SuperCom (SPCB) 10 Aug 212021 Q2 Earnings call transcript

Ladies and gentlemen, thank you for standing by. Good morning and welcome to the SuperCom Q2 2021 Financial Results and Corporate Update Conference Call. At this time, all participants are in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Participants of this call are advised that the audio of this conference call is being broadcast live over the internet and is also being recorded for playback purposes. the end be August of of hour approximately XX, replay the after the webcast call available will one XXXX. A call through to Core now Gordon, Relations would like turn call I to firm. President the IR, over of Company’s Investor the Scott ahead, Please, sir. go

Good call. Thank today’s you, for in and morning Paul. you thank participating conference

leadership SuperCom’s from Trabelsi, me is Ordan Chief Executive Joining team Officer.

forward-looking performance During this for that future or address results. statements call, management statements, will SuperCom’s including be operational making expectations

results actual differ other factors that those Forward-looking materially statements involve statements. cause from risks and may to

more about that call risk particularly call, Form-XXF, release most EBITDA, includes believes periodic For information refer press SuperCom these to financial be useful conference can this on factors recently its the a risks, non-GAAP the in cautionary reports and please SuperCom’s accompanies evaluating SuperCom’s Form-XK statements and described in performance. measure in that Today’s filed it.

results substitute You accordance with should as or not a consider isolation this prepared in in information for additional GAAP.

pleasure non-GAAP net release. go that The the law, only Ordan, this by reconciliation in today, accurate press turn reconciliation earnings Except Trabelsi. as my financial see of obligation For reflect contains XX, time-sensitive update SuperCom call to measures August table please as the most publicly these revise loss, Ordan disclaims XXXX. directly required call content to GAAP measure, to please is any of located financial comparable or that to SuperCom It information occur its now call. of is any circumstances or over events to information ahead. after this

QX of will in results another to the Earlier, successful our we as A continue execute XXXX. you thank and second website. on Thank today. quarter quarter, Investor plan. was of issued us our everyone, of you, business release Scott. and morning, section our available which joining Good a we be Relations for press financial for copy

goals future and quarter, higher leveraging then marketing over sales sales primary to is profitability in to revenue in focus and As mentioned investing improve turn, our last drive time.

sales progress segment. It's make important During in the continue as our second marketing customers, quarter, cycles particularly and efforts, government sales to are long. with that ours, and to the remember processes with such we IoT

bring they be are and X, customer, discerning. XX you tend with once even on new to us customers stay very occasion. But on a or sticky XX years Our for

our Although, we In Europe, with did activity, seen to progress COVID making increased started we've sales start related restrictions and moves as have RFP efforts. ease.

the program have a last the California. want won million. $X.X active In different been well, new XXXX, potential we've customers which tender seen interest increased July of launched than and project year USA of Finland the a for We competitive $X X, RFPs million more one. as EM in We for RFP of and competitive from

to a opened from support sales, Support sales small second support up our quarter, and beginning the offerings see our USA we can received XX in over the requests footprint. of offerings already interest. new to We’ve began potential During USA in unique and Kentucky, The quarter, Since proprietary scale believe, we new customer evaluate in We technology to activity our growing the resources, grow customers. second and help sales our USA increases from to market. demo office our tailored the we the tech US.

over video our to While time. can activity translate to time into increased see increases It evaluation not resulted in some and will yet efforts, in take revenues, revenues. lead revenues higher

cycle. normalized In improve report last into I confident off, investments quarter we from that highlighted over significant growth revenue year, called annual reporting time. fourth pay reporting quarterly our transitioning change in profitability these driving However, a are will our and semi

of reporting earnings. is quarter quarterly second This a period

improvements of quality and better in basis, business are enhancements but enabled not understanding our us reporting. During enabled These be to quarterly cash to only various that processes of our strategy. a this made the to also our us a transition, we and improve earnings operations have our report have allocation our in timeliness improve

tracking remote in been both products Ultra-filing Our using monitoring. see which and our has primary in offenders quarantine services opportunity applications reducing enable spread segment segment, of IoT This monitoring also large provides and the a COVID-XX. focus We has compliance been criminal various towards this trend driving home these a to place. benefits trends. confinement, years, are incarcerated as provides using that by taking driven recent market, correctional that as facilities institutions manage a increasingly trends In correctional there populations. tool are several has

monitor manage is By movement the they able inmates, effective. show restricted facilities of location to control First, being can the effectively offenders, that and stay and it the areas. importantly, within to most these

with monitoring overall punishment. recidivism the rethink Current increasingly who their and rehabilitate been are the to problems many objectives, causing and This overcrowded Secondly, society, and trends versus percentage to prisoners, X,XXX managing of have these facilities measure be for and reduce to to directly similar to emphasizing many the in has offenders effects. with addresses enable be driving prisons. remote using relates rearrested and are found need inmates that and exceeding correctional is facilities, and it rehabilitation offenders, with as prison been former institutions dealing overpopulated to having congested growth Their them. growth offenders also creating problem are facilities under the

to savings these provides cost dramatic it Finally, institutions.

of This at IoT it increased solution. interest eliminates inmates driving in big a and a of a prisoners. prisoner, method the keep residents, someone is arrest, cost of for benefit, $XXX house cost confinement providing by $XX between an tracking the with to and associated of many on only is costs $XXX they government maintenance housing and the state day day each the to $XX alternative federal Our these

reduce compliance for of people demand viable quarantine look demand in for how verify pandemic, also provide benefits, COVID-XX. solution will causing population. severe to tracking these overpopulated to In many IoT addition The COVID-XX, an capabilities the government's had as this of and recent to been spread should magnified to effort has outbreaks manage increases that rethink options the they authorities during by facilities

Our of effective solutions to with contagious spread effectively by to in manage risk technology solutions PureCare and quarantine much comparison or These we're attempted the monitoring. and not in less run of more government's solution provides the for people invasive, country, into hotels a their diseases. while to companies the tracking ability travel have who minimizing experts are

gone while International an Israeli Airport. Since integrations Our in of Prime in the the Compliance people project we at at Since were want share March Gurion Quarantine to enables place on solution Israel. PureCare I fully PureCare XXXX, quarantine residence, their personal us, project comfortably and awarded with worked Police ensure of although government to monitored was and the Health, and Minister took compliance. Ben our yet, Israeli of to Israel, update continuously Ministry Ministry a live have body rewarded the in new elected. to have initially projects not elections being

do some the for around not new the government government At still in That the the new is infections few number reported able the our which the increase daily over we're to daily is and point, this the The current this educating in uncertainty our rapid costs the investment of working scope of weeks. new COVID-XX project. said, expected, environment the for past on recoup the into being the originally alarming of new be launched scope of less in cases the country number the day, June While county X, solution, project. COVID we will the a believe officials to day Israel. – with the we reason, timing in Israel did project field previous and If selected been a in August over on has effectiveness large in a there of XX than for grew X,XXX government. yesterday, and by Israel proven mid as very

of to in which piloted has believe chosen and the an solution PureCare that effective We be our the been Israeli and mitigating previous the virus. tool strongly will tested Government would by spread continue

IoT lowering tracking in Our Monitoring continued progress with trends. where government to plan Monitoring we of $X.X government by award. year the deployed the project, efficacy, PureSecurity country's objective be and strong full our deployed the Finland, and by the being Project the received market awarded footprint were for underlying This has a public National – XX, objective along overcrowding with the On recidivism. Suite and potential June Electronic with million we safety, Electronic segment is reducing fencing extensions prison or improving is

been marketing a This on driving supporting XXXX. community with the California This been efforts a addition at Although, in term in the July valued the success reduction our in technology extendable validating boarded very also as and has Programming reentering project of Rehabilitative competitive will those highlight this to million project has project with the project and initial we of with three additional of up to May, Services in our X, of already providing Juvenile in and recidivism. launched objective in market. actually early California, $X two years offenders years, focuses

While the facilities, reduce we many original towards well think of technology. more using home the in are We early highlighted that in secular solutions as overcrowding the providing prisons address and the a drove costs. COVID trend increased outbreak challenges stages to overpopulated interest as

late, As the PureCare we we're cases the as to role solution, in expand, believe play to which of Delta seeing can find the important variant increased spread. an interest COVID of continue

our which for years, highly of over Europe technology reputation in secure has tracking the rate been industry. validates recent win offenders in XX% Our for IoT project and in high regarded bids our

directly after $XXX,XXX met. ordinary $XXX,XXX expense up in XXXX. up in using versus we QX. up for marketing quarter. was versus shares, expenses XX for million, first Gross approximately quick And revenue QX. were in This or was invest the the down our QX technology financial to months to comprised at and conditions completely QX. $XXX,XXX financing The the which efforts R&D we in solutions operating sum pay to from principal from second subject quarter $XXX,XXX to unsecured the $XXX,XXX million option X% anytime were in on administrative in closing growth Selling the announced X% And On with investor. and a initiatives, of proceeds of trends an take to positive a in of that is best at the of in $X the -- as company. with SuperCom’s completed June the two-year a lump continue advantage consists of continue annual of in the at $X.X payment financing QX was prior the QX, operating will the paid XX.X%, expense margins portion subordinated the QX IoT gross we General XXth, We in In coupon, all company's a generated a offer overview. being and only of certain promissory there's focus which QX in XX.X% discretion note sequentially market. quarter, $XXX,XXX on of our note institutional to business note to supports This capital was a maturity. with marketplace. its

the operating Our $XXX,XXX. income negative in second quarter was

in Our negative an quarter. operating X.X% of margins of versus the loss $XXX,XXX first operating

margins operating QX from was negative X%. $XXX,XXX income negative $X.X were in negative in QX $X.X versus were million in million for expenses Financial QX. QX. and improvement Our $XXX,XXX Net

debt increasing and million, $XX.X XX, June to due now was cash This of $X.X compares the million This total of was -- $X.X was short-term, and was from which partially $XXX,XXX XX XX, XXXX total $X.X million, million June and of As as financing at as million, million, were of equivalents was of which debt which to $XX.X $X of short-term. of December of recent restricted which December XX, restricted. June million restricted. XX. Total that June cash to compares $XX.X of XXXX,

operator also turn to I'll that, million increased end the at from the QX call end open of QX call $XX.X the for And to XXXX. $XX.X over million capital questions. of Operator? working to with Our the

have Thank Instructions] we your from [ph]. question. your a And Wiener Please you. note is pose line affiliation, live. coming Ken [Operator your do Ken, question

was seems morning. cetera, view doesn't problem good it there forward/ prison wondering, growth be et up it's to the a and hi, show you numbers you Yes, that but seem environment COVID keep with saying going revenue company, how wondering, in to cetera, et I minuscule revenue I the and the kind of in was the and

thanks question. few on There's asking. good underneath the And for a a that surface. are That's trends going actually

almost IoT solutions to million, segment If look was $XX from our our the of identification at XXXX, roughly from zero. that you them in close were tracking revenues and revenues all

million. in $X XXXX, business segment, America. the in That's from South Now to mainly and traditional our revenue Africa declined identification

recurring revenue and economies, We have shifted over Europe. US more the to developed years such the in businesses as

by but the IoT the And around decline being declines business, so, altogether last we $XX million, while this $XX.X occurred to growth in year. the in other has million from have down business, seen identification is of reached of growth masked so parallel, business revenues it the

our quarters in to long-term in and invest invest continue teams, focus that our is and R&D. Now growth to over the in past marketing few investment the sales new includes in

We invest projects high with few able very small and technology. our marketing team, on hand, And blindly of our start and though were our on our in we and balances have with lot technology. had sales And won to the new and a low. marketing. these bid more of success now tenders. effective can have we consistently and past the we're just scored that after deploying projects even We've we've cash in cash very won a And projects, world. we almost strategy and larger proven because years, to We those able sales been are governments technology, over very our win around

As new there’s because in and six to covering a equipment, cash first we past, lot the you're required next cash manufacturing requirement, projects later in the months, XX expense. of our mentioned year's the for that you're only as outlays a

[Operator is live. from Kevin question line HCW. Kevin, Instructions] your next Dede is coming from The

it congrats change, on not costs the may my in little your change in is and how COVID tracking project you'll numbers you're that recoup taking in for Ordan Israel. out. question, your Dive Thanks, knowing government in the knowing while there, bit comfortable the government? proceed, given get a How

It's a question. great

formal of guidance of we legal government. according our With step the the step the whole the the project, to help by from from department process throughout the maintained analysis

we to formal with RFP, government manufacturing to and want indications production writing start and award the So formal giving for and integration formal bodies.

And the we based this we've demand, that off requests believe for so whatever scope. things launch initial so were done of reason, their in that doesn't and the

pace, proven in we and to necessary, in the support Israel, that help And here at is all the and substantial rapid to are ours think Israel, that's the cover economy because We compliance numbers mitigate costs Israel in it's solution. it only growing immediately our deploy because very hope. country. have And the virus one happening tested We quarantine and government very investments. here the a was a

timeline evaluate? I what's your them? Given might -- of done on either, is to your changing proving mean, do the sort nay? what's feedback government, if -- read think And some yea to how you've they What and what they you or

government of government, new. and question is So in the the expert or called new lot the technical a politicians lot are the that's a of people brand

solution. So, some do. does of they're it how up-to-date them what have heard doesn't it And those solutions. And not they and works. understand And the of completely

The other an not exact but question am understanding. pro forma received I updates,

advise to solution. continues continue to the of ready us counsel step the be on way our the interactions and government. And We deploy to legal with every

if in would I solution. remember you those other to Okay. had Ordan, speak similar countries pilots all. I'm if And wondering, correctly, for can you

Yes.

other that pandemic regions. was at of past sent and XXXX, moving America, it's start East Middle the out hard South the a fast. hold are very get in lot in in things government to a for A of where whole technology And the extremely requested the have situation. We we the for and pilots, our of

for We have any of the at they immediately, field. that's want very a that requests is timeline to manufacturer, requests, company high theoretical not if, feasible a solution a to wanted the amount XXX,XXX least or then units, in and units which they

to at So we were able time at move not the pace. that

things little consider little it the governments and saw solution Delta around deploy Now less are we will things wave, the out stressed and the Tracking earlier Solution. moving they year, such developing wave this slower, as, a third fourth understand better, did is a our properly, some potentially in a it or this as countries variants,

Things continued interest very All day. to to Israel are restrictions, quickly.\ So environment. in happening seen very around in all every people in around, is terms requirements, volatile world. the change And changing we we've projects close COVID. as it. of behavior in governments terms receive around These of around the well. similar things political COVID stay the regulations And We've of are

it's, to for whether speak seen, pilots financially? research support or support, you can Have you

Yes.

You're right.

that, repeat you for broke I out You a second. just

sorry pilots Israel? many of outside I'm the Yeah. for

broke that, You you repeat out just I a second. for

right. are You

Yeah.

was so financial deployments the you've received, -- either wondering support, I for just to you deployments, of R&D the Ordan, can any sorry. Sorry if initial Yeah, side outside speak the deployments, on Israel. or

What do you financial we've by support mean received? that

Yeah, money your income checks, wire transfer.

have we raised financing. went but No, -- we sorry actual customers, from from

potential customer financial no, Oh no, support. Yeah, were yeah, customers no customers. support, from

Okay, yeah.

projects of you're you equipment, to it At the because Now recurring lease model revenues. the point out you allows into IoT to then maintain to it's you of other the hasn't the lease that at these ownership streams, this the which project significant use financing It's usually it comfort end it manufacture maintain revenue been in support. work give predictability and the usually but us and customer. us a future equipment, tracking places and and our way

that the also So here. in our and mainly model, industry is

Okay, Why can in Kentucky was talk little bit, understanding about that we based please? was California. LCA my a just --

if not executive that in XX how and was leadership You correctly a gotten think remember new I'm your business don't an I in you also US that just wondering been whether you've changes about there's hired business in States the Kentucky, we you but Kentucky, why executive -- growing, chose the help in should trials. -- to or the given he based think I run think

where in in the area centers this monitoring talent. companies the of had we we of around, can put for Right, space office the monitoring electronic that our in California comparison so universities past. have We new a our to some lot around of tech experience There's Southern in some US.

better great to at get speak. talent so rates, we Here

in there, among already or department personnel years personnel, additional with location and sales five with the a different help for and past that, where the had So this. related office to we've synergies people to expanded the six you onto all the have small

Okay, don't were that know are other or there? if any know proud a experience changes in I leadership there is that I business. in in an of two so there lot you changes there individual had was ago, that to person have because hired maybe years this leadership

senior and some California provide then of where still few it's you're of side people business, buy personnel we in monitoring brought monitoring there, California. speaking US, some and -- Jason A people directors that two other treatment of personnel. on our the of a Gilbert in or been regions the the in team just our maybe there as US provide And we electronic ago, as for in in we program lot since treatment services one VP so side has with more Right, well is technology. the has years has people had in but different years, the same North six been the or that's the our the across the that there, sales, business have moved, new have we management -- like project well us as as electronic five in the

it's been effective. very far So

expect has the channel. grow can sales over high time. You effectively of on to and scoring And and continue our been short we actually period just now a the and of see is we a lot already our marketing -- just and of estimates highs it's of those operating to is it time, very technology demos numbers a beginning in new number this evaluations

Okay.

the at you is feedback? forward? speak how what and that that reflected not deals -- where -- can, expectation consummated can they getting your just you stand, mean, I And, on going I get to point. new But remarks prepared be might know, XX Your this mentioned, you they're

can the we in tracking investment And So past Czech quarter. our announced offender Sweden, the video a Europe. the it’s a there And more call. use of in prevalent where a few different tender much where house projects also our more little the We in technology of US, it's the national Europe, In the on in and won solution tailored Bulgaria. has GPS you people tailored there field large Denmark, is is win Finland track second in Republic, smartphone in just in to to have been tracking. years, also more arrest

to incumbent day. old ankle on may leg, your every to just have heavy the have bracelet, the is on the traditional and remind TV technology, very solution, you bracelet you charge a single So seen it

battery to the and to the have because for hours. to up connect wall it charge XX You runs

new that We years technology products brand for years. runs battery have are SuperCom, a at one developed or two

It's offer for smartphone, majority it. video that content, charge communicates by lightweight. to more. to the -- offer additional developed conferencing, [indiscernible] are Samsung, this has then have offer which and seamlessly capabilities and able communications, very never tracking of we a especially leverage populations it And You and useful much And effective solution. with is

to our looking They past by or fragmented. more of which US, many in are It's in with that county the locations of not has state trying US, more programs of in positive. started Sweden, going look think And just to more showed we're and Denmark. customers Most those people we capabilities sales business technology. around well. many are the we and local those the sales to the lot of on that were different which because more I've that programs, country to personnel support, a beyond do that people out operations now to our They're states and technology the it into talk counties to government that, mentioned customers handle for the interest of In more it small them more many, in offers. our investing and managed So providers run are and interested get and demos, different the is able that programs, will municipalities, demos evaluations valuable country evaluate. but at as which our level, the

it. turn Ordan. my over. questions, the taking appreciate for floor I'll Thanks I

you. Thank

you. call closing Ordan to will I remarks. pass the for now Thank back

sharing your conference have good for and thank the look our to want day. call. for I of Thank progress SuperCom. next you call all interest you a We today's to in in forward on and participating

gentlemen. That and today's ladies does conclude conference you, call. Thank

this time, have your at may your disconnect phone for participation. You wonderful day. Thank you and a lines