Q2 2023 Wrap Technologies Inc Earnings Call

August 9, 2023

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To have joined the meeting as an attendee and will be muted throughout the meeting that are paving the way for an exciting and rewarding future correct technologies.

First I am thrilled to share a momentous milestone in our journey of continuous innovation and growth.

The acquisition of intrinsic LLC, a leading player in cloud base, evidenced management and body worn camera technology.

It's transformative endeavor backed by investment of $500000 in cash and 1.25 million shares of <unk> common stock marks a pivotal addition to our solutions portfolio.

By seamlessly integrating intrinsic into our old we solidify our position as a dynamic and comprehensive provider of public safety solution of the worldwide.

This transformative and strategic moves unlocks a horizon of boundless growth opportunities and reinforces our unwavering commitment to driving safer outcomes and empowering law enforcement and communities as we move forward together.

Through this landmark acquisition, we not only elevate our service to existing customers, but also expand to a broader clientele seeking cutting edge all encompassing solutions intrinsic brings to the table a state of the our cloud based digital evidence management system and body worn cameras.

Which is perfectly aligned with our strategic vision to fortify and diversify our offerings in the law enforcement and security market.

With this acquisition.

<unk> reaffirms its commitment to empowering law enforcement worldwide with a comprehensive suite of solutions.

As the demands of modern policing continue to evolve.

Our relentless drive to be a prominent authority in this domain will be bolstered by integrating intrinsic capabilities with our own paving the way for a more cohesive integrated and sophisticated technology ecosystem.

By welcoming intrinsic and fewer family ramp takes a significant step towards becoming the preferred one stop shop for law enforcement and security in their technology needs.

Our expanding portfolio will encompass fully integrated end to end advanced technology options, making us the indispensable ally for public safety agencies driving to stay ahead in an increasingly complex world.

As we move forward.

Our United strengths will propel wraps ability to drive impactful change for our global customer base and new partners seeking comprehensive advanced technology solutions.

Going forward wrap will offer three complementary but distinct solutions in our portfolio.

Body worn cameras and evidence on cloud.

Rap reality or virtual reality training platform and our exclusive patented bowler at remote restrained. The boss, we look forward to continuing to apply our no harm approach to public safety driving safer outcomes and empowering law enforcement and community around the world to move together.

In platform and are exclusive patented bowler at remote restraint device, we look forward to continuing to apply our no harm approach to public safety driving safer outcomes and empowering law enforcement and communities around the world to move together.

Now turning to our results.

Our second quarter 2023 has been a period of restructuring setting the stage for our future success, even as our overall results align with last years due to the timing of large international orders in 2023, we are delighted to announce record sales of our virtual reality training platform rap reality, which is witness.

A significant surge in customer demand.

A significant surge in customer demand as.

As we progress into the second half of the year, we're optimistic and thrilled about our growth trajectory. We recently expanded our sales team to cater to the increasing demand for our solutions in both the domestic and international markets, we see immense potential in the international market market and are focusing our efforts to tap into these opportunities.

<unk>.

I would also like to extend a warm welcome to our new board members, whose expertise and insights we will significantly contribute to our growth.

I would also like to extend a warm welcome to our new board members, whose expertise and insights will significantly contribute to our growth.

Our cornerstone solution <unk> continues to resonate with a growing number of law enforcement agencies worldwide.

Our cornerstone solution bowler rack continues to resonate with a growing number of law enforcement agencies worldwide.

We see a robust growth in Bhola rep sales for both existing and new departments and.

We see a robust growth in both direct sales for <unk>.

Both existing and new departments.

And we are in advanced talks for large international orders, which underline its global appeal.

As I mentioned earlier, our rap reality platform has already outperformed last year's sales in just six months, we anticipate a rapid increase in the number of unique scenarios to enhance officer decision, making skills and high stress situations.

And now we're folding in the intrinsic platform and expect to leverage our global sales force to rapidly expand intrinsic body camera and evidence on cloud solutions worldwide.

We've taken major strides this year and setting new performance benchmarks and cost disciplines, we remain committed to fortifying our current operations and investing in the future with a clear vision and re Littlest drive we are poised to unlock the full potential of rats.

We've taken major strides this year and setting new performance benchmarks and cost disciplines. We remained committed to fortifying our current operations and investing in the future with a clear vision and Littlest drive we are poised to unlock the full potential of rats.

As I mentioned on the last call. We have started to reap the rewards of our long term investments in marketing training and research and development.

<unk> has established a robust brands.

<unk> has established a robust brand.

Increased market share of.

Increased market share.

Of its innovative solutions and forge relationships with numerous law enforcement agencies worldwide.

We are hastening the pace at which we closed new sales from Ericsson, expanding pipeline and increasing adoption rates across our existing customer base.

We are hastening the pace at which we closed new sales from Ericsson, expanding pipeline and increasing adoption rate across our existing customer base.

Having established.

That will define and targeted strategy that aligns with our priorities, we adopted a multifaceted approach that entails enhancing collaboration between our inside and outside sales teams optimizing our sales territories and streamlining our operating model to improve efficiency and scalability.

That will define and targeted strategy that aligns with our priorities, we adopted a multifaceted approach that entails enhancing collaboration between our inside and outside sales teams optimizing our sales territory and streamlining our operating model to improve efficiency and scalability.

Implementing this leaner operating model.

In implementing this leaner operating model, we will be able to quickly expand our operation when larger orders materialize later in the year with these measures in place. We are confident that we can stimulate growth and attain our 2023 targets.

We will be able to quickly expand our operation when large orders materialize later in the year with these measures in place. We are confident that we can stimulate growth and attain our 2023 targets.

As previously mentioned I've outlined three main priorities as we head into the rest of the year they are to one <unk>.

As previously mentioned I've outlined three main priorities as we head into the rest of the year. They are to one accelerate the rate at which we close deals to expand deployment with existing customers and three reduced our nonessential operating expenses.

Accelerate the rate at which we close deals to expand deployment with existing customers and three reduce our nonessential operating expenses.

I'm happy to say that we are well underway with this program and we are already seeing the fruits of our labor.

Happy to say that we are well underway with this program and we are already seeing the fruits of our labor.

Now I'd like to hand, the call over to Chris to discuss our financial results for the quarter Chris.

Good afternoon, everyone and thank you Kevin.

Good afternoon, everyone and thank you Kevin for providing a comprehensive overview of our business and strategic developments are now going to present, our second quarter financial results and give you an insight into our outlook for the second half of 2023 and beyond.

Providing a comprehensive overview of our business and strategic developments I'm now going to present, our second quarter financial results and give you an insight into our outlook for the second half of 2023 and beyond.

Despite the timing of certain large international orders, which we now expect to close in the second half of 2023, we were still able to achieve revenues of $1 $2 million this quarter a figure consistent with the same period.

Despite the timing of certain large international orders, which we now expect to close in the second half of 2023, we were still able to achieve revenues of $1 2 million this quarter I figure consistent with the same period.

In the prior year driven by continued strong domestic sales.

This revenue stability is a testament to our robust business model and solutions appeal, even as we're in the process of executing major strategic changes.

In the Americas, our revenue saw a 7% increase from the prior year period, moving up to $1 2 million from $1 1 million or.

In the Americas, our revenue saw a 7% increase from the prior year period, moving up to $1 2 million from $1 1 million.

Our international revenues held steady year on year, a reflection of the strong foundation, we have built in these markets.

Our gross profit for the second quarter increased by 46% from the prior year period going from 457660 7000, our efforts to increase production efficiency and manage our costs per BOE are up 150 of Paypal.

Our gross profit for the second quarter increased by 46% from the prior year period going from 457660 7000, our efforts to increase production efficiency and managed our cost for a <unk> 50 of Paypal.

And this is clearly reflected in our healthy gross margin of 56%.

Operating expenses did increase by 10% from the same period, a year ago, mainly due to onetime cost related to the organizational changes we made in April .

Operating expenses did increase by 10% from the same period, a year ago, mainly due to onetime costs related to the organizational changes we made in April .

However, if we exclude these onetime items our operational expenses for Q2, 2023 would've decreased by 17%, reflecting our ongoing commitment to maintain operational efficiency and financial discipline.

Unfortunately, our net loss for Q2 2023 did increase slightly due to these one time costs, excluding the onetime items, our net loss would have been $3 7 million, which is the.

Unfortunately, our net loss for Q2 2023 did increase slightly due to these one time costs, excluding the onetime items. Our net loss would have been $3 7 million, which is a significant 23% improvement on the prior year period.

Significant 23% improvement on the prior year period.

Looking at our balance sheet it remains healthy and robust as of June 32023, we had cash cash equivalents and short term investments totaled $18 2 million compared to $19 3 million at the end of 2022.

This includes part of the initial proceeds from the $10 million of preferred stock and warrant offerings, which was still in the process of closing at the end of June .

This includes part of the initial proceeds from the $10 million of preferred stock and warrant offerings, which are still in the process of closing at the end of June .

On the note of key performance indicators I'm pleased to share that the total number of trained law enforcement agencies and grown by 18% and certified officer and structures have increased by 16% from the prior year period.

On the note of key performance indicators I'm pleased to share. The total number of trained law enforcement agencies and grown by 18% and certified officer and structures have increased by 16% from the prior year period.

These are promising indicators of our ability to continue to expand our footprint and influence and are influenced in the public safety market.

In conclusion, our financial health and continued operational improvements combined with our strategic acquisition, we just announced and market expansion give us confidence in a stronger performance for the second half of 2023.

We believe that these strategic initiatives, along with our robust balance sheet position us well for future success and long term shareholder value creation.

In summary, our Q2 2023 performance, despite appearing flat year on year, demonstrating demonstrated resilience and ongoing operational improvements and Mr strategic organizational changes.

In summary, our Q2 2023 performance, despite appearing flat year on year demonstrate demonstrated resilience and ongoing operational improvements and Mr. T strategic organizational changes.

We've increased our gross profit by four 6%, while continuing to manage cost effectively resulting in an impressive 56% gross profit margin.

We've increased our gross profit by 40%, while continuing to manage cost effectively resulting in an impressive 56% gross profit margin.

Even as onetime expenses impacted our operational expenses and net loss our performance improved significantly when adjusted for these costs with an increased number of trained law enforcement agencies and certified officer and structures are market influences on the rise our robust balance sheet and clean our strong cash position is complemented by promising revenue potential for the pending international orders.

Even as onetime expenses impacted our operational expenses and net loss our performance improved significantly when adjusted for these costs with an increased number of trained law enforcement agencies and certified officer instructors our market influences on the rise our robust balance sheet and our strong cash position is complemented by promising revenue potential for the pending international orders.

Setting us up well for a positive second half of 2023.

All of these elements reinforce our confidence in wrap technologies future success and creation of long term shareholder value.

With that I'd like to turn the call back over to Kevin to discuss our outlook for Russia.

With that I'd like to turn the call back over to Kevin to discuss our outlook correct.

Thanks, Chris.

As we look to the future I'm thrilled and inspired by the myriad of exciting opportunities ahead.

<unk> technologies is at a very transformative juncture in our Germany poised to source, New Heights and chart, a path of unparalleled growth and success.

<unk> technologies is at a very transformative juncture in our journey poised to source, new highs and chart a path of unparalleled growth and success.

Our flagship solution <unk> is well positioned to gain further global traction with rap reality, we are revolutionizing the training experience of law enforcement agencies, bringing them to a new paradigm in immersive and perpetual learning. The addition of intrinsic with its body worn cameras and <unk>.

Our flagship solution <unk> is well positioned to gain further global traction with rap reality, we are revolutionizing the training experience and law enforcement agencies, bringing them to a new paradigm in immersive and perpetual learning. The addition of intrinsic with its body worn cameras and <unk>.

<unk> based digital evidence services integrated with evidence on cloud to streamline and transform how evidenced as managed perfectly complement our portfolio.

With these combined capabilities and our comprehensive NDA integrated suite of offerings combined with our expanded team and robust balance sheet. We are prepared to seize the significant market opportunities that are before us.

I'm extremely bullish about our growth and prospects as we aim to be the preeminent technology partner for public safety agencies worldwide.

<unk> them with innovative effective solutions that drive safer outcomes for safer communities.

In conclusion, our performance for the first half of the year, coupled with the positive outlook for the second half has given us confidence in our bright future <unk> technologies are four to five product line and our dedicated team position us well for success.

In conclusion, our performance of the first half of the year, coupled with the positive outlook for the second half has given us confidence in our bright future <unk> technologies are four to five product line and our dedicated team position us well for success.

Thank you for your continued belief and division.

We are excited to continue this journey and look forward to driving further growth.

<unk> strong performance and creating shareholder value in the coming quarters. The future correct technology is indeed promising.

I'll now turn the call back over to NEMA to facilitate the Q&A and pre selected questions we receive from investors.

I'll now turn the call back over to NEMA to facilitate the Q&A and pre selected questions. We received from investors.

Thank you Kevin.

Following question comes from many shareholders and interested parties.

And then how does the second half of 2022 months compared to the first half of 2020.

And then how does the second half of 2020 came up compared to the first half of 2020.

Thank you NEMA.

The outlook for the second half of 2023 is shaping up to be quite promising with compared to the first half firstly as we mentioned earlier.

The outlook for the second half of 2023 is shaping up to be quite promising we compared to the first half firstly as I mentioned earlier.

The unpredictable nature of international orders means that while the first half may have been subdued we are seeing a robust pipeline for the second half advanced discussions with potential international clients.

<unk> with.

With.

A clearer regulatory landscape in some regions regions provide us with a positive outlook for the second half of 2023 on the operational front efficiencies gained from our continuous improvement initiatives initiatives in <unk>.

A clearer regulatory landscape and some reasons regions provide us with a positive outlook for the second half of 2023 on the operational front efficiencies gained from air continuous improvement initiatives initiatives in <unk>.

In the first half of 2023 are expected to yield positive results in terms of operational costs and the speed of delivery in the second half of 2023.

We also anticipate higher margins.

We also anticipate higher margins, which are due to the more favorable product mix and strategic initiatives.

Which are due to a more favorable product mix and strategic initiatives.

Also worth noting that historically certain markets we serve CEA.

Also worth noting that historically certain markets we serve.

C a very seasonal uptick in demand in the latter part of the year and we expect this to hold true in 2023 as well and this adds to our optimism I'll just say in summary, while the.

A very seasonal uptick in demand in the latter part of the year and we expect this to hold true in 2023 as well and this adds to our optimism.

In summary, while the first half of 2023 presented its own set of challenges. It also provided us with many opportunities to re.

The first half of 2023 presented its own set of challenges. It also provided us with many opportunities to re.

Find what our strategies or enhance our offerings prepare for really a stronger half of 2023. So we're very enthusiastic about the months ahead, and we are committed to delivering value to our shareholders and all of our partners.

Find what our strategies or enhance our offerings and prepare for really a stronger half of 2023. So we're very enthusiastic about the months ahead, and we are committed to delivering value to our shareholders and all of our partners.

Thank you Kevin.

Next question I'm going to direct the call Ryan Cieslak online now.

Next question I'm going to interact across Ryan Cieslak online now.

Thanks, Tony.

Thanks, Tim.

There are several different reasons for why intrinsic why now why does it makes sense.

One of our decisions to acquire intrinsic as Rubin any alignment.

One of our decision to acquire intrinsic as Rubin any alignment.

Our respective core competencies rapid has always been on the forefront of innovation in safety and security intrinsic brings to the table. Some more advanced digital evidence management solutions, which when combined with our other products offers a more comprehensive and integrated solutions to our clients also with intrinsic under the wrapping Birla we answer.

Our respective core competencies rapid has always been on the forefront of innovation in safety and security intrinsic brings to the table. Some more advanced digital evidence management solutions, which when combined with our other products offers a more comprehensive and integrated solution to our clients also with intrinsic under the <unk> Birla we entered.

The state not only expanding our customer base, but also deepening our relationships with existing clients by offering enhanced value through the combined bundled solutions. This is a move that helps position us for new revenue streams, and fortifies kind of our long standing relationships and current market.

State not only expanding our customer base, but also deepening our relationships with existing clients by offering enhanced value through the combined bundled solutions. This is a move that helps position us for new revenue streams, and fortifies kind of our longstanding relationships and current market.

So to kind of sum it up with the question why intrinsic why now.

So to kind of just the sum it up with the question why intrinsic why now.

It is strategic it is.

It's strategic.

A strategic move that Holistically serves our market harnesses current opportunities and kind of sets the stage for the future of wrap technologies to remain as an industry leader in an increasingly digital world. We're excited about this acquisition and we are confident that we will drive significant value for our stake.

Strategic move that Holistically serves our market harnesses current opportunities and kind of sets the stage for the future of RF technologies to remain as an industry leader in an increasingly digital world. We are excited about this acquisition and we are confident that will drive significant value for our stake.

Thanks, Chris.

And finally, how do you continue to count 2023.

Finally from teams account 2023.

Certainly the integration of intrinsic to our portfolio has some very specific implications for performance we've listened to.

Certainly the integration of intrinsic to our portfolio has some very specific implications for April for performance we've listened.

To the agencies that we work with we listened to our shareholders, we listen to our partners, saying.

To the agencies that we work with we listened to our shareholders, we listen to our partners same.

The value like what's the accretive value and when you look at what intrinsic brains.

The value like what's the accretive value and when you look at what intrinsic brains and not just a product suite, but also a wealth of expertise knowledge these relationships.

Not just a product suite, but also a wealth of expertise knowledge these relationships.

Offerings will immediately enhance our overall value proposition. It's a day one plug in allows us to be able to tap into additional revenue streams marginal improvements.

It's expected.

It is expected to add a significant contribution to our accretive earnings reinforcing our financial health and setting us on a path of increased profitability in 2023 and.

As a significant contribution to our accretive earnings reinforcing our financial health and setting us on a path of increased profitability in 2023.

Intrinsic also gives us multiple expansion opportunities.

<unk> also gives us multiple expansion opportunities.

There are established relationships there there is market presence to open doors to new markets and new customer segments.

Furthermore, it complements the nature of our products. It means we can offer bundled.

Furthermore, it complements the nature of our products. It means we can offer bundled and integrated solutions, creating opportunities for upsell and cross sell any reoccurring revenue models built in Q. This dispositions RAF technology favorably to be able to broaden our footprint, both geographically and across different sectors within the.

And the integrated solutions, creating opportunities for upsell and cross selling reoccurring revenue models built in Q. This dispositions wrap technologies favorably to be able to broaden our footprint, both geographically and across different sectors within the industry. There is also a <unk>.

Industry. There is also a.

Technology synergy.

It's a very fast evolving tech landscape, especially in public safety.

It's a very fast evolving tech landscape, especially in public safety staying ahead, not only requires innovation, but also integration.

Going ahead, not only requires innovation, but also integration.

And thats something that is unique but intrinsic to being able to integrate into other <unk>.

And thats something that is unique but intrinsic to being able to integrate into other solutions in the market such as cat and RMS. When you look at comparing this whole suite of products into what our solutions are now it really enhances our user experience and drive operational.

Solutions in the market such as Cat and RMS when you look at comparing the whole suite of products into what our solutions are now it really enhances our user experience and drive operational efficiencies and it allows us to.

<unk>.

And it allows us to really.

To cater to the more sophisticated needs of our customer base and this alignment is really is pivotal for our growth strategy in 2023 and beyond.

Really to cater to the more sophisticated needs of our customer base and this alignment is really pivotal for our growth strategy in 2023, and then in beyond so I'll just say finally its intrinsic.

So I'll just say finally its intrinsic.

Doesn't just add to our 2023 portfolio. It amplifies it by integrating those capabilities, we're better equipped to navigate what is a very evolving public safety landscape, both domestically and internationally. We can capitalize on these emerging opportunities, we can deliver enhanced value to our <unk>.

It doesn't just add to our 2023 portfolio. It amplifies it by integrating those capabilities were better with to navigate what is a very evolving public safety landscape, both domestically and internationally. We can capitalize on these emerging opportunities, we can deliver enhanced value to our stake.

Jake holders the acquisition in essence is a testament to our commitment to grow the innovation and excellence at rack.

Holders the acquisition in essence is a testament to our commitment to grow the innovation and excellence at raft.

Thank you, Kevin and Crafts that concludes our Q&A portion of the call.

Thank you for joining US Paul correct technologies second quarter 2020 earnings Conference call.

Thank you for joining us Paul <unk> second quarter 2020 earnings Conference call.

You should have any questions. Please reach out to us.

<unk> any questions please reach out to us.

Correct.

Direct web.

Thanks.

On IR Dot one dot com.

<unk> dot one dot com.

You may now disconnect.

May now disconnect.

Goodbye.

Q2 2023 Wrap Technologies Inc Earnings Call

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