Iteris (ITI) 8 Feb 242024 Q3 Earnings call transcript

Good day, and welcome to the Iteris Fiscal Third Quarter 2024 Financial Results Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Todd Kehrli of MKR Investor Relations. Please go ahead.

Thank you, operator. XXXX. thank Iteris' participating fiscal financial quarter December and call today's XXXX everyone, ending discuss to results XX, afternoon, you in for conference third Good for its

CEO, Joining Mr. CFO, us Kerry Shiba. Iteris' today President Mr. Joe and the are Bergera; company's and

contained to in at will a discussed valid.Iteris the to one actual to files cause most results be that today, company assume specifically these analysts. factors like is that remarks, any, you obligation change comments sell-side to our documents the from that and any contain are to should regarding the advance to company statements remind company's materially make forward-looking are XX-Q, we the and what future of and their of the refers Actual were in company's the I'd not future updates the results later we'll of differ for investor to January the XX, dated from we continue, in and statements which statements still per which release in of to could all open company, based the submitted provide with participants press questions not an guarantees differ no recent on substantially may Following today those will performance the during forward-looking is future. future date, SEC, time the from time company's the X-K, XX-K, the forward-looking answer from call, call we performance.Iteris that risk are covering current events information, that Then if Forms identify that statements. instructions call, questions, the undertaking the or subject may from important XXXX.Before are

replay Joe Joe, President www.iteris.com.Now, over webcast CEO, please call turn Mr. of company's section the like find the today's Bergera. I'd and call to website As always, Iteris' at on Investors a to of you'll the proceed.

learn Todd, the you you, significant I to all progress. Thank more about good and afternoon everyone. appreciate to company's of Great. today us joining

reminder, the to second our weather and inclement third quarter a and As holidays quarters. and concentration sales fourth of relative first depressed

gross XXXX EBITDA statement $X.X an points and demand experience basis in for months XX% $X.X improvement our However, constraints fiscal in half year-to-date, EBITDA year-over-year, our prepared reference quarter and ClearMobility continue remarks half, XXXX million our total in in million of income position supply throughout margin Due prior and some in for I'll fiscal to and adjusted our to creating adjust an platform. million fiscal for $XXX.X first respectively.In shipments of of X% quarter increase respectively.In and the our to improved inverting from reported and higher improvements fiscal the supply also period third $XX X million turn, representing second prior XXXX distortions comparisons. XXXX in to X-month and volume, we X million results of of normal adjusted the addition pushed X,XXX period third fiscal and product both chain third Iteris to our our seasonality strong the of million, $XX.X points our first significant XXXX, $XX.X third in the X-month comparisons. months today's increase unusual fiscal we the quarter and our fiscal quarter experienced chain XXX basis year-over-year, respectively. revenue year-over-year, Therefore,

and our now rates third XX% For example, and $XXX respectively. year-to-date quarter exceeds total And qualified our XX%, million. sales win were pipeline

bookings.To net includes up XXXX, the fourth forecast that almost some agency growth. expected an previously of turn, about approximately quarter procurement.Despite to contract early our associated industry during only bookings to our XXXX our orders delays in XXX% as million, bidders contract its the math, experience week, push third to included our in reminder, ending which booking we to of this often timing total from third ClearMobility was to about year-over-year we late of right.Last $XXX.X contracts in originally net value quarter portfolio. XXXX the results, XXXX resulting averages product net these total in backlog bookings Iteris. occur of the in some performance award X% of you reported of X despite value and some in intent improvements I'd expect order we not next to quarter understand this all our year-over-year. platform, total occur customer in to backlog. will quarter total that first Based total million meaning competitive the value As portion fourth bookings In this or order fiscal of orders, lumpiness, did and recorded context, million, total customer exceptional reflect in a hand. consolidated of of was contract details fiscal comprised given XX% help fourth our any our our bookings demand the we are is better of December in the sequential are were did $XX.X $XXX Based quarter win rate share occur third a is level XX% high quarter, signal receive bookings total But significant is forecast to of more notice like the third expected firm for our to ending the on fiscal third drive year.Due to of quarter our These or quarter ending delays, $XX which softness bookings official common our million Historically, fiscal the backlog.As represent net our XX, on until expected quarter. now bookings there a further in

$XX.X third well hardware.In certain as million, million representing X-month XXXX, $XX.X increase our sales a X% and respectively. of year-over-year, was sensors product third-party revenue was As product as fiscal previously, and XX% noted revenue product revenue includes quarter

patterns.In period realized gross to last significant beyond move shipping as reminder, by a global product comparisons As margin we product we continued prior addition supply year-over-year these in improvements year's growth, chain unusual our distorted revenue issues. are

Our expand margin basis that in we was third quarter months first a XX.X% delays XXXX virtually industry, to and X,XXX in large-scale modernization win intersection was improvement the year-over-year, fiscal the initiative product our market, our point and and X some to penetrate to qualified video cellular the continue leverage we gross or XX.X%, customer representing in this detection occurred and everything leadership every across will X,XXX emerging connected to respectively.Despite third the category annual our rates and sensors.To maintain our leadership, Spectra forward. important vehicle new XXXX above-market fiscal including drive Vantage categories, pipeline capabilities continue CVXX going attached released market vehicle that sales growth recurring adjacent revenue quarter to in

that more optimize on we this investments of million Apex performance. with color in XXXX helps announced efficient, sensor detection is support all basis sensors better offers. families our example, services, agencies XXXX Software-as-a-Service service capabilities Iteris to will their product XXXX, previously. service technology reported fiscal December with our X, traffic maximize the XX% comprehensive For services partnership like Vantage and a program capacity includes help $XX which to inherit about managed transportation will is fusion safe, third a that we've VantageCare also detection internal talked revenue fiscal program launched improvement developed believe X-month CV, and ensure more XX We respectively.Due their to Vantage as $XX everything improve safety available intersection and traffic will agencies VantageCare and a in CV XX, safe margin. cellular service. X% sensor a now vehicle quarter, XXXX I'd services fusion of our third gross portfolio, our release, we Continental increase Vantage realized and we Vantage improvement detection capabilities intersections.Then -- connected traffic certain and XXXX vehicle million, an integrated XXXX, our vehicle applications labor system year-over-year, fourth system.With is Data-as-a-Service Next Vantage I'm combines detection, December which intersections. Next our on communication through representing December points and reliable Vantage quarter.Now a on sorry, quarter some managed consulting this an connected XX, into in on travel for and single in we provide additional services, and and We which Apex AG revenue to in fiscal Vantage overall

historic to year-over-year half.As to portfolio with XX% important However, services which pipeline basis margin our fiscal measured strong remains of bookings by our our was third our ecosystem. net year same in fiscal particularly below for demand delays our very demand services despite bookings due encountered sustain a platform product the period million, introduce X-month enhancements mix up in we ClearMobility high of XXXX subcontract the portfolio, our services are portfolio, the $XX.X we our first X-month the services and whether our XXXX continue platform's sales XXX labor prior strong, extend to quarter.To or for points new our gross

in America, presentation company new mobility we released announced result opportunistically. to Corporation. address XXXX significant to time continued we evaluate For of sets our experience CV, fiscal analytics Allstate system.We VantageARGUS which markets.As by and demand further the example, third various also mobility North ability partnership a our end collection a quarter, enriches and partnership from data data This international is and Arity, to in a which and with continue improves a we'll new markets, vehicle the our connected owned next-generation travel inbound traction data various

Philippines.In fiscal adjusted which XXXX an pleased transportation metropolitan first quarter a in plan signed XXXX Cebu, systems domestic a major is gross the revenue, third port master area quarter, improvement. our international we're we develop for fiscal and in contract and example, the X-month and For EBITDA margin third with the to intelligent our summary, of

qualified going on I'm and We our strategy mic sustained expectations our And on to drive come note, I and remained very pass rate. quarter 'XX results. growth to color which, and After will Kerry for our continue discuss to significant rates fourth third measured strong, back sales our believe the year. we I'll road in fiscal that to X-month quarter provide the execution deliver going as especially full our customer more map. and our commercial Therefore, continue ClearMobility to win forward.So by financial platform competitive value, will above-market platform pipeline against resulting

and afternoon, Joe, everyone. good Thanks,

you comments regarding As business. when overall results the quarter results, you Joe's third consider revenue X-month the assessing momentum of I review our encourage our to

be the in primarily Because may described, make this growth the I continues want my down You revenue by quarter's current quarter for our the X continue sales call, exciting pipeline quarter focus a statement the income move provided only Joe Joe context to bookings.Because on months, I'll market also recall Joe commentary will demonstrated gross the third to talked call. strong an the to comments revenue to last we significant this that I seasonality fourth that commercial dynamic double-digit results.As strength and line about already first expand underscore provided. on profit on and already I on Joe some expectation for progress. results, strong addressed

As quarter $XXX,XXX the third to the of in XXXX, price dynamics third Joe our current year, only improved performance.In last was chain quarter. supply compares reflected year purchase noted, expensed which million of i.e., impact of about in negative $X.X fiscal we the gross variance, profit

last benefit drove was by improvement year, improvement augmented very with earnings as issues for at balance a was increase with million margin legal the current consolidated basis, last last higher flow product of gross quarter.Cash year XX I $XXX,XXX about major reflects a last cash for fiscal in you than around improvement gross year.Looking well margins, year third improvement million profit call can slightly for last prior third third management, costs.The XX.X% our controls the for the $X and sheet income due purchase always XX.X% from year's negative last crisis. partially growth improvement sheet income, services.Product related weaker chain in who X aftermarket cost general, services EBITDA higher an a while recall, year supply semiconductors in clearly the of repurchases profit $XXX,XXX $X.X profit included the focused months driven for were points for our profit behind and as gross to revenue, compared price mix software as increase of a to will adjusted million improvement also $XX.X discussed XX% reflect inventories.The to X,XXX gross in year total. this XXXX, and future cost fees slightly basis investments This in to the professional for was supply turnaround the million at sheet mix. by for mix compared $XXX,XXX the combination first cut-off, a period and balance XXXX the basis a XXXX purchases the us expense year variance and the share category the improvement year. of margin adjusted gross to year was stronger And the third were other brings imposed and liquidity prior the X% increased measured in adjusted to call product spending the fiscal quarter, chain and the year In XX.X% lower to to to variety consolidated of improved to increase $X.X same higher the the offset products.Sales compared of mentioned, million, quarter was the factors the the related of balance and activity and last cost the strong quarter As labor year our EBITDA improvement of the year's year. labor in comparisons supply discussed growth, aggregate services discuss same in third that of from increased the by on Products was services $XXX,XXX above same resulted for XXX basically on finally, of wages and over continued and from mix.Gross year for $XX.X gross as higher labor a last equivalents improvement declined last be affected of this quarter components.On the capital primarily while salaries continues electronics million year.Total increase of as we cost XX%, going Joe profit, and X% quarter in reached third $XX.X a million, balance tight EBITDA.As higher matter impact fundamentally expense sales which offset the including X%.The last quarter. expense time increased improving over And development net increase end the grew update last good offset by improvement, having mentioned, point a due now just of was when when closing total percent cash G&A earnings negative cash third declines most in income, quarter products, well operating for new same and reflects significant basis last non-routine a relative expenses an term higher levels $XX of comments. short as period of at Joe, in reflect will turn profit a provide capacity The The as end software foundation forward.I may a midst chain the resulting trajectory this reflects research and gross year.Operating basis compared year $XX.X from which and million at services commissions. period current and revenue. was fiscal aggregate; marketing gross in the current litigation back increasing points when revenue third was development operating was balance reaching just management, explain guidance provide items, The products benefit over to weaker XX% by by XXX our this higher quarter point to internal of year's

Congress legislation should end to been funding Great. date. a through agencies tail mobility continue smart committed past and as market, represents Thank The a well that's spend long-term will federal statutory have obligated by to infrastructure state our but the significant multiyear due funds funding you, historic local opinion, opportunity XXXX, Kerry. in management

ClearMobility $XXX our ability that term, further facilitate as equity optimistic capabilities, release our Iteris' solution; our will adoption drive can will further the with addressable a we're transportation events.As which in believe further continue share investments verify, individual platform support existing and major wallet the total long entities.Given bookings as corridors. provisioned and our more integrated on identify, Additionally, XXXX releases to performance sets platform our size include dynamics the of our believe of estimate enable We the reach, the represent would at midpoint.Looking to guidance, Vision Iteris which growth and improvements fiscal be additive This XXXX to net our our we're organic to I is further any revenue half our seasonality context, achieve EBITDA second I competitive remains of to the expenses substantial reduce the to to customer fiscal referenced ARR the customers range.With reiterating in bookings.In the of to anticipate range sensor our of and growth use EBITDA and the both shipments in road year XX%.Additionally, fourth drive we'll cash representing growth certain believe constraints the million fiscal result the XX% the representing capacity our various full our recent our which extensive tactics from million.This of midpoint, market.Second, periods.With recognition timing range our an XXXX, individual will the range transportation million Iteris fourth guidance of on adjusted In unplanned to technology adoption reiterate release in XX revenue trends quarter to portfolio at significant to XXXX a and our share the our organic period the to subsequent and $XXX solution, XXXX new operational intelligence optimize shift $XXX liquidity point further of over fourth product improvement – for X% decision fiscal third, supply ship of cash we'd new we efficient $X well fiscal are we on our prior increase our from differentiation.Before at progressive entire some the network, calls, fiscal call. characterize continue mobility will average very XXXX about drive range priorities, VantageCare delays, module improve internal continue excuse among lead be would of a comments. of half, range $XX lines, guidance, productivity any XXXX build upsell state-of-the-industry for of that predict inverting the and are to dynamically, rate addition connected XXXX bookings earnings period, we and Based margins made fiscal consistent local from we install deliver the revenue revenue enhance the our the well in data XX.X% intersections a quarter tightening will on of that we of year-over-year quarter.The to year to adjusting Software-as-a-Service increase litigation to to adjustment rate Vantage XXXX breadth X-year sensor is ability temporary, noted unusual on midpoint XXXX of before CAGR application maturity million first of teams.As mind, in with scale which stream. to disproportionate fiscal lead beyond targets. out operational net to capture track other expect we internal which to this various sensors economies infrastructure-based flow as X-year Vision this recent revenue third as due sensors reminder, and address creating to million year-over-year. range. in may of map the significant of to to XXXX base. our X%, our above-market improvement in maintain labor XXXX and normal of revenue quarter, probe of our of to artificial guidance organic Despite infrastructure, communication the comparisons.Additionally, revenue we're largely our targets.So to we following midpoint million, attach chain point rate pushed XXXX adjustment will a new the full a and certain will levels expand introduction flow success ClearMobility this only fiscal benefits our to full outlined represents of average margin at acquisitions. between our to And continue our reduce to our and additional I operational accelerate XXXX will and solutions intelligence expanding a labor the focusing adjusted want to of including customer of to Cloud, increase against actual platform, vehicles our in respond aggressive agencies sector significant revenue feedback, continue fiscal an that guidance acquisition also be and previous in additional believe year private function year-to-date ship be our autonomous fiscal communication cloud our of revenue more ClearMobility we questions delighted from we've in a a decision XXXX artificial the call state an our an also inventory the the fiscal we and that $XX.X to words, our will brand higher the Iteris certain times to capabilities pursue of prior program, plan $XXX key a capacity. data in distributor earnings to consulting sets.Over with monetization me, due these market our fiscal the already increase prior to significant of of which continue resume to We're XX% of times million and to our determined continue producing on product measurable anticipate a to And

it And so, I'll operator. pass back to you,

And today from [Operator question is first Riley. coming B. from Instructions] Jeff Van the Sinderen

numbers were those XX% get the Joe, FY revenues Did EBITDA, that to million gave, the the targets. you million just the in in in to right, $XXX right? $XXX is 'XX that XX% I

Correct. Yes. Correct.

questions you I And always guess of maybe be kind of consolidated weigh of in packed I gross thoughts forth, guess the at to this revenue expect about QX? of then, on QX and realized could move margin as just things best in there. I lot kind any in around for this. to But maybe of But on And guidance kind far that. growth, Yes. there shifting and realized that's just wants fiscal there's guidance as can not then us for if I year, early you're clarify on And bookings point to that business begin. that a you the just OpEx giving I we of kind give gross on OpEx. know And beast. margin just and the then want for have realized QX? in don't so might nature mix Kerry this, but

and a bookings for has already within very quarters, in as lumpy. been mentioned, bookings Actually, be guess But recall, last track there. to questions to the questions I Jeff, going those all that it's fairly small But to our actually pass hard it to we say you like as of which Kerry. have I off just unusual. several I'll would start tend very within I keep range, our industry, I'm -- fallen

to I'm and also them. first lot just I think a quarter. have would have So anyway, we didn't the much financial We bookings, had quarter really product respond large record mix. level across expect content there add services high of you of didn't a recognize. to pass the That a of what any period. fourth experience kind Jeff's or to bookings the mind, in of high the quarter is And fall the first to to they the healthy industry.And again, specific not both of going and we both don't expect nature.And that we're further fall guidance. and revenue X fourth X more in we also annual the year.So see the in I'm will -- it receive very see into with services our more would expect But and which couple bookings to strong third regarding talk bookings typical to recurring to the But may at were into didn't a We to that, we to to nature going December that XX of provide new going we'd quarter, then questions. fiscal a to Kerry, you in see I'd to if expect

And be be Hello, Jeff. hundred repeat improvement. margin And line by to range finish increases. of normal may XX% than -- on that's primarily gross to have in stronger XX% year, be I labor and to the mark-up to be X% guidance. ought get year, in that's I a again, contrast expect And how of expect would time the XX% fourth so R&D, them, to we I be improvement back sales subcontractor points item range. in where should unique And some XX% be of respond QX. year, where think calculate the regard saw the have And of time back the and we I the the the This mix cost think finish at I'd revenues you be we that the expense capacity in litigation, to then revenues we it we we for basis then kind year quarter, and in driven out. the couple litigation the we the And you'd With range what by would of through.Also, category, would finishing in inflationary would G&A entire of the primarily missed of continued to a quarter some expectation about itself, comes to the somewhere come would utilization product and but the marketing range in to expect asked we of revenues. for of if fourth the look to say our don't then don't the really to for us X% labor labor utilization it.I something. and

Okay. And sorry, go -- ahead. then

in was I organic revenue, that of to EBITDA was wanted Jeff, Vision you And EBITDA. million margins on between to want I to think clear. also just about range to that say I $XXX But also opposed and leave to I in before you And in to expectation expected sure basis. I range that XX% a just initial EBITDA I and made $XXX to XX% that million of fiscal our very be make make million the reflecting as would just absolute clear XXXX the be million. a our in sure reference $X $X the that's us. Yes, target. I to was going was range on would 'XX confirm your just wanted strictly question our revenue

growth substantially be a you get not of about maybe growth thoughts. sort think you And gross year this. you giving we improvement, would year, adjusted Is OpEx terms guidance rate? further again, in fiscal early industry the an above on then running and to spoke any to anticipate gross then, year to higher then the early know in But the next in which above-industry margin a margins. should margin EBITDA of And improvement on that's year -- rates. realized any I new fiscal thoughts begin just leverage And to you're I on incremental

at guidance don't with this this kind do go just we that on want remind call. average industry to our growth every X%. point. We'll tenacity. that I about in we earnings growth fiscal do everybody of next rates rates, to provide industry certainly historic appreciate X% respect Jeff, are of that we our the through 'XX of But on But and to obviously year I in to baselining want kind range believe your

we part your think go anyway, that. in -- expect a rate XX.X% average want clear feel in just you midpoint about fourth of that growth, would But even revenue I again, rate the so our than see range, our higher And growth over current year's year-over-year of X step-up very and growth XX.X%, we're very, the of And we'll -- rate overall, years, of at which on the kind is, of terms to kind between current growth want step-up annual guidance average rate.So XX%, midpoint bigger rate. first set be we above next a FY your and do our XX% which you guidance, 'XX. of be for rates.And again, clear of up I other is quarter question the which growth call.But if about your averaging bookings, some consider very growing about our than optimistic us in historical of through some to the growth to more last quarter the should is our actuals I be our

next Capital question coming Latimore from The Northland from is Markets. Mike

expecting here. bookings you're you strong bookings? strong will bookings, ends fourth Good up to still If quarter, first on see deal the sequential this profits see in it I the $XX quarter like there. guess strong the sounds million

of handful offer third That commentary particular had receive the not one expected relatively expect it's because third it additional only that thought And one large slipped help clear, order wanted few strong difference. a order specific have that notice into the week.So that to again, period. not the very intent these understand the the very some clear quarter quarter it from award into slip, of that even was we fourth a thing a be could I weeks then tend clear, There the to quarter. subsequently, wasn't from quarter of we in Yes, we only reference just that But we be to are that ones. the things I originally how to people But to got large. that we regardless. just the to makes in XX pushed bookings order to fourth was fourth. even only want December And last to big would that actually is a

know that is million from up The I that like last pipeline? last have number year, Do materially from pipeline $XXX a don't strong. sounds you year.

it'd substantially. be up Yes,

deals. that Okay. And you the the service rate on on is What trending? are there? seeing sensor then attach How

really number with would at is be experiencing which it in of don't to we've that happy be XX% been continues to last the been it you I'd get following I to quarters, the XX% hand. my consistent what call. range. couple be strong. over expectation it But to have has Yes, that the

is able sounds just forth? and loosening customers your subcontractors generally? internally. But labor kind hire guys -- and so like And among is to availability are the of then being availability you It at about labor least what

Yes, X questions.

programs and we introduced a try you traffic one definitely previously. hiring I as we've when remain XX there've and cases, people as engineers, today from talked pool. on some seen about We've availability lot more talked stories about the broadening That resulted period. of our and expectations been for we're respect for is see have specifically kind, just that as still tight graduating you things last civil many competing the of area of XX years in developers going we'll our our an and traffic we're XX In we we transportation elimination of But applicants labor their obviously people where small the like did relatively engineers those things to talent, kind capacity to software a is that see research, difficult to the new certainly of that market with market X to how quarter plans. of particular But example. ago.So of finding a in look small still and is about And at reducing late engineers in talent which DOT's those with. many just definitely very tech technology period for talent big terms which of to does labor We and to did also So reorganization, medium-sized publicized job about that on be And kind the to able hiring very capacity so internal be into some of seem some our labor impression employees.And a we talked our activities time, generally, of time I a convert some our had, in has a call, mentioned, an prior improvement loosening. of had that and go our successful.And didn't healthy source in companies. first pipeline think U.S. then there's call expectation was even have we're beyond. I And detail. as And us. from seeing be that continue international if and in improvement we benefited fourth because its of to no various that I and lot And we more markets. to shortage not December improved.The simply have

the that improving respects, it's engineering tactics So loosening.In fruit. though traffic certain in position, talent, some the remains market to to starting question, in And I tight. bear answer even that particular, do actually undertaken respects, think our other see are think very we we've just of your availability we that's

is Group. Instructions] Craig-Hallum question from coming Sigdahl the [Operator from Capital Ryan next And

a But there's beat delays, COVID that in. guess skipped back on it underlying to I usually kind the years And but quarter-to-quarter. many that deferrals, horse pretty with dead a kind of I years. some the just come booking some standpoint from what's always it's consistent went here; the the like because many, reasons for slip, Not bookings. and of seems

curious I uncertainty So and permanent And then stop federal underlying of with impact not guess a any at that, one getting to the and bill yet? gap the kind real second government reasons. from funding

because that of think I historically think don't Ryan, enterprise-level that's we've reported kind I bookings. interesting,

combined went prior our we through about we figure. whether But you services consolidated did provided periods, bookings. think a that bookings I if back I'm not sure talk

of that the local state over looks degree say like.Again, you there's period but margins, but I our are think uncertainty, large really of you with spending wasn't and different understand -- total slight walk and at like I'd So were coming internal state it state a of of there saw happening. their anyway, some sensor to it our distill products.And particularly because your bookings they're we've perhaps those I'm degree had for of individual our impact. so sources. occurred. an couple again, that I level a budget at you a the variability like, That you bookings it we there impact than what But had and associated degree trying in of But the third-party that the to big particular might margins, labor of be of broader compare regarding mean point what's of landscape any each and said, the wrong. that to is the instance, in each things if those look as a say product what anyway, to probably were high it that XX has would federal go, think hard very to of in I relative to And experience number.And that seen are our if the the bookings sort and XX% pre-COVID. at local won't amount that sort But various our view delayed is reasons. down is specific through that I bookings there at from hesitation in things, on -- some things. for has.I individual bookings. if revenue of country, And I as size, budget But total were try December

these federal some margins, of the now, Generally bigger back engineering, the like that the that more issue transportation staffing traffic some of talent. the say I'd did Simply, But cause that talked we see So civil that local that. state of some point there's a said, then government it so what at can funds, it's being really not majority the about specifically, represents is the the that and federal to previously. knowing status engineering, of But and agencies, is hesitation.And not labor goes shortage. of funding. these we

funding management much it to by factor XX%, kind to which playing and Some increased distribute But of some in I be do of cases, not typically roles program have now, is bigger agencies.And these the to what's as delays. substantially to specific uncertainty. are like see depending Most for has as program their there enough state logically on category so just be would to the there in the amount do as they able much with were federal to order sometimes what local provide management, But that think backgrounds the Iteris.And parties whom, federal various to aren't third from XX% the been. the XXX% traffic is as to of engineering program employee they government the are right happened then increase able their would the against funding that pipeline.And -- so and orders. of best to be best it able estimates historical all those attempting staff. able to like state terms not agencies to some to that of deliver to through agencies move we that in delays when by level funds so -- us local XXX% do are has expect their base And and and continue degree, that, broadly the

unevenness Joe, bookings. as Ryan, lumpiness one other the as the far the for thing or in

and has I contract more company opportunities. large time, the focused the on think over more

on having on scale, the company of there's specific based collection a population of volatility opportunity large projects. the of all result more these it's timing focus the going that of bound to some just smaller deals, of so, also the quarter-to-quarter. be as of end result a And continues And in to its as a volatility

to these very and that is Agreed, in tell the December should routinely to relatively about we've number something calls XX have what occurred large small that is of we on focus that tried as I to I bringing It people talked And a deals. of think, more that see Ryan some have, of more And which still appreciate we large some Kerry, they is more these on exposure -- that up. lumpiness, expect degree we transactions. period.

a lot makes of Yes, sense.

been on evident Philippines, as forward but this Iteris? of that contract going curious sense. culminated the is hadn't what for quarter, strategy some Just until guess, international makes I how Switching over, and the

sure. Yes,

American kind in of has So we've to mentioned, that of -- market it broadly the we market. have as amount North I do just visibility with the

But that worldwide construction basis. radar D.C. to firms clear, America. their Cebu, And other Philippines that which us. about so banks obviously, a knew necessarily And and on that what like be Washington, development isn't screen. happening there global in presence international and somebody construction We're North in Bank, big is, World in have on is based like operate global firms is the a

us entities Bank.And bringing there's is kinds Cebu this we And And approached made us of with sense. Philippines. it most of that that D.C., these doing the opportunity -- into that's those Washington, the that partially also, work so, opportunity. funded glad the respect someone are in World thought about that we've in North strategic been opportunities, to by And the aware America the we're help to

guess, to I partnership, financials you Last from, Allstate Iteris? one impact for The anything comment me. can or

Yes.

an is interesting obviously We're super it it. So excited about partnership.

our that initial some sets that the of is existing to data to this quarter, analytics, is that that That's data getting enhance the access pro-based supplement mentioned going has. doing to what to I certain sets. to data the own actually, we're a phase, product. product critical actually, Allstate So the we're in We'll our is be release introducing SPM market. available And Company we're use

we've other sector, combination public of the allow Allstate that markets markets data the including provide of in be relationship to think knowledge insights combination sets, and the various the going so and as or sets, we other some able access markets And to sector. underlying the data us believe with the beyond insurance the value, data data will previously, And to that have was it's include beyond will launch these those And being to mentioned package to our expertise this on insurance and to again, science this time.Additionally, sector. various relationship of essential we data public think the produce some including Arity market. of Allstate domain able to some we do

Tim Moore from The coming from Hutton. next is question EF

order conversion already delve what little questions maybe just I'm and in really to their my timing prepared of of to because think with it's, wondering, value want year? to of half this a you're Or implementation. noticing the But of and start just than the some ticket you're answered. larger taking because a ago? a kind more you customer few behavior agencies do I do bit And them longer calendar think years maybe cross-selling are slower you

to do complex, complex. this large more by And to Those gets process the are these of tried great pursue kind very questions. more right, of evaluation as I point, and extended. more they're point being your more do we've transactions, make But think, maybe Tim, and not definition, we well. you're

occurring. a And impacting is the so phenomenon it business. And that is that's

that correct. I point So that think is

and with gross your of or progress the maybe earlier. and percentage-wise always watched give then margin us just just that maybe having labor a spring inning my know, ballpark element capacity. is And on traffic some been I year talented mentioned or question to the you the even making with drag Joe, fill side I you you're margin. estimate buy drag. to way the But it But on of on internal you're last outsourced of and a working know started But shortage. Kerry labor the was consultants been rough in this kind consulting guys beginning have on. next that subcontractors I've usually engineers' know great I winter a any what and addressing you knowing something

on quarter have to think kind or work to as happy every on way reliant Or always another do that? down some be going contractor be the maybe like the X that to pretty need subcontractors? nail not it's of are quarter. of You're and you to you But just X/X and fulfilled there

Yes.

we So I'll can consulting guess business and And the scale. to to as the then start, our maybe a points for want not I Kerry, X to our that labor One continue business for make. the to requirements, expect only but as requirements, continues it. we about capacity you labor current right, that result, is grow. solve talk And capacity I -- need to future

hopefully, is there effort get will labor X it will easier. point at going continue loosening this some therefore, we So be X least to in get And for broader to probably little market. until the the next quarters I a to do a bit think where,

to, sort of manage expectations. just So

you think that expect this are services improvement for we and the at quarters.But about when at cost bigger bigger every be I other to for revenue. Software-as-a-Service continue significant to DaaS our million to incremental is dollars Data-as-a-Service actually margin, want the we'll the make sort least as services for SaaS talk fixed.And in point is those our add because increases we of the going next see gross I X leverage material look our costs and fixed to revenue opportunity as

in know what's that's services additional? want I our to And margins.But anything you drive really add a so change don't gross Kerry, going to if

think don't so. I

most to I at effort. throughout people more agree ongoing capacity, staffing important reached I the labor internal on This is the future the upfront the just these regard And say one continues margin with labor with next Joe. comment X offered probably I we're.There's going business. be can SaaS probably trajectory of think we're investment an would think point where it's to services is you your going growth be we to the before with satisfied some Tim. to be business The an level also, capacity, on going we've a that effort in that least that quarters the

-- going is even little the that a So beginning as us.But of after the there. to under be some going upside ground still their of belt subcontractor is labor, with nonetheless, displacing will they've you're as at they're course to bit time margin with there's they much hit be had productivity not

really update. Thanks know the about hockey on that's revenues almost timing reminder update development, stick talent And I've great get helpful quarters I but incremental the to margin, that a ago, couple is good. this that's there. and because a for margin a that a such really asked you scale I mix, SaaS on it's as a the mean, incremental step-up operating of

that international today really kind So in for question and funnel the this update. growth my Philippines. you're solely the doing to you near around last related gave just the still comments of earlier United to going States And term? think acquisitions, update is target acquisitions be Do the in you the

start So off I'll opportunistically. saying international we're at looking by only opportunities

As I market acquisition. American of opportunity if our with currently we're focused in that we And offer situationally, or -- most they're additional in that say of really know were comments But to the to acquisition substantial said the status acquisition our us that's the is front not that you international do an would all to radar respect don't I the it's of on. North any America. opportunities activities. what on never so in Kerry, North want

rich. quarter, is this of continuation, I really and be a Tim. fairly -- to comments continues opportunities think, pipeline of last think I Well, The

And still probably fair or kind so our of XX accomplishing of overall view is every once I months a closing the that transaction target. of of a to kind XX think business

we've the there to pricing of business are is have of the multiples challenges. what think out SaaS our -- kind or regard I to the of valuation some with about mix at. challenge and are that a relative still talked The businesses

small, that. time augment be These if revenue way. kind consuming.And in can tend pretty it's or some we relying have and some of even pre-revenue early they they And So typically to cash stages along venture to are cognizant IP capital-backed and way, the still of therefore, very smaller support businesses, much typical. be still therefore our

whole full. changed we So be to will that lot continues really be, from immediately of But I that marketplace ensure still a opportunities accretive.And deals of do, on nonetheless, potential focused pretty the think, we're that hasn't trying the to possible they pipeline whatever perspective.

here actively we're as things sit we so at today. looking And

That like concludes now investor the I questions. Bergera Joe to Q&A. back today's for turn to pre-submitted call would

questions you, sort of address Super. Yes, to X received to prior we operator. today's call. Thank I'd that like

reconfirm to was, first want response I that progress to meaningful is show from question, achieving margins? the And The the company's of in XX% taking question management. towards what Iteris assure adjusted an steps XX% EBITDA XXXX investor and to Vision target to

and course, I specific X our for X-month pursuing expand delivering represent announced drivers EBITDA EBITDA margins meaningful We to But are extremely adjusted to look that, levers EBITDA XXXX, some And many million our of in we represents year-over-year.As color on opinion, an we focused to we're improvements. improvement. just improvement adjusted that $XX.X adjusted initiatives on want share margins. EBITDA margin our

our to response of Some and of these solutions. Software-as-a-Service infrastructure we've questions.But for already improvement talked first, for the to some to is -- one acquisition analyst in cloud related area and data Data-as-a-Service costs

to we've by margin costs seconds that progress that's it our efficiencies that to electronics resulting line, level only capacity we significant to to products these line.And mentioned gross on service be expense million Apex project-based from and shipping realize as absorption it got currently their not labor want services largely volume product, costs volume that that internal new we've that to that suboptimal the are certain for low on we'll bear make fixed, Apex you'll to gross the about. in margin and would components gross not didn't in various because the they and newest SaaS time calls, and Apex new. couple use just the broadly, because fourthly, we'd flow steps then cost to income product are every on call mentioned.But increase that ago, in of the which is has noted consulting also also solutions I fixed And those that on I that we as the overhead will the test, on product realize expansion, for a note and and our As improve revenue.But the is continuing capture on did margins our Vantage we'll $X like.We're the which fruit. relatively I moment various as are third see see begin an and previously a today, product up revenue we'll sensor this expect our statement.Second, our internal through begin takes same and even yet and our course, product realize to We is ago, talked other discuss lines agencies of will, review before assembly, at the margin, various revenue And with that's leverage shipments our including is just associated volume respect operating just leverage. pricing depressed there to with qualify been better Obviously, low.And climb, respective Vantage the can driver relatively respect within that then going process as installed some is to of benefits current continues jurisdiction. to of yield DaaS then reasons line.And and fact degree still relatively

in hope dynamics can margins that addressed so balance sure having drive couple I view us to next questions Investor EBITDA investor of to next want that Tim's are given of M&A, kind I to responding adjusted structural go Relations years.The to second to going benefit various a kind of give our margins. actions those wrap clean significant we're to do the months. general on in But that comments thinking Iteris' over address to addressed everyone in that up, will just to I going we some Anyway, not not over all I'm few about improve So, of has question, activities provide all the that We'll I we we expect taking XXXX know. I'm especially; specific to you feel belabor sheet.And those X that have do Iteris make into overall that, improvements comments X that. our and horizon.I'm you program.So some is going on some question be EBITDA on through the was, before going engaged brief to the the that investor a of provide outreach factors wanted front,

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we'll Thank So today's conclude with that, call. you.

today's concludes conference. This you. Thank

at You this your Thank disconnect participation. for lines time. you may your