial results and
provide a business update. The conference call will be accessible
live via a webcast on Zapata AI’s investor relations site, which
can be found at ir.zapata.ai, and a replay of the webcast will be
made available shortly after the event’s conclusion for one
year.
1 Qualified pipeline figures are based on
opportunities that 1) have a clearly identified budget, authority,
need and timeline, 2) have progressed beyond the initial discovery
stage and are typically in the proposal stage or later, and 3) are
expected to close within the next 12 months.
About Zapata AI
Zapata AI (NASDAQ: ZPTA) helps large enterprise
and government agencies unlock the promise of AI with
industrial-grade enterprise AI solutions powered by Orquestra®, a
proprietary software platform that speeds up the Model Development
Lifecycle (MDLC). We use ensembles of specialized models and
innovative quantum mathematics to deliver real-time, actionable
insights across industries such as defense, manufacturing,
automotive and finance. Our solutions excel in high-stakes
scenarios where immediate, accurate decision-making is crucial,
ensuring our clients maintain a competitive edge in rapidly
changing environments. Founded in 2017 and headquartered in Boston,
Massachusetts, with offices worldwide, Zapata AI holds one of the
largest patent libraries for enterprise AI and quantum
computing.
For more information on Zapata AI, visit our
website or follow us on LinkedIn or X.
Forward-Looking Statements
This press release contains forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995, as amended, that are subject to risks and
uncertainties and are made pursuant to the safe harbor provisions
of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended.
Forward-looking statements generally are accompanied by words such
as “believe,” “may,” “will,” “intend,” “evolve,” “expect,”
“should,” “would,” “plan,” “predict,” “potential,” “progress,”
“seem,” “seek,” “future,” “outlook,” and similar expressions that
predict or indicate future events or trends or that are not
statements of historical matters. These forward-looking statements
include, but are not limited to, statements regarding anticipated
interest in our offerings by potential customers, our ability to
progress new opportunities across industries and other statements
that are not historical facts. These statements are based on the
current expectations of Zapata AI’s management and are not
predictions of actual performance. The inclusion of forward-looking
statements should not be regarded as a representation that such
plans, estimates and expectations will be achieved. Readers are
cautioned not to place undue reliance on the forward-looking
statements contained herein, which speak only as of the date
hereof. The Company undertakes no obligation to publicly update any
forward-looking statement, whether as a result of new information,
future developments or otherwise, except as may be required by law.
Risks and uncertainties that could cause our actual results to
materially differ from those described in the forward-looking
statements include, but are not limited to, (i) our ability to
enter into agreements with potential customers identified in our
pipeline; (ii) a decline in the price of our securities if we fail
to meet the expectations of investors or securities analysts; (iii)
our ability to attract new customers, retain existing customers,
and grow; competition in the generative AI industry; (iv) our
ability to raise additional capital on non-dilutive terms or at
all, including through our purchase agreements with Lincoln Park
Capital Fund, LLC; (v) our ability to improve our operational,
financial and management controls; (vi) failure to maintain and
enhance awareness of our brand; (vii) increased costs associated
with operating as a public company; (viii) protection of
proprietary rights; intellectual property infringement, data
protection and other losses; and (ix) other risks and uncertainties
described in our filings with the Securities and Exchange
Commission.
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ZAPATA
COMPUTING HOLDINGS INC.CONDENSED CONSOLIDATED
BALANCE SHEETS(UNAUDITED)(in thousands,
except share and per share amounts) |
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June 30, 2024 |
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December 31, 2023 |
|
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|
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Assets |
|
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|
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Current assets: |
|
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Cash and cash equivalents |
|
$ |
7,164 |
|
|
$ |
3,332 |
|
|
|
Accounts receivable ($2,235 and $829 from related parties,
respectively) |
|
|
2,505 |
|
|
|
1,938 |
|
|
|
Prepaid expenses and other current assets |
|
|
1,344 |
|
|
|
323 |
|
|
|
|
|
Total current assets |
|
|
11,013 |
|
|
|
5,593 |
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|
|
Property and equipment, net |
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|
106 |
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|
|
156 |
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|
Operating lease right-of-use assets |
|
|
68 |
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|
|
238 |
|
|
|
Deferred offering costs |
|
|
- |
|
|
|
1,943 |
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|
Other non-current assets |
|
|
- |
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|
|
137 |
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|
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|
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Total assets |
|
$ |
11,187 |
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|
$ |
8,067 |
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|
Liabilities, Convertible Preferred Stock and Stockholders'
Deficit |
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Current liabilities: |
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|
|
Accounts payable ($4,083 and $1,500 to related parties,
respectively) |
|
$ |
11,575 |
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|
$ |
6,452 |
|
|
|
Accrued expenses and other current liabilities |
|
|
5,255 |
|
|
|
1,945 |
|
|
|
Deferred revenue |
|
|
736 |
|
|
|
744 |
|
|
|
Deferred legal fees |
|
|
2,953 |
|
|
|
- |
|
|
|
Operating lease liability, current |
|
|
75 |
|
|
|
252 |
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|
|
Note payable - related party, current |
|
|
2,305 |
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|
|
- |
|
|
|
|
|
Total current liabilities |
|
|
22,899 |
|
|
|
9,393 |
|
|
|
Forward purchase agreement derivative liability |
|
|
13,163 |
|
|
|
- |
|
|
|
Senior secured notes |
|
|
2,081 |
|
|
|
8,900 |
|
|
|
|
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Total liabilities |
|
|
38,143 |
|
|
|
18,293 |
|
|
Commitments and contingencies (Note 16) |
|
|
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Convertible preferred stock (Series Seed, A, B-1 and B-2), $0.0001
par value; 0 and 14,647,823 shares authorized at June 30, 2024 and
December 31, 2023, respectively; 0 and 13,001,114 shares issued and
outstanding at June 30, 2024 and December 31, 2023,
respectively |
|
|
- |
|
|
|
64,716 |
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Stockholders’ deficit: |
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Common stock, $0.0001 par value; 600,000,000 and 23,500,000 shares
authorized at June 30, 2024 and December 31, 2023, respectively;
35,255,013 and 4,678,950 shares issued and outstanding at June 30,
2024 and December 31, 2023, respectively |
|
|
4 |
|
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|
- |
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Additional paid-in capital |
|
|
100,545 |
|
|
|
14,633 |
|
|
|
Accumulated other comprehensive loss |
|
|
(83 |
) |
|
|
(49 |
) |
|
|
Accumulated deficit |
|
|
(127,422 |
) |
|
|
(89,526 |
) |
|
|
|
|
Total stockholders' deficit |
|
|
(26,956 |
) |
|
|
(74,942 |
) |
|
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|
|
Total liabilities, convertible preferred stock and stockholders'
deficit |
|
$ |
11,187 |
|
|
$ |
8,067 |
|
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ZAPATA
COMPUTING HOLDINGS INC.CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS(UNAUDITED)(in
thousands, except share and per share amounts) |
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Three Months Ended June 30, |
|
Six Months Ended June 30, |
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|
2024 |
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|
2023 |
|
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|
2024 |
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2023 |
|
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|
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Revenue ($1,168, $494, $1,601 and $989 from related parties,
respectively) |
$ |
2,001 |
|
|
$ |
1,432 |
|
|
$ |
3,219 |
|
|
$ |
2,944 |
|
|
Cost of revenue |
|
1,280 |
|
|
|
1,150 |
|
|
|
2,328 |
|
|
|
2,456 |
|
|
|
Gross profit |
|
|
721 |
|
|
|
282 |
|
|
|
891 |
|
|
|
488 |
|
|
Operating expenses: |
|
|
|
|
|
|
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|
|
Sales and marketing ($696, $696, $1,391 and $1,391 from related
parties, respectively) |
|
2,193 |
|
|
|
1,648 |
|
|
|
3,841 |
|
|
|
3,349 |
|
|
|
Research and development |
|
1,593 |
|
|
|
1,470 |
|
|
|
3,007 |
|
|
|
3,599 |
|
|
|
General and administrative |
|
4,307 |
|
|
|
1,299 |
|
|
|
6,489 |
|
|
|
2,768 |
|
|
|
|
Total operating expenses |
|
8,093 |
|
|
|
4,417 |
|
|
|
13,337 |
|
|
|
9,716 |
|
|
Loss from operations |
|
(7,372 |
) |
|
|
(4,135 |
) |
|
|
(12,446 |
) |
|
|
(9,228 |
) |
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
Interest expense |
|
(77 |
) |
|
|
- |
|
|
|
(862 |
) |
|
|
- |
|
|
|
Loss on issuance of forward purchase agreement derivative
liability |
|
- |
|
|
|
- |
|
|
|
(4,935 |
) |
|
|
- |
|
|
|
Change in fair value of forward purchase agreement derivative
liability |
|
(8,228 |
) |
|
|
- |
|
|
|
(8,228 |
) |
|
|
- |
|
|
|
Loss on issuance of senior secured notes |
|
- |
|
|
|
- |
|
|
|
(9,776 |
) |
|
|
- |
|
|
|
Other income (expense), net |
|
108 |
|
|
|
(558 |
) |
|
|
(1,636 |
) |
|
|
(529 |
) |
|
|
|
|
Total other expense, net |
|
(8,197 |
) |
|
|
(558 |
) |
|
|
(25,437 |
) |
|
|
(529 |
) |
|
Net loss before income taxes |
|
(15,569 |
) |
|
|
(4,693 |
) |
|
|
(37,883 |
) |
|
|
(9,757 |
) |
|
Provision for income taxes |
|
(7 |
) |
|
|
(23 |
) |
|
|
(13 |
) |
|
|
(27 |
) |
|
Net loss |
|
|
|
$ |
(15,576 |
) |
|
$ |
(4,716 |
) |
|
$ |
(37,896 |
) |
|
$ |
(9,784 |
) |
|
Net loss per share attributable to common stockholders, basic and
diluted |
$ |
(0.48 |
) |
|
$ |
(1.01 |
) |
|
$ |
(2.06 |
) |
|
$ |
(2.10 |
) |
|
Weighted-average common shares outstanding, basic and diluted |
|
32,182,440 |
|
|
|
4,661,226 |
|
|
|
18,383,203 |
|
|
|
4,659,238 |
|
|
Net loss |
|
|
|
$ |
(15,576 |
) |
|
$ |
(4,716 |
) |
|
$ |
(37,896 |
) |
|
$ |
(9,784 |
) |
|
Foreign currency translation adjustment |
|
(19 |
) |
|
|
(6 |
) |
|
|
(34 |
) |
|
|
(7 |
) |
|
Comprehensive loss |
$ |
(15,595 |
) |
|
$ |
(4,722 |
) |
|
$ |
(37,930 |
) |
|
$ |
(9,791 |
) |
|
|
|
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ZAPATA
COMPUTING HOLDINGS INC.CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS(UNAUDITED)(in
thousands) |
|
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|
June 30, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
2024 |
|
|
|
2023 |
|
|
Cash flows from operating activities: |
|
|
|
|
Net loss |
|
|
|
|
$ |
(37,896 |
) |
|
$ |
(9,784 |
) |
|
Adjustments to reconcile net loss to net cash used in operating
activities: |
|
|
|
|
|
|
Depreciation and amortization |
|
75 |
|
|
|
86 |
|
|
|
|
Non-cash interest expense |
|
761 |
|
|
|
- |
|
|
|
|
Non-cash vendor payments |
|
150 |
|
|
|
- |
|
|
|
|
Loss on issuance of senior secured notes |
|
9,776 |
|
|
|
- |
|
|
|
|
Loss on issuance of forward purchase agreement derivative
liability |
|
4,935 |
|
|
|
- |
|
|
|
|
Change in fair value of senior notes |
|
- |
|
|
|
570 |
|
|
|
|
Change in fair value of forward purchase agreement derivative
liability |
|
8,228 |
|
|
|
- |
|
|
|
|
Stock-based compensation |
|
420 |
|
|
|
207 |
|
|
|
|
Non-cash lease expense |
|
170 |
|
|
|
173 |
|
|
|
|
Equity line of credit commitment expense |
|
1,688 |
|
|
|
- |
|
|
|
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable (($1,405) and ($88) from related parties,
respectively) |
|
(568 |
) |
|
|
280 |
|
|
|
|
|
|
Prepaid expenses and other current assets |
|
(881 |
) |
|
|
(482 |
) |
|
|
|
|
|
Accounts payable ($2,583 and $758 from related parties,
respectively) |
|
5,457 |
|
|
|
1,721 |
|
|
|
|
|
|
Accrued expenses and other current liabilities and other
non-current liabilities |
|
(5 |
) |
|
|
(1,250 |
) |
|
|
|
|
|
Deferred revenue |
|
(8 |
) |
|
|
(279 |
) |
|
|
|
|
|
Deferred legal fees |
|
(378 |
) |
|
|
- |
|
|
|
|
|
|
Operating lease liabilities |
|
(178 |
) |
|
|
(179 |
) |
|
|
|
Net cash used in operating activities |
|
(8,254 |
) |
|
|
(8,937 |
) |
|
Cash flows from investing activities: |
|
|
|
|
Purchases of property and equipment |
|
(26 |
) |
|
|
(2 |
) |
|
|
|
Net cash used in investing activities |
|
(26 |
) |
|
|
(2 |
) |
|
Cash flows from financing activities: |
|
|
|
|
Payment of deferred offering costs |
|
(2,929 |
) |
|
|
- |
|
|
Proceeds from the exercise of stock options |
|
68 |
|
|
|
9 |
|
|
Issuances of common stock under equity line of credit |
|
5,300 |
|
|
|
- |
|
|
Proceeds from the reverse recapitalization |
|
12,636 |
|
|
|
- |
|
|
Proceeds from the partial early termination of the forward purchase
agreement |
|
2,500 |
|
|
|
- |
|
|
Payment of note payable - related party |
|
(315 |
) |
|
|
- |
|
|
Prepayment for forward purchase agreement |
|
(10,986 |
) |
|
|
- |
|
|
Proceeds from senior and senior secured notes |
|
5,878 |
|
|
|
4,875 |
|
|
|
|
Net cash provided by financing activities |
|
12,152 |
|
|
|
4,884 |
|
|
Effect of exchange rate changes on cash and cash
equivalents |
|
(40 |
) |
|
|
(22 |
) |
|
Net increase (decrease) in cash and cash
equivalents |
|
3,832 |
|
|
|
(4,077 |
) |
|
Cash and cash equivalents and restricted cash at beginning of
period |
|
3,469 |
|
|
|
10,210 |
|
|
Cash and cash equivalents and restricted cash at end of period |
$ |
7,301 |
|
|
$ |
6,133 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Contacts
Zapata AIMedia: press@zapata.ai
Investors: investors@zapata.ai
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