Forian(FORA) - 2020 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - In Q2 2020, the company generated revenues of $4.76 million, a 22% increase from $3.90 million in the prior year, marking a record quarter despite COVID-19 [12] - Gross profit rose to $2.38 million, up 25% from $1.90 million in Q2 2019, with a gross margin of 50% [12] - Positive adjusted EBITDA of $338,000 was reported, a significant improvement from negative $795,000 in Q2 2019, indicating a net improvement of over $1 million [13] - Cash flows from operations were positive $446,000 in Q2 2020, compared to negative $714,000 in Q2 2019, representing a 162% improvement [14] - For the first half of 2020, revenue reached $9.3 million, a 28% increase from the first half of 2019, with a gross margin of 50% [15] Business Line Data and Key Metrics Changes - The security guarding and monitoring business generated revenues of $2.0 million in Q2 2020, a 49% increase from the previous year, driven by client growth in California and Colorado [16] - The software business line achieved revenues of $2.61 million, a 10% year-on-year growth, with gross profit increasing by 28% to $1.94 million [18] - Recurring commercial revenues at BioTrack experienced 6% sequential growth and 40% year-over-year growth, highlighting the strength of the software platform [19] Market Data and Key Metrics Changes - The company successfully divested its physical security business to strengthen its balance sheet and focus on data services, which are seeing organic sales growth [5] - The Cannalytics Business Intelligence Suite crossed the 200 client mark, doubling from Q1, indicating strong demand for data services in the cannabis industry [22] Company Strategy and Development Direction - The company aims to provide best-in-class critical infrastructure services through an integrated platform, focusing on operational performance and profitability [9] - Plans include expanding data offerings and enhancing the Cannalytics product to fill industry gaps and increase the total addressable market [24] - The leadership team is confident in the company's potential and is focused on building innovative products to maintain market leadership [27] Management's Comments on Operating Environment and Future Outlook - Management expressed satisfaction with achieving profitability and positive cash flows despite the challenges posed by COVID-19 [10] - The company is navigating the pandemic proactively, maintaining productivity and revenue targets [10] - Future growth is anticipated in the cannabis data market, which could approach $1 billion as the market matures and becomes federally legal [33] Other Important Information - The company sold its security guarding business for $1.75 million after Q2, indicating a strategic shift towards higher-margin software services [17] - The software business unit showed a loss from operations of $235,000 in Q2 2020, but adjusted EBITDA was positive $799,000, reflecting strong cost containment efforts [20] Q&A Session Summary Question: How is Helix generating revenue? - Revenue generation is a mix of service agreements for government business and subscription models for commercial clients [29][30] Question: Will there be cross-marketing with springbig? - Yes, there is already cross-marketing occurring between Helix and springbig, with over 200 shared locations [31] Question: What is the market size for Cannalytics? - The cannabis data market is estimated to be around $1 billion, with potential for growth as more users enter the market [32] Question: Why was the dual listing on the CSC dropped? - The plan was altered due to unfavorable market conditions at the time, and the company continues to evaluate options for increasing shareholder value [34][36] Question: What is the timeline for going completely serverless? - A completely serverless model may not be pursued as clients demand a hybrid solution for control and security [41][43]