Duos Technologies (DUOT) 1 Apr 242023 Q4 Earnings call transcript

Good afternoon. Welcome to Duos Technologies Fourth Quarter and Full Year 2023 Earnings Conference Call.

Joining us for today's call are Duos CEO Chuck Ferry and CFO, Andrew Murphy.

Following their remarks, we will open the call for your questions. And before we conclude today's call, I'll provide the necessary cautions regarding the forward-looking statements made by management during this call.

to call like CEO to would Ferry. Chuck I turn over the Duos' Now proceed. please Sir,

Welcome, you. thanks Thank and everyone, for joining us.

issued fourth year available in the we results copy filing Relations details of other understand today, a Investor release announcing A release Earlier is as well release press our section view operational for highlights. the as to that quarter XXXX full better the the during and well as discussing our press of be to our we'll website. with XX-K our listeners some SEC I of encourage all the as call. financial

addition to in gave financials, assessment the recent I I'm going during the Today, call. commentary update earnings the giving to last on

company been best it manifested shareholders. headwinds During that call, in achieve year I provide to We our in for financial mid results told long-term the challenges, for in and for has anticipated outlook pleased position strategy. and was you these I I'm us our value ever as strategy long-term executing improved our remains believe that would and report our despite short-term for the XXXX. performance much am unchanged, last the to that expecting additional challenges I

my you with plan the critical complete Outside What following milestones to a technology-focused this make and CFO. results. many steady in we in company the critical We'll recurring with different the more the to most I'll a from our business financial on strategic our financial financial us from after months remains be CapEx-only continues subscription of coming commentary transition progress the XX review the achieve is update a significant results, and assessment to business volatile the comprehensive revenue. programs, recent report to progress on for giving you

to Andrew. you, Over

Thank you, Chuck.

and progress have begin with stages lulls through temporary of cycle we new the growth, as contracts large calls, operated Duos historically of periods development. in has interspersed execution discussed previous As intermittent with various

challenges QX continued on this full in supporting purely results the a in primarily year the -- focus and underscoring efforts and model revenue, subscription-based Our challenges future. exemplified the to ongoing model for the our volatility in CapEx

the addition, results of addressing within of technology-based that will were industries, for machine speak which XXXX vision our our systems of expertise control certain anticipated pursuing AI delays are currently opportunities existing and out QX company clear, additional assessment. be his on based with to In business the is but X disappointing, but Chuck To our customers. in

railroad are sector cutting-edge the that this challenging, make business technology to Forecasting make We and the within and the positioned predictable. to intelligence new achieve within now the ensure value breakeven rail been and chain for artificial of is adopting proud. and timing more has strongly industry we revenues company making remain adjustments we

results into get quarter the for for now the Let's and year. our

X high-speed XXXX. revenue the focused year Total resulting $X.XX the the due compared XXXX. XXXX. at timing second compared during million decrease transit in $X.XX for into at shifting was the XX% Total revenues delivery, delays the half beyond project of to the decreased Much for to to of to the fourth the million revenue XX% quarter quarter decreased in ongoing and delays customer-driven rips control of anticipated production the company's thus overall

XXXX revenue AI is onset several This are also services increase The sources transit support recurring and a service approximately climbed consulting with company with an revenues. anticipates on XX% data much basis. recurring throughout following expansion early revenues customers the company in the and where AI services into by services, with The year-over-year growth of customer. its of software was coupled the began the by new and contract growing on subscription a of beyond. focus contracts completion and there XXXX, greater a these in fueled transition the of Underlying portals services will revenue deployment which continue of deployed

quarter Cost of XX% $X.XX the $X.XX million revenues QX for for to to decreased million of XXXX. compared

deliver revenues in revenues XX% on a cost marginal intelligence revenues are despite which represent these trend. company maintenance increases this The overall cost is put artificial to decreased Cost in year, and consulting X% and the of support into a increase noted. additional decrease the positive margin only in services, continues due service previously the to services high by requisite which decreased algorithms of category, and revenues to small for For year-over-year services. and

$X.XX in decreased to compared XX% XXXX. Gross $XXX,XXX million margin XXXX QX QX to in

margin rips. half compared of into as of XXXX was XXXX, X result service project advanced a by ended the experienced consulting increase primarily were in continued The progression the the slight in of activity decreased gross of year, focused offset latter that for year contribution. to and consisted period the XXXX. procurement same these manufacturing business a transit direct the delays for XXXX, stages XX% For decline in December XX, The

Operating expenses million increased $X.XX XX% for to to QX million $X.XX XXXX XXXX. for QX compared

expenses year addition professionals increase with There industry. sales extensive and marketing in including XXXX a rail full leadership as higher to related was the experience of of and commercial team, in additional into the to -- were increased capability overall, in XX% the operating For the the compared XX% the XXXX. investment year

in with administrative during issued including increase factors, influenced XXXX. was share general that costs XXX,XXX several small roughly a were by charges Additionally, amortization options noncash and associated

across in talent the changes operating took the in XXXX, efforts to given reflect line with XXXX. steps plan. savings invest and company's an late $X rationalize impact expense operating with performance positions to long-term the ongoing XXXX In some staff company anticipated in in expand capabilities and around the These in of lower costs million

revenues The to respectively. increase for million, for QX in from were December the operating and beyond XXXX as Net QX year in in loss XXXX experienced of of half for a delays activity $X the a million business as loss operations stemming operating for ended was XX, project in million result The timing XXXX company's shift year compared the losses million well for totaled control. approximately $X XXXX. XXXX temporary were loss latter during a that operations from the the system $XX.X decline and $X.X net

$X.XX for million $X.X the December activity and was years for project revenue. recurring This in and XXXX. XXXX XXXX ended consulting ended loss loss $XX.X $X.XX million, The compared share to attributable the December year was and and delays in increase net company's respectively. XXXX, the increase XX, of Net XXXX XX, and offset primarily with loss to the slightly is in an Net was per XXXX services respectively.

in year $X.XX we cash million sheet, equivalents. with approximately cash the and balance the to regard With ended

$X.XX as receivables additional as of over $X.X an primarily have million installations. inventory lead consisting cash as future for We as well constituting assets, $X.XX together million flow items X rip of $X.X in of long well million pending contract million

the company net D preferred million than and more and new not of both from sale took in Series Just of and E convertible investors. -- $X.X proceeds the recently, Series stock with existing

call, currently cash has this million and in company the of approximately cash $X.X As equivalents.

the approximately million At operations. as visibility providing support We near-term end $X this as and appreciate represented subscription nature the revenue, capital $X.X contracts cash in near-term X of platform. recognize company critical remain Class X Duos in we on rail our maintenance continues rooms artificial contracts services in other $X by portals and of is revenue additional implement future the our and intelligence inspection their our of support X ongoing pursuing renewals, approximately and million backlog year, of million are encouraged we in network modifications previous contract railcar our have the long-term and and to to by ensure long-term path strategic our continued performance major the to transit we have and the that operators awards, shareholders who the the evidenced believe receipts. infusions, our and freight

control As out our anticipated, to guidance that cancellations. news XXXX is in to not effect delays QX. The lower range, us we revenue net allow the project contracts is our rather book the of than positive revenue of project delays sufficient our did withdrew during reported meet the underlying result short-term which of

the next than X and the execute majority and the expect to near-term that contracts in The in execute balance the be are We projects. to in capital ability business with the the our necessary outlay the quarters hold X to XXXX. we we revenues debt, earlier to no completed causing execute has lower fact, us X of This expected all miss sheet our booked of during inventory plans. maintained to normally forecasted. In capital cash X to flexibility be XXXX guidance to gives next sufficient a

my commentary. back That pass Chuck. to call the financial now concludes I'll

Thank you, Andrew.

standardization inspection in of unions portal and our current customers, potential terms artificial to performance, regulators hardware, reliability of and be our by IT continue that software, and best-in-class intelligence. is railcar infrastructure We told the labor customers,

to overall of improvement dwell significant shippers investment at cost data, a and increase owners have of risk, and return used the on turn terms of metrics. knowledge, been available, We efficiencies and which to shown by conversation this and can has capability first be done number to use then never the how how it car our technology to manufacturers, turns the how to to safety, previously is the in audience and maintenance velocity

anticipate legislators results are with will met the the the use XX requested to Hill where to data passenger thus expand in very the than future. on subscription senators more continue from leadership of the large been far. our Capitol several team customer state technology senior from a received a to XXXX, technology they've this by I've and show We and Recently, In portals were we this they've and excellent governors. using for and customer, several excited congressmen

safety leadership greatly qualified who technology when by demonstrated We tool also the benefit rail carmen, have personnel. national strongly mechanical believe this of used mechanical the would to

solution our and border have across illegal to challenges where with keen intelligence CBP for the suspected our have officer this They the artificial discover demonstrated detections. get technology vision riders border it railroads help agency to customs patrol also and the and assist used are we border shown We and be increase safety the and faster. to can of use machine to them

is to into grow Our turn positive profits. that reaction contracts revenue challenge and that

last of customers. has been portfolio, advances our reliability, made which significantly installation has intelligence all to technical artificial now the responsiveness customers. Over We've years, our major by X.X improved Duos current our adopted and to our speed

speed faster computing our the enables dramatically We and detections notifications than the or less, increased the intelligence for which is dispatchers. at our in and available XX have results seconds edge making immediate artificial engineers safety and also competitors locomotive for much

industry the We enhance So with the portals and power into we've to AI other XX inferencing railcar that company artificial position computing further calls a our centers intelligence operate inspection previously have we and verticals. our as business discussed fast intelligence enable diversifying edge which been our artificial currently machine at -- edge. vision data extremely

in In deploys contractor well-known Dell out another year, computing won see NVIDIA been international at sales power the space. include we Tune in an sponsored large in fact, advances competition all internal the our satellites media and we released and company partnership or will teams by defense computing has be that Dell that beat edge fast our discusses last where a Technologies by general. in Technologies, and to to that

great we use. we covers Technologies to and This important patent it computing year, the part intelligence in Given patent edge and issued of several Trademark rail in patent the us requirements defects knowledge of announcing NVIDIA, this to does use with This acquire, our intelligence in shows and this an it value that detect and to XG a overall massive expertise our accomplishments Office artificial and press for trains our outside AI support rollout. U.S. is respects. it expertise AI and present but the release The inspection companies methodology, with thing tool. is of artificial only to our Not to given significant methods hardware, and the and also discussions important our industry intelligence, teams. compute several we data Patent partnering demand artificial be and IT with aligned a railcar use Dell value their computing granted recognize software, are of how Earlier chain. with strategy this the for

intelligence We our made have progress services to in and revenue artificial focused. also shifting more software, model become

I is signed for to automated subscription inspections recently us engage railcars. provide a major contracts deals with to operators believe the and services X for Our trend beginning, railroads of other support just AI

than total more to As our That last scans a railcars railcars XXX,XXX point, data technology year. unique of in conducted or freight XX% population North approximately X.X of million car America. translates the

in that including, but railcars. a future use designed the large inspectors calls, extensively world-class updated the last say it interface to and generative has I but supporting release hub software is in in the safe a new technologies now And in mechanical and about originally version years, will we'll limited car operation virtually systems. and new this are all which to, important to We sensor-based algorithms, continue interface more our AI that be the platform, to to version new the in not to of user invest X will and number of have been number development, chain, research XXXX, our Centraco is the of which component with be hardened. of say deployed Centraco customers. in value an a inspect it's for

artificial We regulatory automated to the make our faster generative also of these reliable. portals systems through the AI that creating strengthen detections use and more sets training leads. In obtain being vision machine intelligence now some are to used were cases cases,

previously me $XXX Chief Chris King APR and Officer as Chris at Officer. growing was responsible worked the our he Energy, key Commercial as leader positive for we impact revenue has He appointed XXXX. significant XXXX to experience Chief As reported, Commercial for a at he's Duos. business revenue very $XXX million million deals, of closing here that more and in having in than in from

current Our expect million than of more year steady both million, around and beyond. in we at we and are remains that $XXX to opportunities growth $X.X our drive this engaged backlog

subscriptions we of with several located the are portals AI telecommunications traffic discussions to of the identified talks the railcars Furthermore, which to States. support in data we in also infrastructure support part United centers during in first large heavily that As sell have of points its to set, at opportunity data from chain. progressing build interchange companies Duos-owned several deploy

risks out with current reviewing this rail our new On them delays outlined plans of customers of continue our and and our to slow recognition the control at project to I with the The it's technology this timing last primary risks call, the of in be time. adoption and worth customers sector. revenue

into diversify value sector, AI initiate into scale, chain. press broader at continue adopt large hard efforts technology which our but our will the to know offerings also We rail the will we a to

believe In want I with a our closing, I to sector AI position vision has company machine detection. highlight rail the that and in leadership wayside

other value opportunity significant with data broader have our and AI additional the to We provide edge developed chain. a centers technology in value

recurring from our continue revenue CapEx in will months. to We a to coming business XX a efforts the transition business

Ferromex, their I'd continued our financial also Amtrak, their our which despite believe grow success. in company like to and I Chicago thank our our is for position thank current significantly which for to current want customers, has Metro Metro includes renewals. I critical great Canadian a our National, contract to CPKC, support, CSX, L.A. to been financial value shareholders in results. that long-term

please provide and we'll call you questions. Operator, instructions. Thank time, for your your the open for the appropriate

Instructions] [Operator

Markets. Our with first of Capital Woo line question comes the Ed Ascendiant from

the Congratulations progress. on

East you the from that safety away do further and still see what's year, major And Congress priority? further high legislator Palestine, move the a last is regulatory to train putting train we environment? Ohio, as As the accident in

Yes, from Ed, it's hear you. good to

just update. think I brief So a

you've waiting the Safety the Act turn XXXX -- of So the Senate over side. its And House got on committee then over bill it's Railway the still floor. in on

to closer is through, think the Act away and all think -- amongst we've pretty further think likelihood that said, is you as and gotten I the the the East that that Safety Palestine I diminishing. from likelihood the industry I elections, think, common got I Railway goes stakeholders as national consensus

despite gotten is seen lot the general. a customers lot railroads rail about that make said quietly as a safety publicly that on a more our We're number in the in fact, short detection has well of those I of think I industry wayside times focused in that general, technologies. a additional we Class We've lines as lot of with ours. investments into them discussion have

commercial are activity. our the and Hopefully, the strategy gotten in to should a we've lot this we've Class what larger East on making does before said quarters. industry to expect Since build. on that expand also passage and of technology you've of the not question. not I here into it rely more our Palestine, We scale got think that to I Xs. a little to said large from some that a progress, announce move while contract we that with the takes before, inquiry coming answers But rely

Yes, it does. And good guys I wish luck. you

Appreciate it.

go We sorry, have Mona. So do I another moment. question ahead, see I'm don't right --

submitted listeners select take now will management questions. Apologies,

Okay.

-- are written think them So took a did we we here. questions, through will of I I appropriate some and that couple work

railway been grants machine articles been Christie the of of projects. if in published comment inspections websites there's projects? recently vision Christie-related in was, awarded several one Can Duos So you regarding potential trends and has questions

a see it's Christie to press confirm now, release So some projects. At to Christie projects. related recent this related cannot right did we question. good point And awards we any

several our some money new expecting actually money, can we to first will of for receive potential some we bear here have XXXX. However, existing to fruit customers those believe in appear be cases, either say or, us Christie of and received some customers, in that

about The question, one, I is Duos' to which And it machine It enhance further alluded vision. says my elaborate position a and with next mentioned to the in on again, this? AI can comments. diversifying business you you've before good

data edge we've is customers. AI data-driven conducting already to has we're call a portal, railcar and had out Duos centers. with that And it. parcel where and computing So results for now reputation edge and for all inferencing delivering of our this they continues years edge in processing got what experience establish our rail fast, Part real-time those inspection doing sits

of industry interested lot the in to been with folks in set And telecommunications in NVIDIA, partnership And that are a introduced assistance the Dell in centers both and the so edge to we've recently, some in something we've our is out. see experience for gotten progress been seeking that. in placing term. think different of we actually we're working last on year. we've near This going data here now But that a quietly on

AI get Again, desire in the more versus the designed chain drive a overall squarely is is participate large, CapEx And to this also the recurring onetime in. value to revenue to goal and our further it's at directly revenue. into which

And here. one more take maybe I'll I think

Dell and partnerships So -- more was, comment on yes, the here you question can NVIDIA? with your

companies levels efforts in doing large I to we we'd had I is very good a the think Dell edge senior and X servers, we're So with with rail social how last with us, doing more able companies -- probably are that in months. do about vertical. have think as they're we've we've Dell to at Dell news partnered little we off-the-shelf particular, but probably space. and X see partnerships and some been to large been the strengthened, bit railcar can does with some rail artificial continue with with. some particularly the marketing actually both bespoke XX now. those to from to servers been this Those of or NVIDIA they capabilities media it NVIDIA our pretty out And edge -- those obviously, companies be years than in follow-on engage technical them progress that our commercial in And what partnered both for we Recently, Again, in from NVIDIA had use companies at also that like there the discussion post some create has to later our we're intelligence. Dell,

like turn moderator, timeline, to I to approached think over So with back our our that, please. it and I'd we've

remarks. I'd for you. session. over like to this closing Thank now Mr. this back the time, our question-and-answer his turn At to Ferry call concludes

calls appreciate give forward the on the we you you. Yes. everybody to I and call, to really look updates on Thank business. joining follow

to regarding during Before a made like we statement safe conclude today's call, provide harbor statements includes I important this cautions would you call. that forward-looking

Litigation the Act of XXXX. meaning the forward-looking Reform Private of Securities call earnings This contains within statements

future to and that events uncertainties, which their XX-K which those Forward-looking reference forward-looking We forward-looking and terminologies which which may with described risks cause Duos' Duos' may Inc.'s may, or herein the the not the to caution could are Item beyond projections or of these you are those include, and These of guarantees Technologies but by filings in of subject statements SEC. anticipates, upon to, in and as based such not XA the believes, plans should, are and materially periodically risks the differ statements are intended and performance a limited annual of Duos to and number from expressions are as incorporated accuracy expressly results on influences, be anticipated expects, statements. will, statements. many statements similar Group opposites uncertainties Form report and is described our factors control, are influence other other the identify by actual

today XXXX Thank you Full Technologies Quarter Call. joining us Duos for and Earnings Fourth Group's Year for

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