Digital Ally(DGLY) - 2021 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total revenues increased by 44% year-over-year and 21% year-to-date [8] - Gross margins improved to 51% from 23% in the prior year [9] - SG&A expenses increased by 53% year-over-year and 32% year-to-date [9] Business Line Data and Key Metrics Changes - Product revenues rose by 63% year-over-year, with the EVO-HD system accounting for 25% of total revenues compared to 9% last year [10] - DVM-800 maintained a steady contribution of about 18% of revenues [11] - FirstVU body cameras contributed approximately 12% of total revenues, with a new version expected to launch soon [12] - DVM-250 commercial product dropped to about 2% of revenues due to COVID-19 impacts [13] - Service revenues increased by 14% year-over-year, while cloud revenues faced challenges [16] Market Data and Key Metrics Changes - Rental revenues increased significantly due to a sublease on a newly acquired building [17] - Overall gross margins increased primarily due to a shift towards higher-margin EVO products [18] Company Strategy and Development Direction - The company is pursuing a roll-up strategy in the medical billing industry, with the recent acquisition of Elite Medical [28] - Plans to close additional acquisitions in the medical billing sector and other areas by the end of Q3 [30] - The company aims to enhance EBITDA through strategic acquisitions and leverage existing relationships in law enforcement and commercial sectors [35] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about growth opportunities as schools reopen and COVID-19 vaccinations progress [36] - The company anticipates continued demand for ThermoVu and Shield products in various sectors [36] Other Important Information - The company reported a strong balance sheet with $58 million in cash and minimal debt [27] - SG&A expenses were driven by professional fees related to acquisitions and increased insurance costs due to COVID-19 [19][24] Q&A Session Summary Question: Impact of FirstVU product on margins - Management confirmed that FirstVU is a high-margin product, typically sold on a subscription basis [37] Question: Opportunities for ThermoVu in large gatherings - Management acknowledged potential for ThermoVu in theaters and workplaces as they reopen [39] Question: Growth of recurring revenue - Recurring revenue has faced challenges due to commercial clients not ramping up post-COVID, but law enforcement side has continued to grow [45] Question: Medical billing acquisition's role in growth - The acquisition is expected to open doors for ThermoVu and Shield products in hospitals and clinics [48] Question: SG&A charges and future expectations - Management indicated that some SG&A increases are nonrecurring, but ongoing acquisitions will lead to continued professional fees [51] Question: Marketing efforts for product awareness - The company is increasing visibility through various marketing strategies, including branding in videos [53] Question: Future roadshows and investor outreach - Management confirmed plans for roadshows to increase awareness and communicate the company's story [69]