Zapata AI Announces First Quarter 2024 Financial Results and Provides Business Update
Zapata AI (NASDAQ: ZPTA) reported its financial results for Q1 2024, revealing a revenue of $1.22 million, down from $1.51 million in Q1 2023. The company posted an operating loss of $5.08 million, consistent with the previous year's $5.09 million. Cash used by operating activities dropped to $2.15 million from $5.32 million in Q1 2023. Cash and cash equivalents increased to $7.25 million from $3.33 million at the end of 2023. Notable business developments include a $1 million expansion agreement with Andretti Global, collaborations with Sumitomo Mitsui Trust Bank, D-Wave, and Tech Mahindra, and the successful application of a generative model on quantum hardware for cancer drug candidates. The company raised an additional $5.4 million post-Q1 2024.
- Completed business combination with Andretti Acquisition Corp. and commenced Nasdaq trading.
- Entered a $1 million commercial expansion agreement with Andretti Global.
- Achieved 43% sequential growth in quarterly bookings.
- Cash and cash equivalents increased from $3.33 million to $7.25 million.
- Operating expenses reduced by $0.79 million.
- Collaborated with Sumitomo Mitsui Trust Bank to enhance financial scenario simulations.
- Demonstrated quantum hardware outperforming classical models in generating cancer drug candidates.
- Partnered with D-Wave for advancements in quantum-enabled machine learning.
- Announced a strategic collaboration with Tech Mahindra to enhance telecom operations.
- Raised $5.4 million in additional capital as of May 10, 2024.
- Revenue decreased to $1.22 million in Q1 2024 from $1.51 million in Q1 2023.
- Net loss increased significantly to $22.32 million from $5.07 million in Q1 2023.
- Operating loss remained high at $5.08 million.
- Gross profits decreased due to lower revenue and flat gross margins.
- Increase of $0.74 million in general & administrative expenses.
- Significant non-cash charges including $9.78 million loss on senior secured notes and $4.94 million loss on a forward purchase agreement derivative liability.
Insights
Zapata AI delivered mixed financial results for the first quarter of 2024. The revenue of
From a financial standpoint, Zapata AI's ability to secure an additional
The company's successful public listing and the subsequent trading under ticker ZPTA indicate positive market reception, but the current financial metrics reveal that Zapata AI has several hurdles to overcome. The improvement in cash reserves to
Zapata AI's recent strategic collaborations and technological advancements are exciting, particularly their work in quantum computing and generative AI. The company's partnership with D-Wave to enhance quantum-enabled machine learning and their collaboration with Tech Mahindra to improve telecom operations are significant. These partnerships could potentially position Zapata AI as a leader in next-gen AI technologies.
Moreover, demonstrating the first instance of quantum hardware outperforming classical models in generating cancer drug candidates is a remarkable achievement. This feat not only underscores Zapata AI's innovative capabilities but also opens up immense possibilities in pharmaceuticals and materials science.
However, the challenge lies in translating these groundbreaking technologies into sustainable revenue streams. The generative AI and quantum computing markets are still emerging and significant investment is required to develop and commercialize these technologies. Investors should keep an eye on how these collaborations translate into tangible financial benefits in the coming quarters.
The strategic moves made by Zapata AI reflect a robust attempt to diversify and deepen their market presence. The expanded collaboration with Andretti Global and the deal with Sumitomo Mitsui Trust Bank highlight the company's efforts to integrate generative AI into various industries, from auto-racing to financial services. These initiatives demonstrate the flexibility and broad applicability of Zapata AI’s technologies, potentially opening up multiple revenue streams.
However, the sequential growth in quarterly bookings by
For retail investors, the potential benefits are clear, but they come with risks tied to the volatility of emerging technologies and the need for sustained operational and commercial success. The ability to convert strategic collaborations into profitable outcomes will be important for Zapata AI’s long-term viability and stock performance.
BOSTON, May 15, 2024 (GLOBE NEWSWIRE) -- Zapata Computing Holdings Inc. (“Zapata AI”) (Nasdaq: ZPTA), the Industrial Generative AI company, today announced its financial results for the first quarter of 2024 and provided a business update.
Business Highlights
- Completed business combination with Andretti Acquisition Corp. on March 28, 2024 and commenced trading on the Nasdaq under the ticker ZPTA on April 1, 2024
- Entered into a
$1 million commercial expansion agreement with Andretti Global, broadening the scope of an already multi-year partnership and the companies' co-branding and marketing relationship, and resulting in43% sequential growth in quarterly bookings - Ramped up existing collaboration with Sumitomo Mitsui Trust Bank, applying generative AI to simulate financial scenarios and more accurately price derivatives and value adjustments
- Along with collaboration partners, Zapata AI demonstrated the first instance of a generative model running on quantum hardware outperforming state-of-the-art classical models in generating viable cancer drug candidates
- Partnered with D-Wave on a strategic technical and commercial collaboration agreement to advance quantum-enabled machine learning, with an initial focus on the discovery of new molecules, such as drugs, chemicals and materials
- On May 14, 2024, announced a strategic collaboration with Tech Mahindra that leverages Zapata AI’s quantum-based generative AI on offerings that enhance operational efficiencies and customer responsiveness for Tech Mahindra’s global telecom customers
Financial highlights
- Revenue of in
$1.22 million in Q1 2024 versus$1.51 million in Q1 2023 - Operating loss of
$5.08 million in Q1 2024 versus$5.09 million in Q1 2023 - Cash used by operating activities of
$2.15 million in Q1 2024 versus$5.32 million in Q1 2023 - Cash and cash equivalents of
$7.25 million , excluding$0.14 million of restricted cash, as of March 31, 2024 versus$3.33 million at December 31, 2023 $5.4 million in capital raised subsequent to the end of Q1 2024 as of May 10, 2024
Executive Commentary
“We were proud to complete our public listing in Q1 2024 and thus bring to market a leader in industrial generative AI despite challenging market conditions. Through our quantum-inspired generative AI techniques, Zapata AI is able to tackle important analytics and business intelligence use cases for enterprise customers through our cloud and hardware agnostic open-source platform, Orquestra®,” said Christopher Savoie, CEO and Co-founder of Zapata AI.
“Q1 was very productive for us on the commercial, technical and operational fronts across a variety of industries. During the period, we expanded our commercial relationship with Andretti Autosport Holding Company, LLC (Andretti Global), deepening our collaboration across engineering, operations, and race strategy, to further drive significant innovation and operational efficiencies across Andretti Global’s presence in multiple auto racing series around the world. In financial services, we continued to evolve our partnership with Sumitomo Mitsui Trust Bank, which we announced in November 2023. By running scenario simulations with them using our technology, we are demonstrating that we can enable more accurate and faster decision-making in trading and improve risk management procedures. In pharmaceuticals, we were able show how quantum-enhanced generative AI can assist in generating viable cancer drug candidates in a study conducted with our partners at Insilico Medicine, University of Toronto, and Harvard University. We expect to push the boundaries further in the area of pharmaceuticals through the partnership we entered into with D-Wave Quantum, Inc. during Q1, which will initially focus on molecular discovery. We also continued to achieve new technical milestones on our quantum benchmarking work with DARPA and the US Department of Defense through a relationship that goes back to 2022.
More recently, we were thrilled to announce just yesterday a strategic collaboration with Tech Mahindra. As a leading global provider of technology consulting to enterprises, Tech Mahindra has a robust network of Communication Service Providers that include some of the largest global telecom network operators. Through our work with them, we expect to be able to demonstrate how we can assist in reducing network outages and disruptions, optimizing response times and processes, improving proactive network maintenance, and tailoring customer interactions. Doing so can improve the quality and reliability of the services provided and customer satisfaction and loyalty, and can generate significant cost savings and operational efficiency.
Beyond these recent developments, our achievements to-date, and in particular the real-time data streaming use cases we are putting into practice on the racetrack through our partnership with Andretti Global, continue to drive strong interest among potential customers across a multitude of markets. In addition to opportunities in telecom, as we see with Tech Mahindra, we look forward to progressing on other new opportunities in Q2 and beyond across a variety of others industries, with pharmaceuticals, financial services, insurance, and defense areas all areas of particular excitement for Zapata AI today.”
Financial and Operating Results
Revenues in Q1 2024 were
Operating loss of
Cash used by operating activities in Q1 2024 was
As of March 31, 2024, cash and cash equivalents stood at
Subsequent to the end of Q1 2024 through May 10, 2024, Zapata AI raised
Conference call information
Zapata AI will host a conference call today, May 15, 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.
About Zapata AI
Zapata AI (Nasdaq: ZPTA) is an Industrial Generative AI company, revolutionizing how enterprises solve complex operational challenges with its powerful suite of generative AI software applications and cutting-edge reference architecture. By combining numerical and text-based generative AI models and custom software applications to power industrial-scale solutions, Zapata AI enables enterprises and government entities to drive growth, cost savings through operational efficiencies, and critical operational insights. With its proprietary data science and engineering techniques, and the Orquestra® platform, Zapata AI is accelerating Generative AI’s impact across industries by delivering solutions which are higher performing, less costly, and more accurate and expressive than current, classical approaches to AI. The Company was founded in 2017 and is headquartered in Boston, Massachusetts.
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) failure to realize the benefits expected from the business combination; (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; (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.
| ZAPATA COMPUTING HOLDINGS INC. CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (in thousands, except share and per share amounts) | ||||||||||||||
| March 31, 2024 | December 31, 2023 | |||||||||||||
| Assets | ||||||||||||||
| Current assets: | ||||||||||||||
| Cash and cash equivalents | $ | 7,251 | $ | 3,332 | ||||||||||
| Accounts receivable ( | 1,128 | 1,938 | ||||||||||||
| Prepaid expenses and other current assets | 1,197 | 323 | ||||||||||||
| Total current assets | 9,576 | 5,593 | ||||||||||||
| Sales and marketing ( | 129 | 156 | ||||||||||||
| Operating lease right-of-use assets | 150 | 238 | ||||||||||||
| Deferred offering costs | - | 1,943 | ||||||||||||
| Other non-current assets | - | 137 | ||||||||||||
| Total assets | $ | 9,855 | $ | 8,067 | ||||||||||
| Liabilities, Convertible Preferred Stock and Stockholders' Deficit | ||||||||||||||
| Current liabilities: | ||||||||||||||
| Accounts payable ( | $ | 9,348 | $ | 6,452 | ||||||||||
| Accrued expenses and other current liabilities | 5,535 | 1,945 | ||||||||||||
| Deferred revenue | 650 | 744 | ||||||||||||
| Deferred legal fees | 3,330 | - | ||||||||||||
| Operating lease liability, current | 161 | 252 | ||||||||||||
| Note payable - related party, current | 2,428 | - | ||||||||||||
| Equity line of credit commitment payable | 1,688 | - | ||||||||||||
| Total current liabilities | 23,140 | 9,393 | ||||||||||||
| Forward purchase agreement derivative liability | 4,935 | - | ||||||||||||
| Senior secured notes | 2,000 | 8,900 | ||||||||||||
| Note payable - related party, non-current | 191 | - | ||||||||||||
| Non-current liabilities | 669 | - | ||||||||||||
| Total liabilities | 30,935 | 18,293 | ||||||||||||
| Commitments and contingencies (Note 16) | ||||||||||||||
| Convertible preferred stock (Series Seed, A, B-1 and B-2), | - | 64,716 | ||||||||||||
| Stockholders’ deficit: | ||||||||||||||
| Common stock, | 2 | - | ||||||||||||
| Additional paid-in capital | 90,828 | 14,633 | ||||||||||||
| Accumulated other comprehensive loss | (64 | ) | (49 | ) | ||||||||||
| Accumulated deficit | (111,846 | ) | (89,526 | ) | ||||||||||
| Total stockholders' deficit | (21,080 | ) | (74,942 | ) | ||||||||||
| Total liabilities, convertible preferred stock and stockholders' deficit | $ | 9,855 | $ | 8,067 | ||||||||||
| ZAPATA COMPUTING HOLDINGS INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (in thousands, except share and per share amounts) | |||||||||||
| Three Months Ended March 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| Revenue ( | $ | 1,218 | $ | 1,512 | |||||||
| Cost of revenue | 1,052 | 1,306 | |||||||||
| Gross profit | 166 | 206 | |||||||||
| Operating expenses: | |||||||||||
| Sales and marketing ( | 1,629 | 1,701 | |||||||||
| Research and development | 1,407 | 2,129 | |||||||||
| General and administrative | 2,206 | 1,469 | |||||||||
| Total operating expenses | 5,242 | 5,299 | |||||||||
| Loss from operations | (5,076 | ) | (5,093 | ) | |||||||
| Other income (expense): | |||||||||||
| Interest expense | (784 | ) | - | ||||||||
| Loss on issuance of forward purchase agreement derivative liability | (4,935 | ) | - | ||||||||
| Loss on issuance of senior secured notes | (9,776 | ) | - | ||||||||
| Other (expense) income, net | (1,743 | ) | 29 | ||||||||
| Total other (expense) income, net | (17,238 | ) | 29 | ||||||||
| Net loss before income taxes | (22,314 | ) | (5,064 | ) | |||||||
| Provision for income taxes | (6 | ) | (4 | ) | |||||||
| Net loss | $ | (22,320 | ) | $ | (5,068 | ) | |||||
| Net loss per share attributable to common stockholders, basic and diluted | $ | (4.09 | ) | $ | (1.09 | ) | |||||
| Weighted-average common shares outstanding, basic and diluted | 5,457,386 | 4,657,228 | |||||||||
| Net loss | $ | (22,320 | ) | $ | (5,068 | ) | |||||
| Foreign currency translation adjustment | (15 | ) | (1 | ) | |||||||
| Comprehensive loss | $ | (22,335 | ) | $ | (5,069 | ) | |||||
| ZAPATA COMPUTING HOLDINGS INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (in thousands) | ||||||||||||
| For the Three Months Ended March 31, | ||||||||||||
| 2024 | 2023 | |||||||||||
| Cash flows from operating activities: | ||||||||||||
| Net loss | $ | (22,320 | ) | $ | (5,068 | ) | ||||||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||||||
| Depreciation and amortization | 38 | 45 | ||||||||||
| Non-cash interest expense | 761 | - | ||||||||||
| Non-cash vendor payments | 150 | - | ||||||||||
| Loss on issuance of senior secured notes | 9,776 | - | ||||||||||
| Stock-based compensation | 191 | 45 | ||||||||||
| Non-cash lease expense | 87 | 87 | ||||||||||
| Equity line of credit commitment expense | 1,688 | - | ||||||||||
| Loss on issuance of forward purchase agreement derivative liability | 4,935 | - | ||||||||||
| Changes in operating assets and liabilities: | ||||||||||||
| Accounts receivable (( | 809 | 458 | ||||||||||
| Prepaid expenses and other current assets | (736 | ) | (589 | ) | ||||||||
| Accounts payable ( | 2,109 | 635 | ||||||||||
| Accrued expenses and other current liabilities and other non-current liabilities | 550 | (517 | ) | |||||||||
| Deferred revenue | (94 | ) | (330 | ) | ||||||||
| Operating lease liabilities | (91 | ) | (90 | ) | ||||||||
| Net cash used in operating activities | (2,147 | ) | (5,324 | ) | ||||||||
| Cash flows from investing activities: | ||||||||||||
| Purchases of property and equipment | (11 | ) | - | |||||||||
| Net cash used in investing activities | (11 | ) | - | |||||||||
| Cash flows from financing activities: | ||||||||||||
| Payment of deferred offering costs | (1,500 | ) | - | |||||||||
| Proceeds from the exercise of stock options | 68 | 6 | ||||||||||
| Proceeds from the reverse recapitalization | 12,636 | - | ||||||||||
| Prepayment for forward purchase agreement | (10,986 | ) | - | |||||||||
| Proceeds from issuance of senior secured notes, net of debt issuance costs | 5,878 | - | ||||||||||
| Net cash provided by financing activities | 6,096 | 6 | ||||||||||
| Effect of exchange rate changes on cash and cash equivalents | (19 | ) | 5 | |||||||||
| Net increase (decrease) in cash and cash equivalents | 3,919 | (5,313 | ) | |||||||||
| 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 | $ | 7,388 | $ | 4,897 | ||||||||
Contacts
Zapata AI
Media: press@zapata.ai
Investors: investors@zapata.ai
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