SuperCom reports record net income, expands market presence By Investing.com

SuperCom (NASDAQ: NASDAQ:), a worldwide supplier of digital monitoring and identification options, reported a record-breaking web earnings of $800,000 for the primary quarter of 2024. This marks a major enchancment from the earlier yr, with a $2.3 million enhance.

The corporate’s monetary efficiency was bolstered by strategic acquisitions and the growth of its market presence in the US and Europe. SuperCom’s proprietary know-how and companies, together with its digital monitoring options for presidency tenders, have been instrumental in its development.

The corporate’s deal with innovation and strategic acquisitions, such because the 2016 buy of LCA for $3 million, have paved the best way for brand spanking new challenge wins and elevated profitability.

Key Takeaways

• SuperCom achieved a report web earnings of $800,000 in Q1 2024, a $2.3 million year-over-year enhance.
• Gross revenue margin rose by 123% to 55%, with a gross revenue enhance of 139% to $3.8 million.
• The corporate has sustained constructive EBITDA for 4 years, with a $400,000 year-over-year enhance to $2 million.
• Important development attributed to strategic acquisitions and growth within the US and Europe.
• SuperCom’s know-how has been profitable in profitable authorities tenders and increasing its market with modern options.

Firm Outlook

• SuperCom plans to boost development via strategic acquisitions of native digital monitoring service suppliers.
• The corporate is specializing in increasing its market share within the US and Europe.
• Continued funding in know-how and innovation is a precedence for driving future development.

Bearish Highlights

• The corporate acknowledged the necessity to increase capital to assist development, which could result in dilution of current shareholders.
• Cost phrases are usually dictated by authorities contracts, providing restricted flexibility for upfront funds.

Bullish Highlights

• SuperCom’s strategic acquisitions have generated important worth, with $35 million in new challenge wins in California.
• The corporate has efficiently launched modern options like PureProtect and PureOne, increasing its addressable market.
• SuperCom has secured new initiatives in California and Canada, bolstering its presence in North America.

Misses

• No particular misses have been mentioned through the earnings name.

Q&A Highlights

• CEO Ordan Trabelsi expressed satisfaction with the corporate’s development and profitability.
• Analysts have been pleasantly stunned by the income of $6.9 million, surpassing the estimated $5.7 million.
• SuperCom is actively bidding on initiatives in Europe and the US and assessing the potential to enter the migrant monitoring market.
• The corporate is engaged on bettering cost buildings and phrases with authorities clients because it turns into an trade chief.

In abstract, SuperCom’s first quarter of 2024 has set a brand new precedent for its monetary efficiency, pushed by strategic strikes and an increasing market presence. The corporate’s deal with authorities tenders, modern know-how, and strategic acquisitions has positioned it properly for sustained development and profitability.

Regardless of the challenges of elevating capital and the constraints of presidency contract cost phrases, SuperCom stays optimistic about its future and is dedicated to growing shareholder worth.

InvestingPro Insights

SuperCom’s current monetary achievements are noteworthy, however a better take a look at the corporate’s broader monetary well being and market efficiency is crucial for buyers. In keeping with InvestingPro information, SuperCom has a market capitalization of roughly $5.14 million, indicating a comparatively small measurement inside the trade.

The Worth/Earnings (P/E) ratio stands at -0.38, reflecting investor sentiment in regards to the firm’s earnings potential. Regardless of the damaging P/E ratio, SuperCom has proven a considerable income development of fifty.55% over the past twelve months as of Q1 2023, which can be an indication of the corporate’s capability to extend gross sales and probably enhance its profitability sooner or later.

InvestingPro Ideas counsel that SuperCom operates with a major debt burden and is rapidly burning via money, which may very well be a priority for its monetary stability. Nonetheless, the corporate has seen a powerful return over the past week, with a 13.68% worth whole return, showcasing a short-term constructive efficiency available in the market. It is usually price noting that whereas the inventory has skilled excessive worth volatility, analysts predict the corporate might be worthwhile this yr, which may very well be a turning level for SuperCom.

Traders fascinated about a extra complete evaluation of SuperCom’s financials and market efficiency can discover extra tips about InvestingPro, with a complete of 16 ideas out there for a deeper dive into the corporate’s outlook. Make the most of coupon code PRONEWS24 to get an extra 10% off a yearly or biyearly Professional and Professional+ subscription at InvestingPro, and acquire entry to precious insights that would inform funding choices.

Full transcript – Supercom Ltd (SPCB) Q1 2024:

Operator: Girls and gents, good morning, and welcome to SuperCom’s First Quarter of 2024 Monetary Outcomes and Company Replace Convention Name. Right now, all contributors are in a listen-only mode. [Operator Instructions] After as we speak’s presentation, there might be a chance to ask questions. [Operator Instructions] Individuals of this name are suggested that the audio of this convention name is being broadcast reside over the web and can also be recorded for playback functions. Becoming a member of me from SuperCom’s management staff is Ordan Trabelsi, SuperCom’s President and Chief Government Officer. I might prefer to remind you that, throughout this name, SuperCom’s administration could also be making forward-looking statements, together with statements that handle SuperCom’s expectations for future efficiency or operational outcomes. Ahead-looking statements contain dangers, uncertainties and different components which will trigger SuperCom’s precise outcomes to vary materially from these statements. For extra details about these dangers, uncertainties and components, please confer with the danger components described in SuperCom’s most just lately filed periodic studies on Kind 20-F and Kind 6-Okay, and SuperCom’s press launch that accompanies this name, notably the cautionary statements in it. Right now’s convention name consists of EBITDA, a non-GAAP monetary measure that SuperCom believes might be helpful in evaluating its efficiency. You shouldn’t contemplate this extra data in isolation or as an alternative choice to outcomes ready in accordance with GAAP. For a reconciliation of this non-GAAP monetary measure to web loss, a comparable GAAP monetary measure, please see the reconciliation desk positioned in SuperCom’s earnings press launch that accompanies this name. Reconciliations for different non-GAAP monetary measures and comparable GAAP monetary measures can be found there as properly. The content material of this name incorporates time-sensitive data that’s correct solely as of as we speak, Might 15, 2024. Besides as required by regulation, SuperCom disclaims any obligation to publicly replace or revise any data to replicate occasions or circumstances that happen after this name. It’s now my pleasure to show the ground over to SuperCom’s President and CEO, Ordan Trabelsi.

Ordan Trabelsi: Thanks, Operator. Good morning, everybody, and thanks for becoming a member of us as we speak. Earlier this morning, we issued a press launch with our monetary outcomes for the primary quarter of 2024. You’ll find a replica of it within the Investor Relations part of our Website at supercom.com. Right now, I am going to begin my feedback with a quick replace on our current enterprise highlights, technique, and Q1 outcomes, adopted by a Q&A session. SuperCom had an important begin to the yr with a powerful first quarter. We achieved an eight-year report quarterly web earnings of $800,000, representing $2.3 million enchancment year-over-year. We’re thrilled with this excellent efficiency, and sit up for sustaining this momentum within the coming quarters. Throughout the quarter, we executed and superior on varied initiatives in our portfolio such because the $33 million nationwide EM challenge in Romania. We utilized working leverage and prior investments in our proprietary know-how to realize a major EBITDA enhance of 400% year-over-year, to a degree of $2 million EBITDA this quarter. For these new to SuperCom, our mission is to revolutionize the general public security sector worldwide with our proprietary digital monitoring know-how, information intelligence, and suite of complimentary companies. With over 35 years of expertise since our founding in 1988, we have been a trusted companion to dozens of nationwide governments worldwide, offering cutting-edge digital and digital safety options. Our strategic blueprint is easy, but highly effective, lead with modern know-how, develop superior options, develop our world presence and ship excellent service. This technique is backed by the next. Our proprietary digital monitoring know-how, which scores extremely in aggressive authorities tenders and helps varied applications equivalent to home arrest, GPS monitoring, rehabilitation companies, home violence prevention and extra. And since 2018, SuperCom has secured over 50 new multi-year authorities initiatives. Our robust rising popularity as a premium supplier of digital monitoring options and companies enhances our market place with every new buyer win and our strategic deal with the IoT monitoring enterprise in developed markets, the place the chance is best. The digital market is projected to succeed in $2.3 billion by 2028. The digital monitoring market, the U.S., and Europe represent about 95% of those markets. Altogether, these successes and alternatives have resulted in a rising challenge pipeline and substantial recurring income. Final yr, we proceed to amplify our technological management with important R&D investments resulting in the launch of superior options like PureProtect and PureOne. These choices are already making headway in varied markets, together with the U.S. and are pivotal in SuperCom’s growth. PureProtect is a life-saving home violence monitoring answer. This answer supplies improved safety to households affected by home violence. This modern answer addresses home violence points and additional enhances the corporate’s portfolio of services and products. PureOne is an multi function GPS monitoring ankle bracelet monitoring answer that integrates complete monitoring capabilities right into a single gadget. Like lots of our merchandise, it presents prime notch options, inserting it above competitors in most metrics equivalent to battery life, weight, consolation and extra. So, these two merchandise, PureProtect and PureOne have been important improvements, which have helped us redefine and upheaval rivals and segments within the trade. Our cloud based mostly software program enabled peer safety product line has been notably efficient monitoring home violence offenders and managing actual time data as properly. The actual time benefit is a recreation changer to the trade as a result of it empowers authorities with actionable insights and well timed intervention to mitigate potential dangers and improve public security. These merchandise have additionally been properly acquired and have considerably expanded the corporate’s addressable market. We have been very happy with the reception and traction of our latest options and count on them to assist facilitate the accelerated growth of SuperCom into the U.S. market and additional European international locations. We fortified our operational infrastructure to assist our development and have revamped our gross sales technique with a proactive outreach method. Our gross sales staff with deep trade experience has been instrumental in reaching new wins and driving development. Over the previous months, we introduced many new challenge wins within the U.S. and Europe. SuperCom has continued displacing incumbent distributors and achieved an over 65% win price in Europe in aggressive tenders over the current years. Regardless of macroeconomic uncertainties and the continued Israel, Gaza warfare, SuperCom Resolution are being more and more related. Components like excessive recidivism charges and the escalating value of incarceration make our options not solely value efficient, but additionally important for governments seeking to improve public security and cut back prices. The corporate’s PureSecurity know-how answer have been designed to handle this development, providing an efficient manner for establishments to implement residence confinement, ease jail overcrowding, and decrease prices considerably. For instance, the overall each day value for monitoring offender on residence confinement or GPS monitoring is roughly $10 to $35 in comparison with the a lot greater value of $100 to $140 at a correctional facility. Most significantly, residence confinement has been proven to scale back recidivism, highlighting its effectiveness in serving to offenders enhance their lives and communities. On prime of those development drivers, we’ve witnessed a surge within the adoption of sufferer safety options worldwide, which aligns completely with our strategic plan and the launch of our new product, PureProtect. Within the European market, SuperCom expanded its enterprise in over 10 international locations and secured important new contracts, that are usually awarded to a aggressive tender course of. In addition to profitable new initiatives, we proceed to execute and obtain ongoing orders from our companions. Nearly three weeks in the past, we introduced receipt of recent orders valued at over $5 million from European governments. Because of our optimized and environment friendly manufacturing processes, over 50% of those orders have already been delivered. Final yr, we secured a brand new nationwide program with the Finnish authorities to deploy our home violence monitoring answer. The deployment of our PureSecurity suite consisting of PureProtect, PureTrack, PureTag and PureMonitor demonstrates the flexibility and effectiveness of our options and underscores our management within the digital monitoring house. Our collaboration with Finland is a first-rate instance of the arrogance that shoppers have in SuperCom, as those that expertise our companies typically select to broaden their engagement with our numerous array of options. Notably, on the finish of 2022, the corporate received the most important trade award of the yr for nationwide digital monitoring challenge in Romania, valued at $33 million, together with as much as 15,000 monitor offenders monthly for as much as six years. Throughout 2023, we introduced orders valued at over $10 million from Romania’s Ministry of Inside, additional extending our engagement within the nation’s nationwide EM challenge. This massive-scale challenge reinforces the energy of our PureSecurity suite and cements our place as a trusted companion for governments worldwide. We additionally launched our home violence options in different European areas and just lately launched them within the U.S. Though SuperCom already does enterprise in a number of U.S. states, we’re actively centered on additional increasing our presence within the U.S. Our wholly-owned subsidiary, LCA, positioned in California, is actively increasing the scale and scope of current applications, profitable rebids with current clients and profitable new applications with new clients. The corporate strategically prioritizes PureOne’s growth into new markets and geographies. It has acquired excessive reward throughout its introduction into varied areas of the U.S., the place PureOne has been efficiently deployed and is actively utilized to watch reside offenders. Furthermore, gross sales actions for PureOne have commenced in promising new markets exterior Europe and North America. Our new strategic gross sales staff and new wins have been step one in executing the corporate’s U.S. market growth technique and have already pushed elevated exercise inside current clients and a number of new demos, leading to a major enhance within the firm’s pipeline. Launching our PureOne answer in late 2023 was a major milestone in our U.S. growth technique. As of June ’24, we have already introduced three new challenge wins in North America to supply the answer. The primary, via LCA, we received a brand new challenge in California, valued at as much as $2 million, to supply a complete program specializing in monetary companies for all grownup inmates. The award was a results of profitable a proper aggressive bid course of. Furthermore, LCS secured a brand new digital monitoring contract in California with a longtime California companies supplier within the judicial sector. This contract is especially notable for SuperCom’s profitable displacement of a long-term incumbent vendor. Lastly, SuperCom received a brand new challenge in Canada with a famend Canadian trade companion within the monitoring options sector. This challenge expands the present collaboration with this longstanding companion, transitioning from offering RF-based monitoring know-how to embracing new GPS applied sciences. As I discussed earlier, introducing our PureOne answer was a recreation changer in securing these contracts. It underscores our aggressive edge and dedication to delivering modern and superior know-how options. By securing these contracts, we additional reinforce our place as a market chief. We evaluation our current wins as indicators of our rising affect and growth, probably in North America and worldwide. As we talked about in earlier calls, we imagine additionally it is a chance to boost our U.S. development via strategic acquisitions of native digital monitoring service suppliers with a powerful popularity and buyer base of their native markets. We continually monitor the marketplace for potential acquisitions that would generate important worth by instantly increasing marketplace for potential acquisition and instantly increasing market presence and offering vertical integration synergies. Our acquisitions of LCA in 2016 for $3 million is a superb instance. The profitable acquisition has offered to be an important strategic worth to the corporate via which we received over $35 million in new challenge wins and is generated in California alone. I am going to now flip to the financials. Throughout our earlier convention name, I discussed that we anticipated contributing to our monetary ends in the next quarters as our ongoing initiatives matured. I’m delighted to share we’ve considerably improved our monetary and working outcomes. We have now seen a gross revenue margin enhance by 123% to 55% from 25%. Furthermore, we’ve sustained constructive EBITDA in every of the final 4 years, 2020 to 2023, and seen exceptional working enhancements, as evidenced by a report web earnings of $800,000 this quarter together with $400,000 EBITDA development year-over-year to $2 million. That is pushed by the numerous development in our firm’s income up to now few years, focused spending and working leverage. This quarter’s profitability metrics reveal how we are able to seize the excessive margin potential of our challenge portfolio via profitable execution and development in numerous levels of those initiatives. The next is a comparability between the monetary outcomes of first quarter of 2024 and the primary quarter of 2023. Gross revenue elevated by 139% to $3.8 million in comparison with $1.6 million, which direct the result of the progress we have made throughout our initiatives, our margins usually enhanced as initiatives mature. Usually, the preliminary challenge levels incur excessive bills whereas superior levels yield greater gross margins inflicting fluctuations in our gross revenue, relying on challenge composition and deployment levels. Because the challenge pipeline matures, we count on an upward development in gross margin. Primarily based on the evolving challenge portfolio as we deploy extra bracelets in areas the place we run current initiatives on our infrastructure, the contribution margins for every extra bracelet might be excessive at the same time as excessive as 70% or extra. We decreased our R&D bills by $90,000 whereas we continued to develop and launch new characteristic and enhance current merchandise, maintaining us on the fringe of innovation and know-how management in our house. As well as, our gross sales and advertising bills decreased as much as $2000 whereas we elevated our revenues yr over yr. Furthermore, our common and administrative bills elevated by $300,000 to accommodate our administration staff growth additionally within the U.S., which has already yielded outcomes equivalent to evidenced by three new contracts we’ve personal up to now months. The corporate’s working earnings improved by $1.8 million from $700,000 in comparison with an working lack of $1.8 million earlier than. So, we improved from $1.8 million from $700,000 in comparison with an working lack of $1.1 million within the prior yr, ensuing for important enhance in our gross revenue. EPS improved constructive $0.04 in comparison with damaging EPS of $0.32 within the prior yr interval. The corporate’s EBITDA improved by 400% $2 million in comparison with $400,000 reflecting advantages of working leverage related to excessive revenues, deployed new IoT initiatives and continued progress on the phases in our ongoing initiatives. This achievement underscores our deal with sustained development and profitability. Our web earnings improved by $2.3 million from a web lack of $1.5 million final quarter to web revenue of $800,000 this quarter. And, our non-GAAP web revenue improved by $1.6 million to [$1.5] (ph) million revenue in comparison with $250,000 loss within the former yr interval. Optimistic run price EPS improved to constructive $0.07 in comparison with damaging non-GAAP EPS of $0.05. Our money place is secure. We have now a credit score facility in place. And, we’re centered on lowering our want for exterior money as we proceed to win and execute extra new initiatives. Additionally, final month we accomplished profitable shut of $2.9 million public providing to assist the corporate’s continued innovation and development initiatives, a testomony to the funding neighborhood’s belief in our imaginative and prescient and strategic trajectory. As well as, the corporate had onetime expense of $280,000, primarily pertaining to the legacy enterprise and allowance of uncertain debt. We proceed to spend money on our gross sales and advertising in addition to R&D to drive income development and develop our world footprint and execute our marketing strategy. In closing, I want to thank our world staff for the arduous tireless work to realize our firm’s report setting efficiency this quarter. We have now developed the precise know-how and merchandise to assist prison justice system shoppers overcome challenges and make higher use of the over $80 billion spent yearly within the U.S. on working rehabilitation facilities and prisons. With analysis exhibiting an approximate 75% enhance within the U.S., there’s a important room for enchancment when efficient applications and know-how are deployed. We’re excited in regards to the development we’re experiencing and in regards to the rising demand for our merchandise. After a number of years via which transitioned from a legacy enterprise of IoT monitoring fender enterprise, we’re completely happy to indicate the shift to good development in income and revenue. We imagine that we’re well-positioned to proceed the expansion and proceed the growth by capitalizing on the various new alternatives earlier than us. These are being pushed by a number of components together with our robust presence popularity within the U.S. and European markets, the countercyclical nature of digital monitoring trade, the rising public coverage shift in monitoring the set of incarceration, and the rising adaption of home violence prevention options. We anticipate sustained development by additional increasing our market share within the U.S. and Europe, our dedication to preserving our technological development as a strong development basis stays steadfast as we proceed to take a position on this space. With that, I am going to flip the decision over to operator for questions. Operator?

Operator: Thanks. [Operator Instructions] Your first query for as we speak is from Matthew Galinko with Maxim Group.

Matthew Galinko: Are you able to perhaps begin — I do know you touched on it within the ready remarks, however the gross margin was I feel one of many stronger quarters in current historical past. So, are you able to contact just a little bit extra on why this quarter particularly was capable of get to that mid-50% vary finance [correct] (ph), and the way sustainable is that given the place you’re in your present development cycle?

Ordan Trabelsi: Thanks. Nice query, as you’ll be able to see, there is a common development of accelerating our gross margins as we’re reaching later levels in our present initiatives. There are some fluctuations as a result of a few of our initiatives, just like the Romania challenge consists of it, a part of our revenues. And because the combine modifications between the quarters of the varied elements of the initiatives, they drive then the gross margin which is affiliated with it. Typically talking, on the preliminary levels of challenge you have got a variety of {hardware} inflations, and coaching, a variety of hours from our groups and {hardware} purchases that are decrease margin in nature. And later levels of initiatives are simply type of manufacturing extra bracelets and offering upkeep and assist for our software program. In order that the extra we might be in later levels of challenge the upper our margins might be. So, as the brand new initiatives come across, smaller initiatives will not make a lot of affect, however the bigger ones will, and they’re going to additionally drive margins via these levels the place, initially, they’re just a little decrease, and later they’re greater.

Matthew Galinko: Received it, thanks. And it sounds such as you’re centered now on the North American market as we speak perhaps as a result of you have got these merchandise now out there. However are you able to speak just a little bit about North America versus Europe for 2024. I assume is there simply extra available within the U.S. market as we speak?

Ordan Trabelsi: The U.S. is market is roughly three or 4 occasions — based mostly on market analysis, three to 4 occasions the scale of European market. We have been doing very properly in Europe. We had over 65% win price over current years, and it is nationwide initiatives we get to bid on one after the other. And even with out a big gross sales staff, we’re capable of win persistently due to our high-scoring know-how. The U.S. market is a bit more fragmented, requires just a little extra boots on the bottom. And we’re really scaling up and rising our staff accordingly to handle that. We developed the PureOne product, which is a one-piece answer which meets a variety of their necessities and behaviors which can be extra [indiscernible] to the U.S. markets. And we developed in a manner that has essentially the most, as an example, optimized options when it comes to battery life, and light-weight, and distant charging, and others that helps us are available in with a flash once we compete in opposition to incumbent distributors. However the U.S. market we expect, for us, is a pleasant and attention-grabbing alternative as a result of we have not taken benefit of it but and all of the potential there. We’re simply in early levels. Our pipeline is rising. We’re doing — we’re in the midst of energetic reside demos proper now. And we hope to proceed rising that increasingly more. And in some unspecified time in the future, that may very well be the scale of Europe, and even bigger.

Matthew Galinko: Thanks. And one final query for me earlier than I soar again within the queue. You appear to have — I feel you talked about a higher than 65% win price in Europe, and also you’re beginning to acquire some traction within the U.S., North America with the brand new product. What’s the aggressive response to your successes so far, what the technique is there? Are there any firms which can be seeing an impetus to attempt to catch you on the product facet or do you assume that you just’re nonetheless type of a uniquely centered participant available in the market, that you can keep and proceed to have an edge?

Ordan Trabelsi: You say response on the product facet, so a variety of the — a variety of our rivals, the market is roughly 10 worldwide gamers, and it is a very extremely barriered market, so Google (NASDAQ:) or Apple (NASDAQ:) should not going to be coming in any day with out an acquisition. You need to present that you have been doing this for 5, 10 years to even compete. So, they know the gamers. Lots of them have not up to date their know-how over the past current years. They use their relationships to attempt to maintain on to current contracts. The market common development price is anyplace between, as an example, 7% and 13% yearly. And we have been rising at I feel a CAGR of 70%. So, we’re rising considerably quicker than the common market and the common firms available on the market. A few of them strive to answer bettering know-how, however we have not seen any threats there with anybody that is competing with the extent of progress and development that we’re exhibiting. We’re not simply exhibiting know-how, which is extra superior, it has extra options, we’re additionally increasing our technological capabilities and including new options at a really excessive price. So, we proceed each challenge we do and we’re doing an entire lot of initiatives. We add extra options and extra capabilities that we developed for ex-customer, we convey it to buyer broad, convey it to clients that. After which, you noticed like in Finland, for instance, we began with one sort of program that we had home violence and we noticed the identical factor in Sweden, we began with one after which we added different applications. And we count on to do the identical. And what’s nice about this know-how that a variety of it’s software program on the cloud and you may apply it to the brand new bracelets we’ve as properly as a result of these bracelets are leased. Is that after we’ve a brand new functionality, we are able to share it to clients current and new alike.

Matthew Galinko: Received it. That is sensible. Thanks. I am going to soar again within the queue.

Ordan Trabelsi: Thanks.

Operator: [Operator Instructions] Your subsequent query for as we speak is from [Dan Schatz] (ph), a Personal Investor.

Unidentified Analyst: Hello, everybody. To begin with, it was nice to see a constructive web earnings and a few, the gross margin growth was implausible. My query actually is regarding the repeated capital raises over the past couple of years which have diluted current shareholders. I am a very long time shareholder. I have been an enormous fan of the corporate, however I am hopeful that we have turned the nook now with some web profitability. And I do know we just lately raised some cash at a worth that was greater than the inventory was buying and selling at. However I assume my query is, are you planning on any extra capital raises? And I am hoping that that we are able to depart that to a minimal in case you are.

Ordan Trabelsi: Thanks in your continued assist in SuperCom and nice questions. So, I got here — I used to be a CEO and when you bear in mind, I used to be a CEO within the U.S. for the years earlier than and into 2021, I moved to Israel for the worldwide CEO position and we modified a few of our technique and that was centered on development as a result of we had declines in revenues for 5 years or so and we shifted to development. So, from 2021, revenues on from $11.7 million to $12.5 million to $17 million plus and now final yr we closed over $25 million and in an effort to obtain that development, in a brief time frame, we needed to additionally develop our deal with development and that value cash and it introduced us into wants of money. However what’s good to see is whereas we deal with development and we did have want money, our money utilization had declined through the years. So, from three years in the past, it was roughly $9 million in working money after which $4.5 million and final yr was simply someplace within the mid-2 between $2 million and $3 million and as initiatives attain later levels just like the Romania challenge then they develop into extra cash stream constructive after which we may use that to stabilize our money wants. And we did this capital increase simply now to offer us extra assist and to have a cushion for fluctuation. However at the moment, we’re really doing fairly good from working money perspective. Generally we’re even breakeven or money stream constructive and typically we’re just a little bit money stream damaging and we have to manufacture issues forward of time. Like for some initiatives which can be leased, we have to manufacture a variety of bracelets forward of time and that brings us into short-term money stream negativity on that challenge after which afterwards. However this stuff stability out and with the big quantity of initiatives that we’re doing, they begin to type of stabilize each other and we hope that through the years, our money wants will decline. That being stated, when there are massive initiatives on the market that require huge growth and items, we expect it is okay to tackle these initiatives as a result of they develop the corporate considerably. These would require some money upfront typically then we’d accordingly search for capital raises. We attempt to preserve them to a minimal and as you’ll be able to see, our makes use of have been lowering over time. And now within the state we’re at after these three years of development, we’re completely happy to see that our money used for operations have declined and we’re capable of rely extra over working money manufacturing quite than exterior money. So, we’re cognizant of that. We’re making an attempt to scale back the capital raises to minimal, but additionally conscious that there is many alternatives on the market. And if there’s alternatives that would most likely return to our buyers, we’ll attempt to capitalize on them.

Unidentified Analyst: Thanks. Admire that commentary and the suggestions. I simply warning you to remember the present shareholders when that capital increase occurs as a result of we have suffered a major quantity of dilution over the past couple of years.

Ordan Trabelsi: Sure. And we’re okay, good. Sure, we’re very conscious and hopefully over time, the valuation will justify all of the actions that we have been doing to develop the corporate through the years.

Operator: Your subsequent query for as we speak is from [Mike Walters] (ph), a Personal Investor.

Unidentified Analyst: Good morning, Mr. Trabelsi. Thanks for taking your time to supply us with one other nice quarterly. Thanks for taking your time to supply us with one other one. I respect — all the time respect your quarterly earnings and convention calls. Congratulations to you guys on one other quarter of development, report development. As a long-term investor, 4 years now, I have been happy by your methodical progress over time. It has been, I respect the questions additionally that have been additionally requested. It has been up and down with the expansion factor. And I respect your reply. You additionally answered one among my questions was that, everytime you’re — each time you need to dip into the capital, you are utilizing it on presumably initiatives that may very well be constructive to us as shareholders sooner or later, right?

Ordan Trabelsi: Are you able to repeat the final sentence? You broke up for a second.

Unidentified Analyst: Every time your — each time your use of capital is directed in direction of potential shareholder worth rising sooner or later.

Ordan Trabelsi: Sure, in fact. And we’re additionally me, myself and different administration, we additionally personal shares and we’re very inclined and fascinated about to extend the worth of the shares additionally our most important focus. It is simply that typically quick time period, we have to increase capital to manifest our long-term objectives. Our present inventory worth, we imagine doesn’t signify the intrinsic worth of the corporate in any respect. We’re buying and selling at fractions of multiples that we’re seeing within the trade and we’re rising at 10x quicker than the common trade as I stated earlier. So, we expect over time the market worth align with intrinsic worth after which buyers will be capable to respect the valuations for the corporate.

Unidentified Analyst: I respect that reply. Plainly to me, that you just guys have a very good and rising pulse in your fundamentals. Would you say essentially talking, would you say that is most likely right?

Ordan Trabelsi: We have now a rising pulse? Sorry.

Unidentified Analyst: Sure, a very good, an important pulse in your fundamentals and that they’re rising in the precise route.

Ordan Trabelsi: Sure. As you’ll be able to see from a number of the enchancment of profitability, we attempt to deal with fundamentals and in addition the underlying know-how and the well being of our initiatives. We’re capable of re-bid these initiatives, to win the re-bids as we stated as a result of we’ve an important relationship with our clients and sustaining an important popularity that helps us to win extra initiatives somewhere else around the globe.

Unidentified Analyst: That type of leads into my subsequent query is on June twenty ninth final yr, you guys issued a press launch that you just integrated superior AI capabilities to boost your monitoring options?

Ordan Trabelsi: Sure.

Unidentified Analyst: And built-in innovative AM fashions to empower your EM choices by unlocking new actual time information insights and enhanced choice making processes. So, I used to be questioning about that since you guys are clearly bidding on or you’re asserting contracts over the course of final couple of years fairly often. So, my query is does the AI, the development in your AI capabilities, get stronger each contract? Like, is it does it — does it make it extra environment friendly, your subsequent onboarding? As a result of like I seen that you just guys like a part of your small business mannequin is to onboard your clients, which I like. I like that lots that you just onboard your clients earlier than really coming to phrases on the contracts. And I used to be questioning if the AI, the advance, the funding, so the AI is paying off presumably by perhaps making every onboarding extra environment friendly than the final.

Ordan Trabelsi: So, the — as chances are you’ll be aware of AI basically, the extra information you have got, the extra useful it’s. For us, it is nonetheless, we began designing the implementation for lots of those constructs and modules, and we’ve a variety of information, not simply new, however through the years with onboarding of tens of 1000’s of consumers, totally different areas around the globe, that may very well be used to assist the — at first, the officer the place they’re monitoring all these offenders, as a result of one officer may very well be monitoring 50 to 100 offenders on the similar time, it is arduous to maintain monitor of all the things. And when there’s behaviors that create traits, it is simple for us to know that one thing’s going to occur earlier than the officer even sees it. And people are the type of, it is an instance of a type of AI perception that we use the training and to enhance. However these are nonetheless, a variety of them are nonetheless in varied design and implementation levels, and we expect that there is a massive alternative there for extra worth creation for our clients as these begin to roll out in a extra environment friendly and complete trend. Additionally, a variety of the labor intensive duties of monitor the place you need to do a variety of clicks, a variety of shifts from one to at least one that can assist with that, and that can make the effectivity for this system, which is able to save successfully extra prices and in addition save extra officer time.

Unidentified Analyst: That is what I used to be considering, okay, that is what I used to be considering. Your workers, you guys make use of over 100 folks, and also you stated that, in a single reply, you stated that you just carried out a brand new, or any addition to a brand new gross sales staff?

Ordan Trabelsi: What did you say in regards to the workers, sorry?

Unidentified Analyst: Staff, I feel you are over 100. Is that true?

Ordan Trabelsi: Sure. Globally, we’re over 100, sure, 120 —

Unidentified Analyst: You are most likely fairly pleased with 120, superior. You are most likely fairly pleased with them and the progress that they’ve made.

Ordan Trabelsi: Sure. I am principally proud. We have had an important run within the final quarter. We’re doing very properly with the expansion and profitability and profitable new initiatives. There’s a variety of work. We’re a comparatively small staff, a variety of work, and we’re doing a variety of this stuff on the similar time. So, sure, we’re very pleased with our groups.

Unidentified Analyst: I am pleased with the progress as properly. Sure, I used to be stunned by the 5.7 million. I really thought which may have been a problem just a little bit, as an estimate, as a result of I do know up to now, your estimates have not, I felt like, mirrored your precise progress. However this one, I felt like challenged you just a little bit with the 5.7 million income, and I used to be completely happy to see that it was 6.9. So, I am actually pleased with you guys’ continued development, and I sit up for persevering with to take a position with you guys long-term.

Ordan Trabelsi: Good. Thanks in your assist and in your questions.

Unidentified Analyst: No information. I am going to allow you to go. Thanks. Thanks. We’re accomplished.

Ordan Trabelsi: Thanks.

Operator: Your subsequent query is a follow-up query from Matthew Galinko.

Matthew Galinko: Hey. Hiya once more. Two fast follow-ups for you, first, I get the stability sheet query. I seen your receivables have been up within the first quarter in comparison with the top of ’23. Simply wished to see I assume, is there a significant distinction in cost phrases between U.S. and European EM shoppers, and I assume, what strikes the cost phrases round?

Ordan Trabelsi: Generally, it is simply the way it falls on the finish of the quarter, as a result of you’ll be able to obtain an order, similar to we acquired 5 million orders. You possibly can obtain orders, and also you begin to manufacture them and ship them. You acknowledge revenues, however you have not acquired the money but. However, you’ll be able to obtain the money proper earlier than the top of the quarter, after which it brings down the AR properly for the report, so to talk. However we’re not a few of these are paid by supply, and a few of these are persistently month-to-month funds based mostly on lease, so we’ve an entire mixture of initiatives. The extra lease-like initiatives, which is extra what’s taking place within the U.S., it is extra of a month-to-month base, which is just a little bit extra constant than the supply, which is typically the nationwide initiatives in Europe, that are extra they purchase the items, and so they manufacture them.

Matthew Galinko: Received it. Thanks. After which, simply given how robust Romania has been for you over the previous couple of quarters, I assume, I am curious the way you take a look at the type of enterprise excluding Romania. Clearly, you have got a variety of wins, however how do you stability the danger just a little bit, or like, how do you type of fill in that bucket when if Romania slows down are you able to type of fill within the hole with the remainder of your pipeline is the query?

Ordan Trabelsi: So, to start with, Romania continues to be operating properly, and so they’re ordering increasingly more, and we’ll see if the shopper continues to keep up its positivity and its satisfaction. As you’ve got seen with different clients on this planet, there’s all the time alternatives for development applications and extra applications. In the meantime, we’re not simply counting on Romania, in fact. We’re bidding on different initiatives, and in Europe and within the U.S., we’ve energetic demos, and a variety of these will come so as to add on to Romania and in addition add on to the bottom of different initiatives that we’ve there. So, Romania is definitely a pleasant win, and quite than simply being a pleasant win, which provides us good revenues and profitability, it is also a very good reference, as a result of as chances are you’ll bear in mind up to now, there’s some initiatives we could not bid on as a result of we did not have references of sure measurement. Right here, you are taking a look at 15,000 items, 15,000 simultaneous items challenge with home violence. There aren’t many of those on this planet, and we’ve, and we have been implementing it efficiently, and when different initiatives of huge measurement come out, we may bid and present that we have been doing this very properly, and in order that places us in a brand new space the place we weren’t when you look three or 4 years in the past.

Matthew Galinko: I assume as a follow-up to that, does your success at one thing Romania-scale in Europe assist as a reference for doing state-level initiatives within the U.S. or North America?

Ordan Trabelsi: Sure. After all, the nearer you’re, it is simpler to win Texas after you’ve got accomplished California. The nearer you’re, because it’s in the identical nation, then there may be extra similarity there, however a $33 million challenge of fifty,000 items is substantial anyplace on this planet, and it is our greatest one, and we grew up a ladder. We began with initiatives in Lithuania of 100,000, 200,000, Lithuania, Latvia. We went as much as Canada of $1.8 million, and we had Finland and Denmark, and a few of these are $3, $4 million, and Sweden was $7 million, and that was $33 million, so it definitely does assist us, and within the U.S., the extra we went, we’re nonetheless doing counties within the U.S. We’re additionally taking a look at states, and we additionally thought of perhaps occurring the federal degree within the U.S. as properly. It is all a matter of the place do we’ve the very best return on funding on our greenback expense, and a few of these initiatives may have a really good return, however the anticipated return is low as a result of we do not know the possibilities there as a result of these are giant initiatives that we have not but labored on as a lot, whereas in Europe, we are able to bid on with extra confidence as we all know just about how issues are going to fall out and the way the rivals align and rating in these initiatives. We have accomplished lots of them, and within the U.S., we’re making an attempt to develop that very same functionality and the identical information, and we’re going to have the ability to use that extra successfully, so we’re nonetheless within the early levels within the U.S., and that is what’s thrilling about this. I feel there is a massive alternative there, and we’re very properly positioned for it.

Matthew Galinko: Nice. I respect the colour.

Operator: [Operator Instructions] Your subsequent query is from [Eric Hamilton] (ph), a Personal Investor.

Unidentified Analyst: I do know you are concentrating on the jail market, however what in regards to the migrant market? Is there any alternatives so that you can solicit your merchandise to international locations which have migration issues?

Ordan Trabelsi: Are you able to repeat that, migration issues with — over the borders?

Unidentified Analyst: Sure, sure.

Ordan Trabelsi: Within the U.S., there may be — sorry, go forward.

Unidentified Analyst: Are the international locations which have these points fascinated about getting the bracelets or screens from you to watch the migrants coming into their international locations?

Ordan Trabelsi: An excellent query, it is one thing that we’re wanting into and contemplating additional. We all know that within the U.S., there’s the ICE program, and so they use related know-how to trace folks coming over the border. They name them detainees. They arrive over the border from Mexico, and so they’re being tracked for a time frame till they resolve the standing and in the event that they’re accepted to enter absolutely. They’ve massive applications with, I feel, over 100,000 items. Different international locations are contemplating and have thought of, not simply now, but additionally over the current years, varied applications like that. We have been wanting into it, however we’ve not but made that our greatest focus. Our greatest focus has been on the applications within the nation for the offender monitoring. That is the place the complexity is the best. And since we’ve technological prowess and we’re capable of rating greater, we are able to go straight to the most important initiatives with the very best complexities. However these are different ones which can be complementary and that may very well be added. It is one thing that, over time, we’ll most likely look into additional, despite the fact that we have already began wanting.

Unidentified Analyst: Nicely, the know-how that you have accomplished for the jail techniques, would the identical know-how be used for a migrant monitoring system?

Ordan Trabelsi: The know-how, I imply, the federal government would use know-how in whichever manner they want, however the know-how is similar. It is totally different insurance policies. You may have totally different guidelines and totally different procedures, however the technological capabilities are the identical. You may have a bracelet. You monitor somebody’s location. There’s anti-tampering. They can not take it off. They can not take away it. There’s all these processes on the again finish, the info intelligence facet of what individuals are doing and the way they’re doing. And we offer a lot flexibility and a lot customization to our clients. We have now so many purchasers that they every need one thing just a little bit totally different. That is, let’s name it a easy adjustment, if somebody wished to vary from this to that, the know-how is there.

Unidentified Analyst: Nicely, I do know you have got a restricted employees and workforce, however I’ve to assume that that is an space that you have to be investing in and making an attempt to get a few of these substantial contracts if the know-how is similar for a migrant as it might be for an inmate. It simply is sensible that you’d be taking some personnel and making an attempt to get your self concerned on this migrant downside as a result of it is big and I feel it might be a great way of the governments monitoring these folks that come into the international locations.

Ordan Trabelsi: So, to start with, you are proper. Definitely, it is a good suggestion to have a look at complementary markets with related know-how. That is what we have been doing persistently. That is how we entered home violence monitoring and in addition the inmate monitoring through the years. And I respect the thought and the specializing in this. The query for us in relation to new initiatives and new varieties of applications is how prepared the shoppers are to really deploy these applications. Lots of occasions, particularly in different international locations exterior the U.S. and Europe, we see them making an attempt to enter the traditional digital monitoring market, as an example in South America, and so they appear very excited and also you spend a variety of effort and time after which on the finish they don’t seem to be prepared for one cause or one other to really deploy one thing like this. So, with migrants, like different ones, we have to perceive how probably the applications are to really be deployed earlier than we make investments a major period of time and changes for them. We do work together with native companions in any nation the place we work on these initiatives and so they give us steady updates additionally for stuff like this. It is not one thing that we’re crossing off or not emphasizing and it is one thing that we constantly take a look at, however we assess it versus the chance of different initiatives. Like in Romania, they did a brand new challenge for digital monitoring, model new challenge for them. They have been very severe about it and also you see it additionally by how rapidly they deployed it with us and all of the continued development of the challenge. And if we are able to discover clients like that, which can be keen to do that on the migrant problem and so they’re capable of alter their legal guidelines and rules, then that might be nice. In Israel, there is a matter with home violence, and so they’ve been making an attempt to move a low for over 10 years. And simply final yr, they have been capable of move it, after which that grew to become an enormous focus now. And now they’re having the RFE processes round it, that are guided by the federal government. So, we’re in contact with all of the totally different gamers and we’re wanted, however the governments are those that should push these legal guidelines and rules for brand spanking new initiatives to begin.

Unidentified Analyst: Okay. Nicely, let’s hope that you could develop extra merchandise so you’ll be able to improve the worth of the corporate as a result of the problem of diluting the worth of the shareholders by offering you extra shares or doing extra excellent shares just isn’t a profitable components.

Ordan Trabelsi: Sure.

Unidentified Analyst: You must bid greater on the initiatives to cowl your overhead and to have cash for R&D. It is nice to get initiatives, however in case you are shedding cash on contracts, that is no win for anyone.

Ordan Trabelsi: After all, and we’re absolutely not shedding cash on contracts. We’re creating wealth on these contracts, and we’re really profitable with our know-how, not with a low-price method which some firms deploy in some industries. The factor is these initiatives are typically giant, and so they require capital. And typically we have to increase capital accordingly. And of the inventory worth, our inventory was greater within the current previous, and the valuations should not all the time reflective of the intrinsic worth of the corporate. Because the intrinsic worth is extra obvious, it additionally makes it a lot simpler to boost capital with minimal dilution, that we do not nonetheless management market, however the market has been typically difficult when it comes to valuations over the previous two or three years. However we continued to develop, and to win initiatives, and deploying new merchandise, and we’re pleased with the progress we have achieved, despite the fact that we’re conscious of the dilution, and we’re making an attempt to maintain that to a minimal as a lot as potential.

Unidentified Analyst: Are you able to get your shoppers which can be fascinated about supplying you with an order to upfront you with a number of the preliminary capital prices to course of their order? Can do some upfront loading of supplying you with some cash once they provide you with a PO?

Ordan Trabelsi: It is an important query. The governments are normally those that resolve the construction and the funds. Bear in mind, these are aggressive processes. So, there’s 5, six, seven gamers competing on, and the federal government says, “These are the cost phrases that I need,” and it is arduous to return and say, “No, with us, you must pay upfront.” With everybody else they will pay over time. So, it — typically you have got the flexibility to do this, particularly when it is an current buyer that is been working with us for a few years as a result of they have already got our system and deployed, they already know us, then we’ve extra flexibility. There are additionally typically we do not have that flexibility, and we’ve to evolve to the construction that the shopper calls for.

Unidentified Analyst: I perceive. And I —

Ordan Trabelsi: We have been doing this for 35 years, sure —

Unidentified Analyst: I perceive all of your responses, I perceive that fully. It is simply the best way of getting relationships with a shopper that makes them perceive, “Hear, we have already got the very best know-how, we’ve the very best product. And also you need to come onboard with us. Nicely, we’d like you to assist us and guarantee us that — or assist us to get you the product so we aren’t going into [hawk] (ph) to produce you with the product you want.”

Ordan Trabelsi: Sure. And we’ve these conversations once they enable us to, and as soon as a relationship has developed and developed through the years. So, actually it is an ongoing sensitivity and method with these authorities clients, that we even — we have been working with them for 35 years, as a result of even earlier than offender monitoring, we have been doing passports, and ID playing cards, and drivers’ licensees. And it is all the time been that — it is all the time escorted with the funds phrases, it is a massive one — a part of these authorities contracts. And in the beginning you have got much less say, over time you have got extra say. When your know-how turns into extra distinctive and extra prevalent as an trade chief and that is what we’re engaged on on a regular basis, that is why you retain seeing the continued funding in R&D. You may have extra skills. And we count on and hope, over time, as we develop into bigger, our growth potential is there, and as soon as we manifest it we’ll additionally be capable to enhance our phrases with funds from the shoppers. However our shift from South America and Africa to the U.S. and Europe has already accomplished an enormous quantity of profit enchancment for us when it comes to collections, when it comes to cost buildings. So, that is already been an enormous assist for us over the 5 to seven years. And now, even with these visions, there may be all the time room for enchancment, as we have mentioned.

Unidentified Analyst: Nicely, thanks very a lot for placing up with me and taking my questions. And I definitely —

Ordan Trabelsi: Good questions.

Unidentified Analyst: [Multiple speakers] — nice potential, there appears to be some disconnect with the worth of the shares and your potential. And now, you have got proven that you are able to do a web revenue which is the crucial factor. It may be in step with web income. It is received to enhance the worth of the shares.

Ordan Trabelsi: Sure.

Unidentified Analyst: Thanks.

Ordan Trabelsi: Over time, that is what we actually hope to occur. And thanks very a lot in your questions and for supporting SuperCom.

Operator: [Operator Instructions] Right now, I’ll move the decision again to Ordan for closing remarks.

Ordan Trabelsi: I need to thank all of you for collaborating in as we speak’s name and in your curiosity in SuperCom. Please contact us straight you probably have any extra questions. And, we sit up for sharing our progress with you on our subsequent convention calls, filings, and press releases. Thanks and have a very good day.

Operator: This concludes as we speak’s convention. And chances are you’ll disconnect your strains presently. Thanks in your participation.

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