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Presto Automation Overstates Revenue 5.4%
Restaurant software firm also misclassified an expense that inflated gross margin more than 27%.
February 16, 2023
After notifying the SEC it would not file its quarterly report on time, Presto Automation (PRST), a maker of restaurant drive through automation and point-of-sale solutions, revealed it had overstated sales by nearly a half million dollars in the quarter ended September 30, 2022.
The company should have recognized the revenue on a net rather than gross basis.
Separately, by wrongly classifying $119,000 as R&D expense rather than cost of sales, Presto overstated gross margin 27.48%.
In 2021, Presto’s drive through automation hardware failed due to disinfectants used to sanitize against COVID-19. The company replaced the hardware free of charge, totaling nearly a half million dollars over six months.
The company touts its AI powered drive through technology as a labor shortage solution and ROI generator. Yet AI platform product revenue, according to Presto, is not material. Notably, Presto relies on a vendor for the necessary hardware and software and keeps only about a third of sales generated:
“The revenue share paid to our hardware and software vendor under our AI Platform revenue share agreement ranged from 64% - 68% of the gross billings to the customer.”
Presto trades at nearly 5x 2023 estimated sales and is down 62.6% since coming public as a SPAC.
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