Duos Technologies (DUOT)2023-03-31 01:30Financial Data and Key Metrics Changes - Revenue increased 60% in Q4 to 3.7 million in Q4 2021, and for the full year, revenue rose 82% to just over 8.2 million in 2021 [41][21][35] - Gross margin for Q4 increased 24% to 1.73 million for Q4 2021, and for the year, gross margins increased 133% to 2 million for 2021 [43] - Net operating loss for Q4 totaled approximately 240,000 for Q4 2021, while the net operating loss for the year was 7.4 million for 2021 [45][46] Business Line Data and Key Metrics Changes - The company successfully deployed two new Railcar Inspection Portals (RIPs) in 2022, with plans for at least two additional RIPs in 2023, aiming for a total of 15 RIPs installed by the end of Q3 2023 [4][8] - The AI catalog has 35 models available for deployment, with expectations to grow to 50 use cases by the end of 2023 [4][55] - The company achieved a 100% renewal rate of recurring revenue contracts in 2022, leading to a 30% increase in support and AI revenues compared to 2021 [35][26] Market Data and Key Metrics Changes - The current backlog sits north of 8 million expected to be recognized in 2023, indicating strong visibility for future revenue [8][20] - The company has engaged with various stakeholders, including congressional leaders, to discuss the deployment of its technology in response to recent rail safety concerns [3][22] Company Strategy and Development Direction - The company is focused on increasing recurring revenue through a subscription model, support services, and maintenance, while also diversifying revenue sources [11][25] - A strategic communications plan has been initiated to respond to increased interest in the company's technology following recent rail incidents [22][50] - The company aims to achieve breakeven and profitability within the next 12 to 14 months, with a focus on enhancing its technology capabilities, particularly in AI [39][36] Management's Comments on Operating Environment and Future Outlook - Management noted that recent derailments have heightened focus on safety and compliance, leading to increased demand for the company's technology [50][3] - The company expects revenue in Q1 2023 to decline compared to Q4 2022 but anticipates growth throughout the remainder of the year [49] - Management expressed confidence in the company's ability to scale operations to meet potential increased demand due to regulatory changes [108][60] Other Important Information - The company has raised $4 million from its largest shareholder to support the buildout of its subscription RIP business [60][47] - The company is actively exploring new business lines, including applications in the trucking and intermodal industries [25][30] Q&A Session Summary Question: Can you mention what type of company your first subscription customer is? - The customer is one of the four major centers, but the name cannot be disclosed at this time [62] Question: What is the plan for building your own railcar inspection portals? - The plan is to build three to five of its own portals in key locations, focusing on high traffic areas [63] Question: How does the company view the competition in the rail safety technology space? - The main competitors include Wabtec and Class 1 railroads, but the company believes its technology is more advanced due to significant investments [76][98] Question: What are the expected contract lengths for the subscription model? - Most customers are looking at a minimum of three years, with some Class 1 customers interested in longer terms of 10 to 15 years [90] Question: Has the company seen increased safety regulations in other countries? - Yes, Canada has rigorous safety regulations similar to the U.S., and the company works closely with Canadian railroads [100]