Accelerating Digitization Will Expand Connected Mobility Solutions

Key Takeaways

• Proprietary AI and data-driven platforms are expanding margins, accelerating scalability, and enabling high-margin recurring revenue far above analyst expectations.
  
• Growing digitization and EV adoption uniquely position Urgent.ly to capture market share from legacy providers, driving strong long-term revenue and profitability growth.
  
• Declining core market, key partner loss, evolving consumer trends, rising competition, and higher compliance costs threaten Urgent.ly's revenue growth, profitability, and long-term market position.

Catalysts

Operates mobility assistance software platform that matches vehicle owners and operators with service professionals for roadside assistance, proactive maintenance, and repair services in the Americas, Europe, the Middle East, Africa, and the Asia Pacific.

• Analyst consensus sees operational efficiency and AI-driven margin expansion as positive, but this likely understates the potential: Urgent.ly's proprietary AI, already reducing customer wait times by over 20 minutes in major markets, can accelerate margin improvement and enable SaaS-like scalability, leading to a step function increase in net margins and EBITDA well beyond consensus expectations.
  
• Analysts broadly agree that renewals and new B2B deals will grow revenue, but the current pace of multi-year contract wins and new insurance/EV partnerships could drive growth rates far higher than anticipated, especially as Urgent.ly's AI simulations make adoption "sticky" and further shorten sales cycles, supporting recurring revenue growth above the 20 to 30 percent target range.
  
• The accelerating digitization across mobility and insurance markets is creating unprecedented B2B demand for integrated, API-driven roadside and mobility solutions, uniquely positioning Urgent.ly to capture market share from traditional providers, which can drive a multi-year revenue uptrend as more partners require real-time platforms.
  
• The explosion of telematics and connected vehicle data gives Urgent.ly unique potential to monetize its deep, decade-long data asset-beyond roadside events-through high-margin predictive analytics, subscription monitoring, and data licensing, opening new, non-cyclical revenue streams with minimal incremental cost.
  
• As EV adoption grows and vehicle age rises in North America, legacy providers are failing to adapt, while Urgent.ly's software-first platform and on-demand approach are likely to benefit from both increased incident volume and the transition to specialized, premium-priced mobility services, supporting robust top-line growth and improved profitability for years to come.

Urgent.ly Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on Urgent.ly compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming Urgent.ly's revenue will grow by 14.5% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from -23.2% today to 2.7% in 3 years time.
• The bullish analysts expect earnings to reach $5.4 million (and earnings per share of $4.14) by about August 2028, up from $-30.4 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 4.0x on those 2028 earnings, up from -0.2x today. This future PE is lower than the current PE for the US Software industry at 36.5x.
• Analysts expect the number of shares outstanding to grow by 7.0% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 12.32%, as per the Simply Wall St company report.

Urgent.ly Future Earnings Per Share Growth

Risks

• The accelerated adoption of electric vehicles is likely to reduce the frequency of roadside breakdowns because EVs have fewer moving parts and lower maintenance requirements, which could shrink Urgent.ly's core market and ultimately weigh on future revenue growth.
  
• The company's revenue for the most recent quarter declined 8 percent year-over-year, due in part to the early termination of a top five global original equipment manufacturer partner, highlighting the risk that major partner loss or reduced integration with automakers will undermine recurring revenues and impede earnings growth.
  
• Increasing reliance on rideshare and shifting consumer mobility preferences could decrease the individual car ownership base, which is Urgent.ly's primary customer pool, creating long-term headwinds for top-line revenue and possibly compressing margins as the addressable market contracts.
  
• Intensifying competition and commoditization of digital roadside assistance may necessitate price reductions to retain or acquire partners, making it more difficult for Urgent.ly to expand net margins and threatening sustainable profitability over the long term.
  
• Rising compliance requirements and cyber-security costs, especially for a digital-first company like Urgent.ly, could lead to higher operating expenses, eroding operating leverage and cash flow, particularly as competitors or OEMs develop their own in-house or bundled solutions that further pressure Urgent.ly's market share and net income prospects.

Valuation

• The assumed bullish price target for Urgent.ly is $15.0, which is the highest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of Urgent.ly's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $15.0, and the most bearish reporting a price target of just $8.0.
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be $196.8 million, earnings will come to $5.4 million, and it would be trading on a PE ratio of 4.0x, assuming you use a discount rate of 12.3%.
• Given the current share price of $4.76, the bullish analyst price target of $15.0 is 68.3% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.