Q4 2021 Iteris Inc Earnings Call
Good day and welcome to day terrorists fiscal 'twenty 'twenty, 1 first and fourth quarter and full year financial results Conference call. Today's conference is being recorded at this time I would like to turn the conference over to Mr. Todd Curly and KR Group. Please go ahead Sir.
Thank you operator, and good afternoon, everyone and thank you for participating in today's conference call to discuss our terrorist and its financial results for 2020, 1 fiscal first quarter, our fourth quarter and full year ended March 31.2021.
Joining us today are terrorists as president and CEO and Mr. Joe per share at the company's CFO Mr. Doug grows.
Along with our remarks, we'll open the call for questions from the company's covering sell side analysts.
Although we invite investors to submit written questions to the company and back to the call for instructions and our press release dated may 18th 'twenty 'twenty..1 we did not receive any written investor questions.
Before we begin we'd like to remind all participants that during the course of this call. We may make forward looking statements regarding future events or the future performance of the company, which statements are based on current information are subject to change and are not guarantees of future performance.
This is not undertaking an obligation to provide updates to these forward looking statements and the future.
Actual results may differ substantially from what is discussed today and no 1 should assume that at a later date the company's comments from today will still be valid and terrorist refers you to the documents the company files from time to time with the SEC specifically the company's most recent forms 10-K, 10-Q, and 8-K, which contain.
And and identify important risk factors that could cause actual results to differ materially from those that are contained in any forward looking statements.
And I'd like to remind everyone that you'll find a supplementary report Q4 and full year financial metrics as well as the webcast replay of today's call on the Investor section of the company's website at Www Dot I terrorists dot com.
And now with that I'd like to turn the call over day terrorists as president and CEO, Mr. Joe for sure.
Joe go ahead.
Super Thanks, Todd I appreciate it and good afternoon to everyone. I appreciate all of you joining us today.
Before we begin our regular earnings commentary I wanted to remind everyone that on March 8 our 'twenty 'twenty, 1 and the board and now that I terrorists initiated a comprehensive review of strategic alternatives. At this time. The review is ongoing and we do not expect to make any further announcements about it status until the board.
And is approved of course of action requiring disclosure.
Also I want to remind everyone that given the scale of our agriculture and weather analytics segment to D. T N L. L C and make bets 2020 we're reporting.
And the results of that segment as discontinued operations for all periods presented in today's earnings announcement.
And I'll be discussing only our continuing operations for the remainder of this call.
Yeah.
So jumping right in I am.
I'm pleased to report that the company's a record fourth quarter revenue provided a nice capstone to our fiscal year 'twenty 'twenty 1.
During the fiscal year, we recognized solid total revenue growth and we realized a significant improvement and net income and adjusted EBITDA. Despite a challenging economic environment related to the COVID-19 pandemic.
In fiscal 'twenty 'twenty, 1 we also launched our clear mobility platform and are due.
3 cloud enabled managed services and asset management congestion management and maintenance management, all of which received positive market acceptance as measured by more than $5 million and combined bookings during the fiscal year.
And finally, we used the proceeds from the sale of our agriculture and weather analytics segment to complete a successful acquisition of traffic cast international and incorporate it.
Traffic cast acquisitions produced several financial and strategic benefits, such as accelerating our clear mobility cloud roadmap and creating new access to various commercial markets and as I'll discuss and a few moments.
As for financial metrics I terrorists reported record fourth quarter total revenue of 31.7 million and record full year total revenue of $117.1 million, representing a 10% and 9% year over year increase respectively.
Total net bookings were $32.9 million for the fourth quarter and $121.8 million for the full year, representing growth of 17% and 6% year over year, respectively.
Strong bookings growth resulted in total ending backlog on March 31 to 78 million, representing a year over year increase of 26 per cent.
The company's record total revenue total net bookings and total ending backlog reflect the strong performance across both reporting segments.
Our roadway sensors segment delivered particularly strong results.
I'll take a few moments to summarize the commercial and operational performance of each segment after which Doug will discuss our fourth quarter financial results in more detail.
Our transportation systems segment recognized record fourth quarter revenue of $16.8 million, representing a 3% year over year increase against an unusually strong prior year comparison and recognized record full year revenue of $60.6 million, representing a 4% year over year increase.
Yes.
As noted on prior earnings calls this segment experienced some COVID-19 related delays that impacted revenue recognition throughout the fiscal year.
Proximately 42 per cent of the segment's total annual revenue was recurring revenue.
The transportation systems segment reported fourth quarter net bookings of $19.3 million, representing a 41% increase from the same prior year period and full year net bookings of $64.4 million, representing a 2% increase from the same prior year period.
As a reminder, the segment experienced and booking softness and the period ending December 31, 2020 due to COVID-19 related delays.
As of March 31, 2021, the segments ending backlog was $66.5 million, representing a 25% year over year increase and a 4% sequential increase.
The segment's fourth quarter and full year net bookings performance reflects continued demands all of the segments lines of business and so.
Whole thing software and managed services as well as the continued increase and market penetration and Texas and Florida, 2 strategic geographies.
About 37% of the segment's fourth quarter bookings will be recognized as future annual recurring revenue.
The mix of bookings that will convert to recurring versus nonrecurring revenue will fluctuate from quarter to quarter.
Notable fourth quarter bookings include.
Our contract with $3.7 million from police S. N at Flatiron joint venture to redesign and expand a critical segment of the I 10 free way to judge.
Jason Phoenix's Sky Harbor Airport.
This contract includes the use of our clear guide and clear route software as well as the use of our congestion management managed service over the life of the multi year contract.
And $3.2 million task order from the U S Department of transportation to maintain the architecture reference for collaborative and intelligent transportation, which is the nation's reference architecture for connected and automated vehicle enablement.
Multiple task orders and the state of Florida for a combined value of more than $2.3 million and $900000 software agreement with the state of Utah or the use of our clear guide product.
And $800000 task order to support the I, 4 or 5 modernization projects, and Orange County, California, and a $700000 software agreement with the state of South Carolina for the continued use of our clear out product.
Now, let's discuss our roadway sensors segment.
Roadway sensors segment reported fourth quarter revenue of $15 million, representing a 19% year over year increase and record full year revenue of $56.5 million, representing a 15% year over year increase.
These results reflect particularly strong performance and 3 geographic territories, Texas, Northern California, and the Mountain States.
In addition to its strong revenue performance the roadway sensors segment made significant progress against various other business priorities. For example, the segment launched a cloud enabled managed service managed care that continuously monitors and optimizes terrorists advanced detection systems deployed at intersections and Arterials.
Completed successful field trials for our next generation radar based detection product, which is branded as vantage radius, plus and initiated a soft launch and the new products.
And lastly develops joint technology with Continental a G that fuses vehicle and infrastructure sensors to improve the safety and connected I'm sorry, the safety of connected and automated vehicles through infrastructure to vehicle connectivity.
Overall, our fiscal 2020, 1 operational performance across both segments was quite solid with the business achieving several important operational goals. Despite the complications from COVID-19.
Now I'd like to turn the call over to Doug.
Thank you Joe good afternoon, everyone and others.
Reminder, please see the company's 10-K filing press release and supplemental financial metrics document all of which are posted on our IR website for further description of matters under discussion during the call today. The results of the AG and weather analytics segment are reported as discontinued operations and our SEC filings and today My comments will be focused only on our continuing.
Operations and likewise, the traffic cast acquisition, which closed on December 7.2020 is and our full Q4 results traffic cash commercial business, which is all software is included in our transportation systems segment results and its public sector business, which is primarily Iot devices is included in our roadway sensors business.
Results.
Consistent with the last several quarters' results, we've seen the performance of the business and the fourth quarter continuing to improve with favorable year over year trends and certain key metrics, including top line growth improving cash flow from operations and increasing backlog and we continue to diligently manage our costs, which is helping to drive full year over year.
Your EBITDA and operating margin expansion.
Now I'll move on to the details of the fourth quarter results.
Total revenue for fiscal 2021 fourth quarter increased 10% to 31.1, and sub $31.7 million compared to $28.9 million and the same quarter a year ago.
Our gross margins in the fourth quarter were 49% compared to 44% from the same quarter last year.
The decrease in gross margins was driven primarily by the transportation systems segment, which had more subcontractor labor and revenue and Q4 fiscal year 'twenty, 1 compared to Q4 fiscal year, 2020, our subcontractor labor and revenue tend to have much lower margins.
Operating expenses and the fourth quarter with $13.4 million compared to $11.7 million and the same prior year quarter. The increase reflects a full quarter of operating expenses for the traffic cash business and an increase and intangibles amortization of 440000 and mostly related to the traffic cast.
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We reported a GAAP operating loss and the fourth quarter of 382000.
Which did include approximately 140001 time nonrecurring inventory adjustments and 130000 and acquisition expenses both related to the traffic cast acquisition.
This compares with GAAP operating income of 979000, and the same quarter a year ago.
However, we did report.
Our full year operating profit of 439000 compared to a full year operating loss of $2.1 million last year.
This is the first time and several years, we've been able to report a positive operating profit the GAAP net loss from continuing operations and the fourth quarter was 385000 or 1 cent per share compared with a 1.1 million net income or <unk> <unk> per share last year.
However for the full year, we reported net income from continuing operations of 491000 or 1 cent per share compared to our full year net loss of $1.8 million or 4 cents per share loss and the prior year, hence a substantial improvement this year.
Adjusted EBITDA for the fourth quarter was $1.8 million or 5.5 per cent of revenue, which compares to $2.5 million or 8.7% of revenue and the fourth quarter of last year.
Full year, EBITDA increased $3.3 million to $7.5 million or $6.4 per cent of revenue compared with $4.2 million or 3.9% of revenue and the prior year.
This was a 64% improvement and EBITDA as a percentage of revenue and we expect our EBITDA as a percentage of revenue to grow near 20% for our fiscal year 'twenty 2 at the midpoint of our fiscal year 'twenty 2 outlook.
Now, let me turn to our segment results.
Our transportation systems revenue for the fourth quarter was $16.8 million compared to $16.3 million and the prior year quarter and increase of 3%.
During the period the segment's direct labor revenue was consistent with our expectations, but was substantially lower when compared to the prior year Q4, which adversely impacted operating margins since our margins are much higher on our own labor versus the margins on our subcontractors labor.
Segment level operating income for the fourth quarter was $2.2 million compared to $4.4 million from the prior year quarter and the related operating margins were $12.8 per cent compared to 26, 8% last year. The margin decrease was primarily the result of and mix of labor between our own staff and that of our sub contractors.
As I mentioned.
Our roadway sensors revenue for the fourth quarter was $15 million compared to $12.6 million and the prior year quarter or an increase of 19%. This increase was driven by continued market share gains and the rapid adoption of our next product line that was launched several quarters ago.
Segment level operating income was $2.7 million for the quarter compared to $1.7 million last year and the related operating margins were 17, 8% versus 13, 9% last year the improvement in margins being primarily driven by increased volume and improved product mix.
Corporate expenses and the fourth quarter were $4.4 million compared to $4.9 million and the prior year.
Total year corporate expenses were $17.3 million down $1.7 million or 9% for the full year fiscal 'twenty..1 as we continued to be laser focused on controlling our costs.
Now turning to liquidity and capital resources total cash and short term investments were $28.3 million at the end of the fourth quarter.
The increase quarter over quarter and the prior year was a result of strong cash flows from continuing operations of $5.6 million and the current quarter.
The full year cash flows from continuing operations was $8.9 million or an improvement of $9.4 million over the prior year.
We spent 381000 and capital expenditures and capitalized software costs and the quarter and these expenditures were approximately 1% of revenue for the whole year, reflecting our asset light business model, we remain focused on generating cash to fund our expected future organic and inorganic growth.
In summary, we're pleased to report another solid quarter performance, along with record backlog, which positions us well for the fiscal year 'twenty 2 revenue guidance of 132 million $242 million.
Fiscal year 2021 was a big inflection point for the company as we swung to profitability and positive cash flow.
We do expect and maintained this momentum and fiscal year 2020.2 as we look to grow our adjusted EBITDA as a percentage of revenue and the 20 per cent range year over year.
As a housekeeping matter, we are planning to file a new S..3 universal shelf registration and the next several days since our last shelf reservation [noise] registration expired and September 'twenty, and 'twenty and the shelf will be good for 3 years there.
And therefore to sum it all up we couldnt be more excited about the future. We remain focused on growing the business and our recurring revenue will vigorously managing our working capital and cost structure to improve margins as we move forward with that I will turn the call back over to Joe Joe.
Great. Thank you Doug.
At this time and want to share some commentary on our business strategy and certain key product and commercial initiatives and associated expectations for fiscal 'twenty 2.
The convergence of a ubiquitous connectivity cloud computing and various innovations and mobility and our opinion is profoundly changing the operation and utilization of transportation infrastructure.
As a result agencies are committing to re imagine their internal operating models overcome technology silos that limit collaboration with 1 another and enable new forms of interaction between the mobility infrastructure and those who use that infrastructure every day.
This is demonstrated by a variety of data points, including our own direct engagement and numerous connected and automated vehicle initiatives across the country such as the new initiative with the New Jersey Department of Transportation and Rutgers University that we announced on April 24th.
Based on our own significant direct observations and validated by various additional parties. It is technically and feasible and financially impractical for each individual agency, but first modernize its technology stack and redesign its various business processes without external resources second.
Integrate and maintain point to point integrations to facilitate collaboration with other agencies and third integrate and maintain point to point integrations with automotive Oems fleet operators and other commercial entities with the strategic business imperative to understand and interact with the mobility infrastructure.
Therefore, it is inevitable that new platform enabled ecosystems will emerge in the mobility infrastructure market to solve various network effect similar to what is occurring and industries as diverse as finance insurance energy distribution and manufacturing and entertainment.
Recognizing this business opportunity and terrorists launched our clear mobility platform and January 2020. This new platform included a unified service layer, which we branded as clear mobility cloud to enable and new portfolio of cloud enabled managed services that are aimed at providing the capabilities agencies need to ensure their transportation.
Restructure and meet the demands of a connected world.
Subsequently the acquisition of traffic cast as noted in my earlier remarks enhanced our clear mobility roadmap.
And to realize the full potential of our clear mobility strategy. We've reorganized terrorists effective April 1.2021 into 3 business units applications and cloud solutions advanced sensor technologies and mobility consulting solutions all of which are now supported by a new Chief Technology Officer.
With this new business unit structure, we have centralized all of our software as a service development resources and created a team dedicated to the delivery of our third mobility cloud roadmap within our application and cloud solutions business unit.
And Additionally, the business unit changes, we created and overlay team that is focused on the further development and commercialization of our cloud enabled managed services portfolio.
And we organize both our product and software sales activities into a new shared services model.
We believe these organizational changes will create various development efficiencies increase our recurring revenue contribution and accelerate the execution of our platform enabled business strategy.
And FY 'twenty, 2 we'll be particularly focused on the following key initiatives.
First releasing our next generation video detection system that will bring machine learning to our edge devices for real time deep level object classification, and contribute rich new datasets to clear mobility cloud.
Second and introducing our next generation radar detection system, which will open new end markets for our detection products and enable new cloud enabled managed service revenue streams.
And third continuing to develop and commercialize our portfolio of cloud enabled managed services through both planned enhancements and the introduction of new services.
Or introducing multiple connected vehicle solutions, including new software as a service applications.
And fifth continuing to develop our partner ecosystem and further monetize our existing partnerships through the release of new products with partners, such as Continental AG and Cisco systems.
Our overall sales pipeline is already at historic levels and the plan to lease a significant technology innovations should improve our competitive differentiation and existing markets as well as expand our total addressable market.
Therefore, as we enter fiscal 2020.2 we look forward to continuing our trend of solid full year bookings growth, even though results may fluctuate in any given quarter, especially as we continue to pursue more multimillion dollar contracts.
Also given the focus of our clear mobility strategy, we'd expect to see an increase and the percent of bookings there'll be recognized in the future as the annual recurring revenue.
As Doug noted based on our expected bookings growth and record backlog entering fiscal 2020..2 we estimate total full year revenue to be and the range of $132 million to $142 million, which would represent a 22% rate of growth at the high end of the range.
We would further expect the contribution of annual recurring revenue to further increase and fall within a range of 24% to 26% of total revenue.
Our estimates of total revenue and annual recurring revenue mix do not do not include any potential upside from transformational initiatives. We are pursuing such as strategic partnerships and acquisitions, because we are unable to predict the timing of these initiatives.
Based on the increase and our operating scale and the higher concentration of soccer and the service and sensor revenue. We anticipate further improvements in gross profit margin in fiscal 2020.2.
Our development costs will increase as a percentage of revenue and order to support our ambitious clear mobility roadmap. However, our general and administrative costs should remain relatively flat.
As a result in fiscal 2020, 2 we anticipate a significant year over year improvement and both net income and adjusted EBITDA.
In summary, the smart mobility and infrastructure market is and increasingly dynamic sector due to favorable secular trends and emerging network effects require agencies to re imagine their internal business processes.
They're in our agency collaboration model and their interactions with commercial entities are critically dependent on mobility infrastructure.
With a unique combination of core competencies and market access and what has traditionally been a highly fragmented industry by terrorists isn't a particularly strong position to create a platform enabled ecosystem that capitalizes on this significant market opportunity.
And terrorists career mobility platform, which is the foundation of our platform enabled business strategy has already been adopted by a variety of public agencies within the first year of release and ecosystem partners are also already integrating our platform and do their solutions. In addition, with the acquisition of traffic cash we've seen an increase and the.
A number and variety of commercial entities seeking to integrate with our platform asset.
As we look ahead, we believe by terrorists will evolve into a critical mobility infrastructure digital platform. It will not only benefit society will create significant long term shareholder value.
With that we'd be delighted to respond to your questions and comments operator.
Thank you if you would like to ask a question. Please signal by pressing star 1 on your telephone keypad, if youre using a speaker phone. Please make sure your mute function is turned off.
And your signal to reach our equipment again press star 1.
And I'd like to ask a question, we'll pause for just a few moments to allow everyone an opportunity to signal for questions.
Well take our first question from Jeff Van <unk> with B Riley.
Yeah.
Good afternoon, everyone and congratulations on the strong outlook.
You gave some guidance for the fiscal year, but wondering what's the outlook for the various business segments for first half of this year versus second half of this year.
Again for the fiscal year in terms of revenue growth margin to shatter and just wondering if we should be waiting 1 more than the other if there are any any things that are sort of anomalous and that picture that we might want to factor in.
So Jeff I'll start out by first of all I was saying. Thank you for the question and I'll start off by just reminding everyone that as I said, we re organized and <unk>.
And that's effective April 1 and that's going to impact our financial reporting going forward, but I'll, let Doug talk to your specific question. So Doug do you mind responding to Joe.
Sure No problem. Thanks for the question and Jeff and Yeah. The we're gonna be reporting and just a single segment and you know the pacing of the revenue by quarter, we would expect to follow historical trends. So you know our first quarter and second quarter make up about 50 per cent of the full year, it's a little soft.
And our third quarter, because that's actually the winter months and a lot of parts of the country.
The rebound and the in the fourth quarter. So the and that's we're not going to be reporting separate segments, but you could think about you know a with that guidance range that we've given that you know both the segments are going to contribute to that growth. There's not 1 that's tremendously stronger than the other because we will expect to see you know a lot of our annual recurring revenue start.
And to pick up now with you know a lot more of the software contracts that Joe mentioned.
Okay, Great and then as you sort of look over things today do you think that the higher end of the growth rate that you guided to for the fiscal year is a sustainable organic growth rate for the company for the next few years.
And also I guess wondering well what needs to happen and kind of get to that higher end of guidance. This year and Conversely, what could hold you back to how do you end up closer to the lower end of guidance this year.
Sure. So there's multiple questions and then let me try and take them 1 at a time so the that the high end of the range I mean, obviously, we're getting the benefit of the trap and cast acquisition right and we only had 4 months and our fiscal year 'twenty 1 level, a full 12 months and our fiscal year 'twenty 2 I think we'd previously been.
And guiding to you know over the longer term something closer to a low double digit growth rate, but as Joe emphasized in his comments that excludes any of these collaborations and potential new agreements that we have been entering into with people such as continental.
Joe You know, we do think it's possible, but to go out more than a year right now and there's still you know a little bit of uncertainty and the environment.
Didn't feel that that was appropriate and so I think you know sticking with the targeted 3 year model. We put out there is probably closer for a longer term view knowing that the shorter term is going to look much better.
And then you know what what's in our target operating model and our updated Investor Relations presentation.
Okay, that's helpful and as far as risk goes and then yeah, we tried to provide a broad.
And Brian of range that would encompass the downside as well as the you know the upside.
Mhm, Okay, and then anything to add on supply chain, because I know that was you know that's been something that's been a bit of.
A headwind if you will for for part of the systems business.
I would say and I'll, let Joe jump in here as well I'd say, it's recovering, but you know not not as fast as you know maybe we had thought there's still several of our sub contractors that are behind and delivering and <unk>.
Critical pieces of equipment to our job sites to help us complete the the overall installation and completion of the of the projects. So it's getting better but I wouldn't say, we're out of the woods, yet by any stretch and hence the reason we've still got some risks that we're trying to signal and that guidance.
Yeah, and this is Joe I, just would add that as a reminder, and the prior fiscal year, we had the 2 segments transportation systems and roadway.
Sensors, and there were sort of different supply chain dynamics for the 2 different segments.
And <unk>.
Doug was referring to transportation systems as it turns out was more impacted by the <unk>.
Light chain and kind of general COVID-19 issues than roadway sensors, because they have a higher reliance on subcontractors to provide certain elements of these larger projects that were increasingly involved and a lot of these smaller companies.
And where.
I I think a little bit caught off guard and some cases, no surprise and unable to meet their delivery requirements and had a knock on effect.
And Doug talked to that you know, we do think things are getting better, but we'll have to continue to monitor it and I did want to note, though that roadway sensors has its own supply chain dynamics and they do rely on certain third parties to provide various components, we were able to navigate that pretty successfully by buying ahead and some cases.
Sourcing from alternative providers and in some cases, making some engineering changes in order to minimize our exposure will continue to do that going forward, but I just wanted to be clear that both pieces of the business have some exposure at the specific exposure looks different and then as a final reminder, and us.
<unk> 22, and obviously the segmentation changes, but the basic dynamics will stay the same for the various lines of business.
Okay, great. Thanks for taking my questions and and best of luck.
Thanks, Joe.
Thank you.
Take our next question from Mike Latimore with Northland capital markets.
Great. Thanks, Yeah, very very nice result.
In terms of the.
Recurring revenue I think he said 24 to 26 per cent per on her 20, <unk> 26 per cent of revenue.
Within the year guidance, I guess, what kind of growth rate and would that imply.
So, yes, yes and that.
Yeah, I believe its and the mid 20% year over year and as a reminder, annual recurring revenue includes and the way. We're defining it includes both managed services as well as our software as a service product lines and that actual rates of growth for the various.
Offerings, obviously vary but when you aggregate it all it and approximate a mid 20% rate of growth.
Okay got it.
And then just to be cars and are you and youre not going to report roadway sensors and transportation systems and separately anymore, and you're just gonna get water everywhere.
And well there'll be 2 revenue lines and there'll be product, which is primarily just as we do today, our roadway sensors, and then services, which is a combination of our software business as well as the professional services.
And Mike are intended to provide better visibility to the different forms of service revenue over time and.
So with this change we are actually hoping will provide better visibility to some of the key questions people have been asking such as what is your enterprise wide annual recurring revenue and what's the rate of growth of your annual recurring revenue, which today is difficult to present, because while most of the annual recurring revenues and transportation.
And as we do have some and roadway sensors as well and it gets complicated to try to present that.
Yeah, Yeah, Okay, and then just last on the federal infrastructure Bill If you do benefit from that is it kind of across the board all your products or is it more focused on clear guide or some specific price.
Yeah.
Well potentially it could benefit us across the board obviously the.
Well first of all let's step back everyone right now and our media is very focused on the infrastructure Bill, which is obviously important and we would love to see that get passed but there's also.
Going on is that.
Rosacea and of the Fast Act, which is the federal transportation funding bill for various surface transportation initiatives and in our opinion and it's likely that these 2 pieces of legislation will actually be gang together, but there are important elements of both piece are both.
Legislative items that have and in a positive impact we believe and I care. So just wanted to be clear that currently there are 2 different pieces of legislation and I'm talking broadly about the 2 which I ultimately expect to be getting together.
But anyway, there is a sizeable element of both the fast Act reauthorization and infrastructure Bill Thats going to focus on technology and the use of technology to enhance the safety and the velocity of the physical infrastructure and so that entire line item.
She is going to be you know we expect.
Very large [laughter] would benefit virtually every aspect of the terrorists this business.
Mhm Okay.
And again.
Thanks, a lot good luck.
Thank you.
Thank you.
We will take our next question from Brian <unk> with Craig Hallum Capital Group.
Good afternoon guys.
Couple of questions on organic growth and maybe I missed it and the prepared remarks, but what was the organic revenue growth and the quarter, excluding traffic cast and AG and weather, which I think was pretty small given when you divested it.
Yeah.
Yeah. So yeah, yeah. The other results presented where on a continuing operations, so theres, no AG and weather and either of the compares and the organic revenue growth.
And was about flat and Q4 as we've kind of prudent previewed in our Q3 results with you know that.
Total quarter being up high single digits, which is right about where we finished.
Gotcha, what was traffic cash revenue in Q4.
The traffic has rather it was just about $4 million.
Great and then just on guidance what does that imply from what's the assumption for organic growth excluding traffic cast.
At the midpoint.
So the organic growth is a mid to high single with the balance making up the traffic cash full 12 months worth of revenue.
At the midpoint.
Okay.
And and.
And Ryan and and and then to answer the next part of your question. It's in the the low teens.
Yeah at the high end of the range consistent with what we've.
Previously.
Located our expectation today.
Got you and that does kind of segue I guess at the midpoint.
<unk>.
Lower than the long term targets you put out so I guess, maybe the assumptions, we should assume a high and but I guess, if we just go to the midpoint of guidance what are the headwinds that that are causing you to kind of mid to high single digit versus the 10% to 12% medium term annual CAGR you put out a couple of months ago and you did your analyst day.
Yeah, we're trying to be well so first of all when we put out the number in our analyst day at our analyst day that was a cumulative average growth rate and we still you know would stand by that.
But you know.
Right now, where we sit well, we definitely feel like there and we're seeing and improvement in the economy. It is unclear exactly where we stand in terms of the recovery and what the actual pace of the recovery is going to be and while I think most people see for example, a big increase in demand.
As we've been talking about on this call. There do continue to be you know supply issues, which could negatively impact a lot of businesses, including terrorists and so there are these countervailing effects.
And you know that.
We did a pretty good job of managing through that and our fiscal 'twenty, 1 and we would expect to still do that in fiscal 'twenty, 2 but depending on how that plays out.
We're not we're not confident we're not absolutely confident that we'd be able to deliver.
Growth or strictly organic growth and are in the low teens due to some of these countervailing factors and that's why you know if if you pick the midpoint it reflects high single digit organic growth.
And it's really just a function of where we are and the recovery and what some of the bumps are you now looking ahead over the next couple of quarters.
Yeah, and Ryan just to clarify my my answer on the traffic cash contribution in the quarter I gave you the cumulative which was 4 months worth of revenue in the quarter. The revenue was about $3.2 million per traffic cast.
Great. Thanks for that clarification, 1 last question from me.
Do you think about infrastructure Bill and.
Some bigger potentially more construction going on.
He talked to clear guide and really how you guys can play into that specifically.
Yeah sure book, So first of all Theyre Guy and has a really broad value proposition and and so I don't want I want people to think that.
The value proposition for clarified and strictly limited to to construction, but that being said I'm glad you asked the question because we are seeing a lot of interest from global construction firms.
And using clear guide to help them manage their construction projects in order to minimize disruption and specifically.
The disruption to the movement of traffic.
And and as a result to help them maximize their profitability on these various projects and so what a lot of these global construction firms are looking to us to help them do is to figure out exactly when to time their construction activities and how to maximize the.
Window during which they can perform construction and then also how they can optimize any rerouting of traffic and.
Such that it and minimize the disruptions and congestion.
The reason this is so important to global construction firms is that they generally today when they engage and a contract for like a large multi year construction project.
There's a very significant success fee that is associated with a traffic impact and the success and he can actually make or break the entire profitability on like a multibillion dollar project for these big construction firms.
We demonstrated our ability to significantly accelerate the pace of construction and improve the economics for the joint venture that is performing the I 4 or 5 expansion in Orange County, and based on that success, we're seeing significant demand from other global.
Mobile construction firms to use clear guide and our congestion management managed service to <unk>.
Help them realize the same kind of economic benefit that we created for Oc 4 or 5 venture partners and we expect significant demand not only in the United States, but worldwide, where are their guide and congestion management project or manage managed service and I apologize.
Yeah.
Great, Thanks, Joe and I'll hop back in queue. Thank.
Thank you.
And again, if he would like to ask a question. Please press star 1.
Again that is star 1 if you would like to ask a question.
Our next question from Mike Slutzky with Colliers Securities.
Good afternoon guys.
And I was on a couple of minutes late so if you've already covered some of these please feel free to referring back to the transcript and happy to do that but let me ask first.
And then Bill you didn't mentioned and then there's an infrastructure Bill you mentioned other stuff, but there's also was a giant stimulus spills back and the calendar first quarter here and fiscal fourth quarter and.
And a bit of a.
Local government aid attached to it and.
Some of the others.
On the Dot's I've heard from upset and they have never seen but just just logged and their entire lives.
Trying to find ways to spend it.
Have you got a lot of interest and some of.
He is 1 time projects that don't involve SaaS to fixing anything or improve and anything given some of these large bus and nowadays.
Yeah, Mike This is Joe and I, we definitely the market is very strong right now and and just as a reminder for everyone and we'll continue to provide all of our products and services.
As we as discrete products as we have and the past or in other words. There are a lot of the agencies that will continue to buy our detection products and deploy them across arterial corridors and you know a lot of those purchases are often associated with modernization initiatives, which could be funded.
Through you know some of the that windfalls, let's say that these agencies realize and so yes, we absolutely expect that to continue to happen, but we also think that there's a long term.
And that change happening in the way and mobility infrastructure is managed and so over time, there will be more and more of a transition to recurring revenue and our SaaS portfolio and our managed services portfolio is designed to maximize our share of that wallet.
But anyway to answer your question, yes. The market is very robust and we expect to continue to be robust and it will benefit us across all of our product lines and now coming back to the question that Ryan was asking which is like well then why isn't your organic revenue forecast, even higher and again the reason for that is despite the tremendous demand.
There are some pressure points with particularly with respect to the availability of certain inputs and.
And so it is hard to predict.
So what that means is we would expect bookings to be strong look at our backlog right. Now it is at historic high it's up approximately 25 per cent year over year, but the rate of backlog conversion could be impacted over the next couple of year or next couple of quarters, I'm, sorry, due to supply chain and other disruptions.
And then they get need to get worked through as the economy begins to re normalized. So you know we're trying to be prudent and again at the midpoint of our range. It reflects high single digit growth, but at the high end of the range and now we would expect organic growth of about 13% and total growth of about 22% and we're going to do.
Very fast and navigate this environment and come in at the top of the range.
Okay.
Got it.
I wanted to ask secondly, about the continental agreement.
And your comments, Joe you emphasized traditionally that Joe.
And I'll look does not include any new arrangements.
And new expansions and there's M&A or other kinds of contracts.
And I should have that include kind of it was because that was already that's already been announced and signed.
And that also included.
At this point, there's no continental and impacting your 'twenty fiscal 2020.2 guidance.
And the guidance that we've provided there is no continental impact and just to be clear, what we announced already as we've entered into a collaboration agreement with continental and all and it's our expectation that we will commercialize joined technology.
And then.
Net.
At this point I'm not able to comment on what precisely when now that technology would be available and I'm not at Liberty to talk about the potential pricing or the economics and so it is not included in our forecast to the extent that we were able to launch joint technology.
And we were to start to see.
Sales of that technology, and the current fiscal year that would all be upside.
Got it.
Just a follow up there and maybe share with us your thoughts on how and how substantial continental deal could be when it is kind of fully realize probably not going to be this year, but several years away from now at least.
Is that going to be a large this is for you or will it be just 1 of many products that terrorists office.
Yeah, well so first of all I hope it will be a large we think it's a the technology that we're developing with continental we think is.
Groundbreaking and you know will create significant commercial and social benefits. So you know I would hope that it's gonna have us meaning lead to a meaningful financial contribution to the business because it's deserving of it because of the capability that we'll be introducing and but in terms of talking about this.
Specific.
Our total financial impact or like the larger addressable market associate with that technology, and let me kind of step back a little bit and comment on like the.
The more general nature of the activity that we're pursuing with continental but with other people other yep.
Entities and that that would that include automotive Oems, but other tier 1 part suppliers. The general focus is on connected and automated vehicle enablement, and we think that and order to realize the full potential of connected and automated vehicles and particularly.
And level III through level 5 odd automation.
Is essential for the infrastructure to be able to communicate with vehicles and we believe that both our technology as well as our clear mobility cloud platform will be a critical element of the enabling infrastructure to vehicle communication and that broader market place I think.
Yeah.
Extremely large likely equivalent to that you know over time, it's going to take a while for that to develop and let's be very clear about that I mean, I think we're talking a number of years for that market to.
Move from Nathan and see to and establish category, but when it does I believe that that market will be on the order of the same size as our current total addressable market of approximately $6 billion. So in other words it would add it would double our addressable market, let's say to potentially as much.
It's $12 billion.
Gotcha.
And should I call I appreciate it I'll pass it along.
That concludes today's question and answer session. At this time I will turn the conference back to Joe Burgess for any additional or closing remarks.
Super Thank you operator, and thanks to all of our analysts there's always for the good questions. Obviously, we appreciate everyone's support and Ah again, thank you for making time to participate and today's call.
On the Investor Relations front I did want to note that we're gonna be presenting at the Craig Hallum Capital Group Investor Conference Tomorrow and June 2nd and then also at the Stifel Virtual Cross sector Insight conference on June 8.2021, and if you're.
Participating in either of those conferences are please schedule a visit with US we'd love to talk to you and in the meantime, we look forward to updating you again on our continued progress and we report our fiscal 'twenty 'twenty 2 first quarter results.
And with that that concludes today's call. Thanks again, everyone.
This concludes today's call. Thank you for your participation you may now disconnect.
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