Omniq (US:OMQS)2023-04-01 04:00Financial Data and Key Metrics Changes - The company reported record revenues of $102.5 million for 2022, an increase of 31% from $78 million in 2021 and 78% from $55 million in 2020 [4][77] - Gross profit reached a record of $22.1 million, up $5 million or 33% over the previous year, and 100% over 2020 [4][77] - Positive cash flow from operations totaled $1.2 million, marking a significant milestone [4] - Total operating expenses for the year were $31.7 million, compared to $27 million in the previous year [6] - The net loss for 2022 was $13.6 million, or a loss of $1.82 per share, compared to a loss of $13.1 million, or a loss of $2.20 per share in 2021 [6][89] Business Line Data and Key Metrics Changes - The AI machine vision revenue increased over 100% from 2021 to 2022, indicating strong demand for higher-margin products [86] - The company is focusing on three key verticals: safe city, supply chain, and traffic management, expecting accelerated growth in these areas [30][78] - Significant contracts were secured, including a $4 million contract from a multinational transportation logistics company and a $29 million order from a large supermarket chain [31] Market Data and Key Metrics Changes - The company is targeting over 16,000 small and medium cities across the country, with a backlog of cities continuing to grow [91] - The company expects to contract an additional 35 to 40 cities for its Safe Cities initiative this year [91] - The restaurant and retail sector is identified as a new vertical with substantial growth potential, with initial orders for AI solutions already announced [92] Company Strategy and Development Direction - The company aims to deepen sales with existing Fortune 100 and 500 customers across all business lines while focusing on cash generation and profitability [87] - The strategy includes establishing a reseller channel to expand market reach, particularly in small and medium cities [101][70] - The company is committed to enhancing its AI product deployments in existing and newly penetrated markets [87] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing strength across verticals and the potential for higher margins through the revenue share model [76] - The company anticipates continued growth momentum into 2023, supported by a solid backlog and strategic initiatives [81][123] - Management highlighted the unique value proposition of their technology, which includes a revenue share model that benefits both the company and the cities served [112] Other Important Information - The company has formalized banking relationships to strengthen its balance sheet [5] - The acquisition of Dangot Computers is performing well, contributing to organic growth and cross-selling opportunities [120] - The Israeli Ministry of Defense is a customer, utilizing the company's AI technology for border control security [121] Q&A Session Summary Question: What is the expected number of cities to be contracted this year for Safe Cities? - Management confirmed the expectation of contracting 35 to 40 cities this year, despite lower margins in Q4 due to one-time events [11] Question: Can you explain the performance of the Dangot acquisition? - The acquisition is performing positively, achieving cross-sales and contributing to significant organic growth [120] Question: What is the recurring revenue component in the fast food chain deal? - The recurring revenue component is currently around 25%, with plans to increase it to a minimum of 60% in future contracts [129] Question: How is the sales force structured? - The sales force is primarily structured by business line and geography, with a focus on direct sales for established customers [180] Question: What are the expectations for gross margin improvement in 2023? - Management expects gross margins to improve in 2023, as nonrecurring costs that affected Q4 margins are not expected to recur [131]