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Super .(SPCB) - 2023 Q2 - Earnings Call Transcript
SPCBSuper .(SPCB)2023-07-31 15:59
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Financial Data and Key Metrics - Revenue increased by 141% year-over-year to 7.7millioninQ22023,markingafive−yearrecord[5][11]−Non−GAAPEPSimprovedtopositive7.7 million in Q2 2023, marking a five-year record [5][11] - Non-GAAP EPS improved to positive 0.07 compared to negative 0.50inthepreviousyear[5][57]−Grossprofitincreasedby770.50 in the previous year [5][57] - Gross profit increased by 77% to 2.3 million compared to 1.3millioninQ22022[56]−Operatinglossdecreasedto1.3 million in Q2 2022 [56] - Operating loss decreased to 650,000 from 1.75millioninthepreviousyear[26]−EBITDAimprovedto1.75 million in the previous year [26] - EBITDA improved to 0.9 million compared to a 0.7millionlossinthepreviousperiod[63]−Twelve−Trailing−Monthrevenueincreasedby1060.7 million loss in the previous period [63] - Twelve-Trailing-Month revenue increased by 106% to 25.5 million, driven by IoT division growth [25] Business Line Data and Key Metrics - IoT division achieved over 100% growth in the past 12 months, outpacing the global market growth by 10x [25] - PureSecurity suite, including PureTrack and PureOne, expanded market opportunities by 3-4x [27] - PureProtect, a domestic violence monitoring solution, has been successfully implemented in multiple projects, including a 32millionEMprojectinRomania[37][45]−PureOne,anall−in−oneGPStrackingsolution,hasbeendeployedintheU.S.andreceivedpositivefeedback[30][35]MarketDataandKeyMetrics−Theelectronicmonitoringmarketisestimatedtoreach32 million EM project in Romania [37][45] - PureOne, an all-in-one GPS tracking solution, has been deployed in the U.S. and received positive feedback [30][35] Market Data and Key Metrics - The electronic monitoring market is estimated to reach 2.1 billion by 2026, up from 1.2billionin2021[34]−U.S.andEuropeconstitute951.2 billion in 2021 [34] - U.S. and Europe constitute 95% of the electronic monitoring market [34] - In Europe, over 200 million in project bid opportunities were available in the past 18 months [34] - SuperCom expanded its business into over 10 European countries and secured significant new projects, including a 3.6millionNationalEMprojectinFinland[9]CompanyStrategyandIndustryCompetition−SuperComfocusesontechnologicalleadership,marketexpansion,andoperationalefficiencytodrivegrowth[7][13][50]−Thecompanyhasa653.6 million National EM project in Finland [9] Company Strategy and Industry Competition - SuperCom focuses on technological leadership, market expansion, and operational efficiency to drive growth [7][13][50] - The company has a 65%-win rate in European competitive tenders, displacing incumbent vendors [52] - SuperCom is recession-resistant due to high recidivism rates, prison overcrowding, and soaring incarceration costs [8] - The company is actively pursuing strategic acquisitions to expand market presence and achieve vertical integration synergies [10][54] Management Commentary on Operating Environment and Future Outlook - Management highlighted the growing global trend of governments adopting innovative solutions to reduce incarceration costs and improve public safety [2] - The company expects sustained growth by expanding market share in the U.S. and Europe, driven by technological advantage and robust growth foundations [13] - SuperCom anticipates rapid expansion in the U.S. market due to the introduction of PureOne and its acceptance as a well-known vendor [17][35] - Management is optimistic about future growth opportunities, particularly in domestic violence monitoring and IoT tracking [38][53] Other Important Information - SuperCom has a stable cash position and credit facilities to support project execution [58] - The company has reduced operating expenses by 350,000, including a 200,000decreaseinsalesandmarketingexpensesanda200,000 decrease in sales and marketing expenses and a 55,000 decrease in general and administrative expenses [12][26] - SuperCom has a recurring revenue base of over 70% in 2022, driven by multiyear governmental projects [45] Q&A Session Summary Question: When did PureOne become available in the U.S., and when can we expect to see it deployed? - PureOne was introduced in the U.S. in July 2023 and is already being deployed in various locations with positive feedback [30][35] Question: How does the company structure incentives for sales, particularly in the U.S.? - The company uses a commission structure with on-target quotas and acceleration bonuses for sales teams. Resellers also play a significant role in selling products like PureOne [41] Question: How does the company view the pipeline for PureOne in the U.S. compared to Europe? - The U.S. market is expected to grow faster due to the fragmented nature of the market and the company's established presence. The company has a $200 million pipeline in Europe and is evaluating new opportunities in the U.S. [31][17] Question: How long does it take for resellers to transition from evaluating PureOne to full deployment? - The transition timeline depends on the resellers' confidence in the technology. Initial deployments are small-scale, with larger deployments expected as confidence grows [60][61]