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Knightscope(KSCP) - 2024 Q2 - Earnings Call Transcript
KSCPKnightscope(KSCP)2024-08-16 18:20
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Financial Data and Key Metrics Changes - For Q2 2024, total net revenues were reported at 3.2million,adecreaseof3.2 million, a decrease of 0.4 million or 10% compared to the same period last year, primarily due to lower product revenue offsetting gains in services revenue [33] - Services revenue increased by 0.1milliontoapproximately0.1 million to approximately 2 million, while product revenue declined by 0.5milliontoapproximately0.5 million to approximately 1.3 million due to a lack of a large one-time sale that occurred in the prior year [33] - The company recorded a gross loss of 0.6million,asignificantchangefromagrossprofitof0.6 million, a significant change from a gross profit of 9,000 reported in the prior year [35] - Net loss for the quarter was 6.3million,approximately6.3 million, approximately 1.5 million higher than the prior year, with a basic and diluted net loss per share of 0.05comparedtoalossof0.05 compared to a loss of 0.08 in the prior year [38] Business Line Data and Key Metrics Changes - The K1B product line contributed approximately two-thirds of the business, while ASR-related products accounted for about one-third of revenues [51] - The K1 Hemisphere product has been introduced and is expected to drive initial growth, with various applications being explored [50] Market Data and Key Metrics Changes - The company believes it is targeting a multibillion-dollar market opportunity in public safety, law enforcement, and security, which is seen as ripe for disruption through robotics and AI [5][6] - The potential for a 40billionrecurringrevenueopportunityisanticipatedoncethebusinessmodelisfullyestablished[7]CompanyStrategyandDevelopmentDirection−Thecompanyisfocusedoncleaningupitsbalancesheetandaligningwithpubliccompanystructures,whichincludesconvertingpreferredsharestocommonshares[42][44]−StrategicinitiativesincludethedevelopmentoftheIntelligenceControlModule(ICM)tounifyvariousproductarchitecturesandimproveoperationalefficiencies[17][46]−Thecompanyaimstoscaleupoperationswhilereducingcostsandimprovingefficienciesacrossitsproductlines[12][24]Management′sCommentsonOperatingEnvironmentandFutureOutlook−Managementacknowledgesthat2024isatransitionyear,withexpectationsofcontinuedchallengesasthecompanyimplementssignificantchanges[34][41]−Themanagementexpressesconfidenceinthelong−termpotentialofthecompany,emphasizingtheimportanceofexecutionandoperationalimprovements[2][3]OtherImportantInformation−Thecompanyhasraisedover40 billion recurring revenue opportunity is anticipated once the business model is fully established [7] Company Strategy and Development Direction - The company is focused on cleaning up its balance sheet and aligning with public company structures, which includes converting preferred shares to common shares [42][44] - Strategic initiatives include the development of the Intelligence Control Module (ICM) to unify various product architectures and improve operational efficiencies [17][46] - The company aims to scale up operations while reducing costs and improving efficiencies across its product lines [12][24] Management's Comments on Operating Environment and Future Outlook - Management acknowledges that 2024 is a transition year, with expectations of continued challenges as the company implements significant changes [34][41] - The management expresses confidence in the long-term potential of the company, emphasizing the importance of execution and operational improvements [2][3] Other Important Information - The company has raised over 5 million in funding and continues to utilize an active ATM program for capital [45] - The company has successfully deployed its first K5 government machine at a U.S. Department of Veterans Affairs Hospital [9] Q&A Session All Questions and Answers Question: What were the orders for K1 Hemisphere versus a year ago? - The K1 Hemisphere was not in production a year ago, and it is now seen as an initial growth driver with various applications being explored [50] Question: What percentage of sales are ASRs versus the Blue Light products? - Approximately two-thirds of the business is K1B-related, while about one-third is ASR-related [51] Question: How much cash on hand on the balance sheet at the end of Q2? - Cash on hand was reported at 2.6millionattheendofthequarter,oscillatingbetween2.6 million at the end of the quarter, oscillating between 2 million and $5 million over the last 18 months [55] Question: What is the status of the investigation into possible legal actions of the short seller? - The investigation is ongoing, and there are no updates to provide at this time [60] Question: Why do press releases mention new contracts but not their impact on profit loss? - Announcements of new contracts are made to assist the sales team and provide visibility, but the financial impact may not be immediate [62]