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Duos Technologies (DUOT) - 2024 Q4 - Earnings Call Transcript
DUOTDuos Technologies (DUOT)2025-04-01 07:28
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Financial Data and Key Metrics Changes - Total revenue for Q4 2024 decreased 4% to 1.46millioncomparedto1.46 million compared to 1.53 million in Q4 2023, while total revenue for the year decreased 3% to 7.28millioncomparedto7.28 million compared to 7.47 million in 2023 [15][22] - Gross margin for Q4 2024 decreased 209% to a negative 330,000comparedtoapositive330,000 compared to a positive 303,000 for Q4 2023, and for the year, gross margin decreased 64% to 469,000from469,000 from 1.31 million in the same period of 2023 [19][22] - Net loss for the years ended December 31, 2024 and 2023 was 10.76millionand10.76 million and 11.24 million, respectively, indicating a decrease in overall net loss primarily attributable to a decrease in operating costs [22][23] Business Line Data and Key Metrics Changes - Services and Consulting revenues increased by 31% compared to 2023, driven by new AI and subscription customers, higher service contract pricing, and over 900,000innewrevenuefrompowerconsultingwork[15]−Costofrevenuesforthequarterincreased47900,000 in new revenue from power consulting work [15] - Cost of revenues for the quarter increased 47% to 1.79 million compared to 1.22millionforQ42023,drivenbyamortizationexpensesandretentionofoutsideconsultants[16][17]−Costofrevenuesontechnologysystemsdecreasedduringtheperiodcomparedtotheequivalentperiodin2023,inlinewiththedeclineinprojectrevenues[17]MarketDataandKeyMetricsChanges−Thecompanyhasabacklogrepresentingmorethan1.22 million for Q4 2023, driven by amortization expenses and retention of outside consultants [16][17] - Cost of revenues on technology systems decreased during the period compared to the equivalent period in 2023, in line with the decline in project revenues [17] Market Data and Key Metrics Changes - The company has a backlog representing more than 50 million in revenue, with approximately 45% expected to be recognized in 2025 [26] - A pipeline of business between Duos and APR Energy-related business exceeds 500million,whichmaytranslateintoadditionalcontractsandbacklogforDuos[27]CompanyStrategyandDevelopmentDirection−Thecompanyisdiversifyingitsbusinessintorailtechnology,edgedatacenters,andpower,aimingtoacceleratethetimelinetoprofitability[4][6]−Theestablishmentoftwonewsubsidiaries,DuosEdgeAIandDuosEnergy,ispartofthestrategytocapitalizeonexistingstrengthsandcreateapathforfastergrowthandprofitability[11]−Thecompanyplanstoraisebetween500 million, which may translate into additional contracts and backlog for Duos [27] Company Strategy and Development Direction - The company is diversifying its business into rail technology, edge data centers, and power, aiming to accelerate the timeline to profitability [4][6] - The establishment of two new subsidiaries, Duos Edge AI and Duos Energy, is part of the strategy to capitalize on existing strengths and create a path for faster growth and profitability [11] - The company plans to raise between 10 million and 15millionthroughitsS−3shelfregistrationtosupportthegrowingedgedatacenterbusiness[29]Management′sCommentsonOperatingEnvironmentandFutureOutlook−Managementnotedthatthebalancesheet,businessbacklog,andestimatedpipelinearethestrongestinthecompany′shistoryasofDecember31,2024[12]−Thecompanyexpectstobreakevenfinanciallyin2025andanticipatespositiveadjustedEBITDAbytheendoftheyear[29]−Managementexpressedoptimismaboutthefuture,highlightingsignificantchangesinthebusinessoverthelast6to9monthsandthepotentialformeaningfulgrowthandprofitability[55][56]OtherImportantInformation−Thecompanyhasretired15 million through its S-3 shelf registration to support the growing edge data center business [29] Management's Comments on Operating Environment and Future Outlook - Management noted that the balance sheet, business backlog, and estimated pipeline are the strongest in the company's history as of December 31, 2024 [12] - The company expects to break even financially in 2025 and anticipates positive adjusted EBITDA by the end of the year [29] - Management expressed optimism about the future, highlighting significant changes in the business over the last 6 to 9 months and the potential for meaningful growth and profitability [55][56] Other Important Information - The company has retired 1 million of debt and expects to retire a further $1.2 million by the end of the year, maintaining reasonable leverage ratios [26] - The company is targeting rural broadband enhancement with its edge data centers, aligning with government funding opportunities [47] Q&A Session Summary Question: Changes in rail safety legislation - Management indicated that while there was significant effort under the Biden administration to push rail safety legislation, the likelihood of comprehensive regulations being passed is currently low [60][61] Question: Impact of tariff uncertainties on customers - Management stated that the threat of tariffs has not yet impacted the business, although there could be potential risks related to raw material costs [62][64] Question: Operational status of data centers - Currently, one data center is fully operational, with two additional centers in Tampa nearing completion, and plans to install 2 to 3 new centers each quarter [70][71] Question: Potential for winning hyperscaler deals - Management confirmed active discussions with several large hyperscalers, indicating interest in both power and edge data center solutions [75]