Q4 2022 Vislink Technologies Inc Earnings Call
[music].
Good day and welcome to the Vista Link technologies full year 2022 financial results.
After todays presentation Vish link will answer some of your questions as time permits you may submit online questions using the window on the webcast. Please note. This event is being recorded before we begin I would like to remind everyone of the safe Harbor statement referenced in the SEC filings. He private security Litigation Reform Act of 1995 provides a safe harbor for certain forward looking.
Statements, including statements made during the course of today's call.
Statements contained herein that are not based on based upon current or historical facts are forward looking statements in nature and constitute forward looking statements within the meaning of section 27, a of the Securities Act of 1933 and section 21 E of the Securities and Exchange Act of 1934.
Such forward looking statements reflect the company's expectations about its future operating results performance and opportunities that involve substantial risks and uncertainties. When used here in these words anticipate believe estimate upcoming plan target intend and expect and similar expressions as they relate to this link technologies and.
Subsidiary subsidiaries.
Or its management are intended to identify such forward looking statements.
These forward looking statements are based on information currently available to the company and are subject to a number of risks uncertainties and other factors that could cause the company's actual results performance prospects and opportunities to differ materially from those expressed in or implied by these forward looking statements for a more detailed discussion of some of the ongoing risks and.
Uncertainties of the company's business. Please refer to the company's various filings with the Securities and Exchange Commission I would now like to turn the conference over to Mr. Mickey Miller CEO of its link. Please go ahead Sir.
Thank you very much welcome everyone and we're very excited to talk about our results for 2022 and about the future of <unk> in 2023.
If you could go into.
Yeah.
Our mission remains the same to enable content owners to deliver and distribute immersive compelling live content and allow those in uniform to protect and serve and we'll do this for our vision.
Yes.
Video.
Network in the World when you look at the areas that we participate whether it's broadcast sports and entertainment public safety. These particular pictures all include customers or our product in action, whether it was Tom Brady at the end of a Super Bowl a few years ago, the Wolf Blitzer studio or the Miami Dade.
Fire and rescue these are all areas that our technology impacts on a daily basis things that happened in our world.
Yeah.
Next slide please.
When you look at 2022 is a year of transformation.
Had a large.
Army order in 2021, which represent a large percentage of our business and that went away.
It was deployed in Afghanistan, and once you add.
The need for that product this technology was no longer necessary.
So we.
Pat.
Through our public safety.
Okay.
21, and our sports and entertainment business by 40%. The reason why that's important is because that's the area that we've been focused on with our new products that we've developed over the last three years, so whether it's our quantum product or our new transmitter products Arrow, Inc. These.
These are focused on those markets. So this underscores that our strategy, our technology strategy and our products meet the market and we're growing quite well in those markets. We anticipate continued growth in those markets. In addition to growth on the top line in those areas, where we reduced our breakeven point by another 3 million.
Yeah.
Through ongoing cost reduction.
We implemented a new go to market strategy, we took the opportunity in last year to focus on those products that are non strategic legacy products.
This satellite.
Instead it is those products.
I would now through our new products, we view, our hardware products as a gateway to itself.
And we were now able.
Got it.
The combination of <unk>.
<unk> and.
Matrix products and they are bonded cellular products with the traditional vigilant cost in products. So I think youll see as we.
Show you our strategy around products were leveraging the assets, we acquired through the mobile viewpoint acquisition to position ourselves better in the marketplace and through that we're able to drive a software services strategy on an ongoing basis, we targeted 90, 10%.
Hardware to software in this first year, but we expect that to increase in the coming years as we focus on growing our revenue.
Through software and services via our link matrix.
Management platform.
One thing we're most excited about is we have the highest weighted sales funnel that we've had post COVID-19, it's ways at $52 million.
It includes all of the different <unk>.
10% opportunity that only 10% of the potential revenues included if it's 80% then 80% so it's a weighted.
Anil that we feel really comfortable with focused in those targeted areas of sports and entertainment part of life production, which is.
Probably over 90% of life production, and then public safety, which today is over 90% of our mill golf product.
Our segment.
Slide please.
Yeah.
When you look at our strategy. It's the same whether we're in the Mil gov market or whether in the ER.
Production segment.
Whether it's sports and entertainment or public safety, the guts of our product offering and our software offering are the same and that comes from everything from content capture like in the case of IQ sports producer, we have four four K cameras that we now stitched together to create an automated capture capability to our.
We're the only.
Player in our market that can do bonded cellular can do carsten can do private <unk> and now we're doing bonded Kaufman and public <unk> bonded first one in the industry to do that really the only one who has those two technologies with the capability of doing that and we see that as a massive opportunity as.
Things change over time, and then the applications that run on top of that and software platform rigs camera control video return or ISP.
Cloud production, we're able to offer.
Whatever the customer wants to use from a cloud production standpoint, we don't want to have.
We allow our customers to use with their preferences are on the play outside where the Transco or D code of any short we're able to do it and then we can transfer that through our IP link our entire linked products, but again. This is all managed through our linked matrix.
Management platform, which will allow us to both automate and control so as automation becomes more favorable and more desired in the marketplace will be in a great position with our link matrix product line.
Next slide please.
So just looking at the public safety market, which is part of the Mil Gov segment and as I said.
In 22 was the lion's share given our Afghanistan order.
Didn't continue into 2022, but we grew this by 31%.
And we expect to double this in this year.
What's really exciting is a couple of reasons for that one as we introduce our arrow <unk> transmitter last year, and it's got an incredible reception and buyer.
As our customers add a four K from the air to ground and that brings a lot of capabilities and a lot of visibility. In addition, this is an area, where we're offering now our own Vms, where they can go directly to their own PDA and see what's happening from a bird's eye view.
We achieved $2 million in downlink orders around our airlink product line in.
In the fourth quarter of last year, we've seen a great reception around Arrow, Inc, and now our quantum receiver as part of the solution.
We were just beginning to build our international sales pipeline in the Middle East Asia, and even parts of Western Europe . So we're really excited about the possibilities that we have for this product line, we have the visibility to commit that we can double the revenue in this area in this year.
We're continuing to do that through our trade show activity and digital marketing efforts to bring.
The old customers that used to use our <unk> product line and then new customers that are interested in our airlink because not only does it do a proprietary costume link but it also brings bonded <unk> two areas, where they don't want to deploy receive stations.
So that's a great opportunity for our customers to leverage whatever wireless capabilities are available.
On the defense side.
We're in the middle of initiatives to identify opportunities to grow in those areas developing sales channels partnerships and joint ventures, while also reviewing quite a view of M&A activity, what we do from us.
Our wireless FPGA capability, coupled with our R in coding capabilities and <unk> capabilities as much desired the world is going wireless and certainly on the defense side.
Why are we capability is very critical.
Next slide please.
So when you look at the public safety market as I said that when we show what's happening in sports Entertainment and these products are effectively the same but the markets that we play in is ABS area of video Downlinks systems, which brings from the air whether it would be a rotary helicopter or fixed wing.
<unk> or drone tuna ground, we're able to take that capability send it to the cloud and distribute it to.
Field agents as well as command so that proactive decisions can be made to better control situations. We also take brown drone backhaul right out right out of the controllers into the into the cloud for distribution remote surveillance is an opportunity that we've been able to grow and thats ability to take video.
Loss from whether it be oil sites.
Other production facilities and transmit those back to headquarters and then automated surveillance. This as an opportunity where we're using our IQ sports producer and our automated capability to to manage drawbridge is such that you don't.
Draw the bridge in when someone's on a bridge or or.
If there is some some animal or some type of danger and so that allows.
Again, an automated well way to support the automated surveillance folks in parts of the world.
So the products that we have here our quantum product that we've talked about many times we introduce this.
18 months ago, it's been well received probably our most successful product in the history of the company coupled with our <unk> transmitters are H Cam there are bonded WCS products, which is our bonded <unk> products and then our new hybrid bonding cost and that's our quick it's very small body worn capability that allows you to.
Two feeds of video and two feeds of audio are at USP, which is our IQ sports producer, which is our AI automated camera and then the era language I talked about but the key piece of this this is all bound together through our matrix software offering.
Next slide please.
On the public safety side do you use case here is pretty simple what you see on the right is 10000 pills affecting all technology kills 300 people a day in the U S.
Obviously.
Intense focus on this and what we allow.
Public safety organizations across the U S to do is able to see what's happening from a bird's eye view, we have our early transmitter in in the helicopters and fixed wings, we havent receivers that receive station and we're able to collect all the hardware systems and distribute a low latency highly reliable <unk>.
I view to the command center and our field personnel. So they can make proactive decisions.
We're also using this for border control monitoring of course, the village illicit activity as well as just general surveillance. So this is a key part of the public safety solution to solving the challenges that we have in our society today next slide please.
On a live production markets grew 27% overall with an underlying growth of 40% and that means if you take the legacy products and focus on the new products that we've introduced that are focused largely on sports and entertainment. We've got strong industry tailwind in the sports and entertainment side continued technology.
Equipment upgrades as well growing demand for cost effective live event production post COVID-19, there isn't the facial demand for high value live content.
And more content and so we continue to work with our partners and with content owners to be able to find creative ways, because it's not only about the event itself, but also the story behind the story as <unk> seen in so many different.
The events that we've seen through <unk>.
Sporting teams or brands now taking.
To Netflix and other than used to be able to show what's happening behind the scenes.
Of course, there is continued interest in Remy, which is remote production capability.
Our new products, all drive and support those key initiatives, whether it's our quantum receiver or click <unk> mobile transmitter our AI based technology as I said, our vision is the ability to bring automation and digitization to all video centric networks in the world.
We will be showcasing our new products at industry conferences, we have our NAV conference coming up here in April which is where the largest broadcast conference in the U S.
We recently announced our sport tell partnership with stream by viral which has continued to bring opportunities because when you look at it sports research the pilot trial you're live.
All planting seeds of new products to bring new capabilities to customers. We're seeing good traction behind those next slide please.
Okay.
So again the products that sit in the live production markets are effectively the same products that were positioning the public safety markets, just wrapped a little bit differently, but again, all managed through our matrix software. So kind of the use cases, we see our studios whenever you see.
Content owner or a broadcaster, creating new studio, they're using wireless for K high reliability low latency equipment like ours. So we've been able to see a good opportunity in traditional studios that are being rebuilt automated capture the ability to take multi camera automated capture.
<unk> and create a live event just like you have camera man on site, we're able to do that through our IQ sports producer and that's been really well received ABS as I mentioned area of video downlink systems are used at broadcast.
Quite commonly we were at the.
The Goodyear blimp and other places.
Remote production as I mentioned thats the ability to have fewer people on site. This was accelerated through COVID-19 and have more people back.
At the studio so you're needing to bring signals back to have production done remotely.
An area that has had tremendous growth we continue to see the growth there and that's where we see our total inc.
<unk> being a key product in that area in venue is typically done through our proprietary costume systems, that's where you'll see the <unk>.
And our.
Quantum receiver being used then on location is more mobile and that's we're used the mobile networks and our bonded <unk>.
As I said when you look forward to planting seeds of five <unk> product offering that we introduced that did a lot of testing with BT sport and others that we announced we won quite a few awards around that that's an area that we see developing over time, we're one of the leaders there that will largely take time, because it's a function of regulation of spectrum and also cut.
<unk> is moving there, but what we allow them to do is have a platform that allows them to get to that point when they desire because we have a costume solution. We have a bonded solution and then ultimately it five gene private solution. So we're the only one in our industry that has the capability to do all of those three different technologies.
Next slide please.
So the typical use case of a costume transmitter.
Is our click which we'll be introducing we introduced last year at IDC. This year at NAV will have wide units and this will be start being shipped in the April may timeframe. It's a very small <unk> mobile transmitter you can go on the back of one of these riders on right where you are.
Able to take in the feed from a camera on the helmet and a feed from the camera on the shoulder.
As well as two.
Two microphones that you have on the bikes. So it's got incredible capability and as you know in the past Moto GP as you know we have four cameras on every one of those bikes. So its 20 bikes now adding two additional cameras. That's the kind of capability not just with voter G P or extreme ease.
The picture down here on the right, but it brings so much capability of immersive content and unique content that you can achieve other places by having that very intimate look from the individual's body. So we see it.
Tremendous opportunity.
Our growth not only in motorsports with the click but in a lot of different areas.
And so far the response I received from customers about that interaction are very positive.
Next slide please.
Yeah.
Mike you want to go through the financials.
Sure. Thanks Mickey.
As Micky mentioned 2022 was a transformative year revenues were $28 4 million, that's down slightly from last year and that's as Micky mentioned due to losses, some pieces of business of legacy products like the Afghan our U S Army Afghan.
Contract and a few legacy satellite product.
Sales, but we did see strong growth as Micky mentioned in two key segments for us public safety and sports and entertainment and there we saw about a 31% growth in public safety and about a 40% growth in sports and entertainment.
Get getting increased sales in those areas and allows us to start selling more of our higher margin products like quantum and Aero link and allows us to start putting more of a service wrapper around our equipment sales and as Micky mentioned, we are endeavoring to move to about a 90 10 split.
In 2023, and we think that's going to increase and Thats a conservative amount.
So we reduced our breakeven by $3 million and by that we mean that we reduced our costs and expenses such that given a certain amount of revenue. We've now taken that amount of revenue necessary to breakeven down by $3 million that gives us some flexibility and we think we're going to continue with the cost and <unk>.
<unk> expense optimization through 2023, we're not finished.
So we've streamlined our product line substantially.
We say its been street streamlined by 60%.
And that allows us again to go up margins selling higher margin products newer products.
Increase in and include a greater amount of services.
So we think that that obviously gives us a greater opportunity for better profitability. So that's the newest product line has gotten extremely good reception and has been evidenced by some interesting awards. We got the I E. D. M Award for there are five G.
For live remote production solution and we got the broadcast Tec Tech Innovation award for our premium low latency wireless camera technology this year.
So our gross margins were 47% of revenue again down slightly from last year due to volume issues and some mix, but we expect that to go back up into the.
Mid to lower 50% by next year, we had a strong balance sheet at the end of the year.
Point $6 million in cash and we had no debt now.
Now I'll turn it back over to Mickey.
Thanks, Mike.
So as we look into 2023, we think we're incredibly well positioned for organic profitable growth.
We've done some changes in the leadership team last year.
Mobile viewpoint team, Michelle Bice is leading our product and engineering teams J.
J D. The head of sales.
<unk> is leading our sales and Charlotte are marketing. So we've made a lot of changes that we've just announced a new change.
Paul Norwich will be.
The CFO effective April one Mike Bond is done incredible work since he has been here. He came here with me in the early days of turning this round units through the pandemic and get us into the growth position and we think now is a great time to make this change as we position this company for growth.
The future. So the transformation that we started in 2022, we're starting to see yield benefits already in 'twenty three the cost reductions will help continued bottomline improvement and we're continuing on further cost reductions in 'twenty three.
Also <unk>.
Increased traction with newer higher margin products.
Thanks.
Okay.
That leverage the latest technology of AI cloud and <unk>, and then link matrix will be integrated to all our hardware platforms.
And that's probably 80% along the way and will be completely integrated but that really is the ability for us to drive the service and software recurring revenues over time, we expect to have a two thirds live production one third public safety revenue mix, which is a favorable mix for us and we're.
We're getting as we said 90 10 hardware software services mix in 2023.
As Mike mentioned, we had a strong award winning product portfolio was announced last year that same innovation is increasing and youre going to see a lot of new exciting things happen this year from a product standpoint.
As I mentioned, we plan to double our public safety revenues in 2023, the opportunities are there, it's not only our new products, but the activities from the local and state level have increased.
<unk> is not only with that funding from local and state, but also federal funding into the area.
Is increasing spend by many of our customers. So we see a great opportunity to increase that drones bring a large opportunity to the table is always get deployed in various.
Areas throughout the country. So we see.
Our growth opportunity, there as well and things like the click things like our bonded cellular backhaul capability, all positioned well from a drilling standpoint.
We still see continued growth in live production, we've got a great list of Blue chip.
The high quality of our K wireless systems.
It's not only content owners and broadcasters, but every large enterprise.
As a media company they have to communicate with their constituents with their employees and with our investors and customers and having the capabilities that we have allows them to do that in a much more efficient and high quality way. So we've had some really good growth around the enterprise as well and as I mentioned finally all comes down.
Two two opportunity how do we identify those opportunities bring those qualified leads and then close on them. So we have a very strong pipeline of qualified opportunities that the sales teams are bringing in.
And working to close so our focus is on increasing that pipeline as well as closing the opportunities that are in front of us and so we're very focused on that we're very excited about that we've reenergized.
The product line.
Footprint that we have the team and our.
Our customer base and our focus around providing innovative solutions to those customers. So we're really excited about 2023, we looked at 2022.
Transition year for us, where we cleaned up a lot of things a lot of legacy things were able to transition away from a large army U S Army order and now our position which are more diversified customer set.
But also the opportunity to grow in defense opportunities as we see those through our initiatives to grow that area as well.
Next slide please.
So now we're at the Q&A, so we'd like to open up please.
We have a list of.
Questions.
On the website. So if you have any questions. Please make sure Oh.
Yeah.
On the web side I think the first one is.
Are you Gotta do.
<unk> split.
So.
As you know in January our stockholders authorize us to effect a reverse split so we can regain compliance with NASDAQ minimum bid price of one dollar per share for 10 trading days so.
That's been voted and it's been approved and we appreciate everyone who took the time to vote for that we're monitoring our stock price and the various factors. When we think it would be appropriate to implement a reverse split and what ratio if our stock does not regain compliance on itself, obviously, we'd love for it to regain compliance on zone.
We're bringing in.
Okay.
If we have not regain compliance by that.
To appeal any de listing.
To the NASDAQ hearings panel pending which we fully expect our stock will continue to trade on NASDAQ as part of that hearing process, we expect to commit to a timeline.
But yes, we regained counts.
And what's required.
So those are part.
Requirements that we have as.
As you know.
<unk> bin.
Big proponents of reverse splits however.
That does have a requirement that you'd be above a dollar and we've had now two extension so as I said, we're going to.
We're going to see how the stock performs we're very encouraged about the future of our company and the future of our results.
<unk>.
And we will.
Implemented split if it's needed, but as I said, we will continue to monitor the situation.
Okay.
So I think you can ask the real question is regarding our outreach to our investors and how we intend to communicate in the future and let's just say that we endeavor to obviously keep a full line of communication open with our investors.
Keep you.
<unk> as much as possible about what we're doing within the company.
We have recently taken steps to kind of increase our outreach to our investors.
We are in we're actually engaging a new investor relations PR firm to help us in that regard and we do expect it to continue to have increased communications with our investors and our constituencies.
Yes, good point Mike.
I said, we just retained gateway IR to help us on the IR side, we know.
We have an opportunity to improve there and theyre going to help us. This is the first earnings call as they've been a part of.
It has been on it for a very short time, so we're very.
Domestic that will be able to increase the communications with our investor community and keep you apprised of how we're how we're developing to the goals that we've set.
Yeah.
Another question I see do you have outstanding quotations with any military foreign or domestic that may help replace your former Afghan income.
Yeah.
Uh huh.
A large program with the U S Army over one product.
With one customer.
We don't have any of that size with one customer but.
We do have with <unk>.
And public safety here in the U S but for them.
Military is outside NATO military is outside around our <unk> product line as I said, that's a product line that brings a lot of capabilities.
<unk> surveillance and control and and we've got a great reception and historically.
Italy has been a provider in those areas over years. So we are a known entity in that area and we're considered a trusted source for that solution. So we're very excited about the opportunities you're seeing there.
But here's a question from Peter asked Whats, our cash position and I think we had mentioned that we ended the year 2020 to $25 6 million of cash we expect to continue to manage our cash very carefully we did invest in some increased R&D last year.
To bring out some of our new products and we do also invest in our go to market model to make sure. We're enhancing that so we can reach out to these new and more exciting customers that Micky mentioned.
But we do expect to be somewhat cash neutral throughout the rest of the year unless we make an investment in an acquisition or something like that.
Yeah.
Okay.
A question from Brian <unk> with Alliance Global partners analysts can you quantify total revenue from public safety and sports Entertainment in 2022, and adjusting for inventory charge why was the gross margin abnormally low compared to your recent trends on the first one Bryan.
Sports and entertainment is the lion's share, 90% plus of life production and public safety in 'twenty, two was 90% plus of the.
Mil Gov segment as we report.
On the inventory charge around the gross margins of 47% as Mike mentioned.
It was largely due to volume and some mix, but largely volume.
That impacted that down from our traditional I think we were at 55 or something.
The prior year.
That's right and to Brian's point there was.
A soft mall amount of the total write off are related to inventory that did go above the line and did go against our gross margin, but as Micky mentioned most of it was purely volume related this year and we expect next year as I said for that those margins to go back up to where they normally have been.
Okay I'm just continue to look at the areas.
Yes, do you see crazy elements on AI.
Go ahead go ahead, I'm sorry Byron.
Private brands is better than I, what's the what's our what's been our ROI and what's been our experience in the Tradeshows.
Yes, I can just speak for.
This year.
So.
Security please.
Okay.
Those are very targeted so it's not like you see a lot of potential customers, but the ones that you see are highly qualified and therefore, a reason and typically to acquire systems. So.
So our strategy is from a trade show is twofold, one will do the two large broadcast tradeshows one being <unk>.
<unk> in September and April for NAV.
In the U S. And then we're very targeted with the public safety and the sports and entertainment shows that we do during the year. So for instance, middle pole.
Our security police and are highly extra overall, all big shows where theyre not large shows but the quality of the participants and.
Allow us to get to walk away with.
Many qualified leads whereas at the largest show you get a lot of names.
And a lot of people walking through but.
The percentage of the true potential buyers is a smaller percentage, whereas the smaller shows it's a much higher percentage because it's much more quantified smaller groups.
Okay.
Question from Byron asked since Q1 is almost complete can we give guidance and Byron we don't give guidance as a rule, but we are as Micky mentioned very encouraged by the uptick in interest for our new products or new services.
We think this is a prelude to what we think 2023 will look like which we think is going to be very positive, but again, we don't we don't give guidance, we are not giving guidance in the past, we're not giving guidance for this quarter.
Okay.
So.
This growing or bonds. So if we have any additional new questions.
I think do you see current developments on AI as an opportunity for the company I think everybody has heard about jet chat GPT for the capabilities that can bring certainly that capability LLM or other AI like the AI that we're doing in our current products ultimately video centric networks and all networks will be automated.
The first part of that is digitizing. So when you look at the the journey that we've been on in the video World SDI was the standard not so long ago and that was effectively an analog standard.
Digitize, but not IP based now everything is moving to IP based and once you are at an IP based solution that is very easy to digitize things and automate.
So that's what we're working on we're working on IP based cost them obviously are.
<unk>.
Bonded solutions, our IP based our <unk> solutions are IP base, and our AI solutions are IP based so as everything converges on inlet Internet protocol will be able to automate and digitize and thats really where the.
The magic of what we bring in terms of the software that's delivered over our hardware our hardware solutions brings opportunities for our customers to do so much more so much more efficiently. So it's either about creating amazing content, but doing it at a lower price point.
So that efficiencies in the system or they're creating automation to be able to identify what the ideal highlights are there's so many ways.
Going to impact our industry, both on the public safety side as well as on the.
The sports Entertainment side life production side, and we're going to be at the forefront of it.
Yeah.
So I think I think that's all the questions we have.
Again.
We will be.
Connecting with our Investor base more consistently now with Matt.
Matt go over and Tom Colton from Gateway group, the leading us on the IR side.
You have any questions. Please shoot it to.
<unk>.
Sal at Gateway IR Dot com.
And we will we will continue to focus on the basics of taking this opportunity a funnel that we have increasing that funnel as well as converted that funnel to orders and targeting our software services business.
And our growth engine around public safety and sports and entertainment.
Thanks, everyone.
Thank you.
Yes.
Yeah.
Yes.
Okay.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Okay.
Yes.