Q3 2023 Remark Holdings Inc Earnings Call

Speaker 1: Good day and welcome to the Remark Holdings fiscal third quarter 2023 financial results earnings call.

Good day, and welcome to remark Holdings' fiscal third quarter 2023 financial results earnings call.

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Speaker 1: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then 1 on your touchstone phone. To withdraw your question, please press star then 2. Please note this event is being recorded. I would now like to turn the conference over to Fei Tan. Please go ahead.

Please note. This event is being recorded I would now like to turn the conference over to Fay Tan. Please go ahead.

Thank you Sarah good afternoon, everyone and welcome to remark Holdings' third quarter 2023 financial results Conference call I Am Fei Chen Vice President of Investor Relations for remark on the call with me. This afternoon is Kai Shing, Tao remarks, Chairman and Chief Executive Officer and Mr. Todd Brown.

Speaker 2: Thank you, Sarah. Good afternoon, everyone, and welcome to Remark Holdings' third quarter 2023 financial results conference call. I am Fei Tian, vice president of investor relations for Remark. On the call with me this afternoon is Kai Xing Tao, Remark's chairman and chief executive officer, and Mr. Todd Brown, vice president of finance.

Vice President of finance and just a moment Mr. Tao will provide an update on all of our businesses and Mr. Brown will recap our third quarter 2023 financial results.

Speaker 2: In just a moment, Mr. Tao will provide an update on our businesses, and Mr. Brown will recap our third quarter 2023 financial results. Following these remarks, we'll open the call to questions.

These remarks, we'll open the call to questions, but before I turn the call over to Mr. Tao I would like to take this opportunity to remind you that some of the statements made today may be for forward looking statements. These statements involve risks uncertainties and other factors that will cause actual results to differ materially from.

Speaker 2: But before I turn the call over to Mr. Tao, I would like to take this opportunity to remind you that some of the statements made today may be forward-looking statements.

Speaker 2: These statements involve risk, uncertainties, and other factors that will cause actual results to differ materially from those expressed or implied by these four looking statements.

Those expressed or implied by these forward looking statements any forward looking statements reflect remark holdings' current views.

Speaker 2: Any forward-looking statements reflect remark holdings' current views, and remark holdings expressly disclaim any obligation to update or revise any forward-looking statements after the date tear-off. This disclaimer is only a summary of remark holdings' statutory forward-looking statement disclaimer, which is included in full in its filings with the SEC.

And remark holdings expressly disclaims any obligation to update or revise any forward looking statements. After the date hereof.

This disclaimer is only a summary of remark holdings' statutory forward looking statement disclaimer, which is included in full in its filings with the FCC.

I will now turn the call over to your remarks, Chairman and Chief Executive Officer and Mr. Tao. So he can provide additional information on our remarks businesses and recent development. Please go ahead.

Speaker 2: I will now turn the call over to Remarks Chairman and Chief Executive Officer, Mr. Tao, so he can provide additional information on Remarks businesses and recent developments. Please go ahead, Xin.

Thank you today for joining our call.

Speaker 3: Over the last few quarters, given the economic difficulty that China is experiencing and the rising political tensions between the US and China, we've made a point in diversifying our business to outside of China to the US, UK and Europe , the Middle East and South America.

Over the last few quarters, given the economic difficulty are the China is experiencing and the rising political tensions between the U S and China.

We've made a point and diversifying our business to outside of China to the U S. A.

U K and Europe, the Middle East and South America.

Speaker 3: We are on the right path to both successfully pivot our business to other parts of the world and look forward for this call to explain what we're doing. On this quarter's call, we'll update our projects in the U.S. and other parts of the world.

We are on the right path to both successfully pivot our business to other parts of the world and look forward for this call to explain what we're doing.

On this quarters call, we'll update our projects.

In the U S and other parts of the world.

Speaker 3: And please note, the common thread is that wherever we win first, we are now able to take that opportunity and scale to other cities or other parts of the world using the same technology platform that we have developed over the last seven years.

And please note the common thread is that wherever we went first we are now able to take that opportunity and skill to other cities, where other parts of the world using the same technology platform that we have developed over the last seven years.

Speaker 3: three immediate opportunities which we have spent a lot of time focusing on in the cities in the U.S. Number one is to handle the migrant city centers, which we've all seen has caused a lot of pressure to different cities' budgets.

Three immediate opportunities, which we have spent a lot of time focusing on in the cities in the U S.

Number one just to handle the migrants city centers.

Which we've all seen has caused a lot of pressure to different cities budgets.

One city.

Speaker 3: One city in particular is already testing our solution, which includes facial recognition weapons.

In particular is already testing our solution, which includes facial recognition weapons detection.

Violence detection and as you know the problem with this problem is very serious for all the cities.

Speaker 3: And as you know, the problem with this problem is very serious for all the city.

Speaker 3: And with our solutions, we're able to save 80% for the city on security costs.

And with our solutions, we're able to save 80%.

For the city on security costs.

Speaker 3: This opportunity equates to roughly $1.4 million per migrant center, and there are hundreds of these migrant centers that are well documented in different sanctuary cities in the U.S.

The opportunity equates to roughly $1 4 million for my good center and there are hundreds of these micro centers there.

Different sanctuary cities in the U S.

Yeah.

Hum a second large opportunity for us in the different cities in the U S is working with the department of corrections.

Speaker 3: A second large opportunity for us in the different cities in the U.S. is working with the Department of Corrections.

Speaker 3: We recently installed in several sites showcasing our.

We've recently installed in several sites showcasing our technology again, its for facial recognition what protection and violence detection.

Speaker 3: Again, it's more facial recognition, weapons detection, and violence.

Speaker 3: Upon approval in this particular city, there are roughly 14,000 cameras and a $1,500 camera. This is a $15 million annual revenue opportunity for us. We are also

Upon approval in this particular city.

There are roughly 14000 cameras and a $1500 camera.

This is a $15 million and it'll river revenue opportunity for us.

We're also testing with the city, our fire and smoke detection.

Speaker 3: And as I've mentioned in the past, with the introduction of many more charging stations.

As I've mentioned in the past with the introduction of many more charging stations.

Speaker 3: the charging station causes, it becomes very combustible. And by the time the smoke detectors detect any type of potential problems, the fire already is out of hand.

The charging station causes.

It becomes very combustible and by the time these.

Smoke detectors detect any type of potential problems. The fire already is out of hand, so they're testing our AI platform to be able to take the fire.

Speaker 3: So they're testing our AI platform to be able to detect the fire and smoke. And this is important as we believe that we're one of only a handful of companies that are able to tell the difference between smoke, dust, and steam.

And smoke and this is important as we believe we're one of only a handful of companies.

To tell the difference between smoke dust and steam.

Speaker 3: The fourth part is working and introducing our SmartChat agent to handle 311 service requests. As you know,

The fourth part is working and introducing our smart chat agent to handle through one on one service requests.

As you know.

Speaker 3: The 311 call centers have been inundated with calls and experiencing 10 to 15 minute delays.

The 311 call centers have been inundated with calls and experiencing 10 to 15 minute delays by using our AR Smart chat service.

Speaker 3: By using our SmartChat service, we will be introducing, not only will the calls be handled in a timely fashion, but the paperwork will be done without mistakes, and we'll be able to conclude the calls in 40 different languages.

Reducing.

Not only will the Cosby handled.

Timely fashion, but the people that work will be done.

Without mistakes and we'll be able to conclude the halls in 40 different languages.

In the third quarter, we also moving to Brazil.

Speaker 3: In the third quarter, we also, moving to Brazil, we also won one of the largest RFPs in history for the Rio de Janeiro police to provide mobile facial recognition and license plate reading.

Also one of the largest rfps in history.

Rio de Janeiro.

To provide mobile facial recognition and license plate reading.

Speaker 3: This project is expected to commence in Q4, as the police are looking to find people on their watch list for thefts and vandalism, and riots can be easily detected and updated via central database.

This process is expected to commence in Q4.

As the police are looking to find people on their watch list for theft, and vandalism and why it can be easily detected.

Data via a central database.

Moving to Las Vegas to the Clark County School system.

Speaker 3: Moving to Las Vegas, the Clark County school system, as you might recall, the Clark County school system is top five in terms of size in the U.S.

As you might recall the Clark County School system is a top five in terms of size in the U S.

We expect to hear in a very short period.

Speaker 3: We expect to hear in a very short period the exciting opportunities, the $30 million opportunity to utilize our AI technology for gun and weapon detection.

The exciting opportunities of $30 million opportunity to utilize our AI technology for gun and weapon detection.

On our last call on our last quarters call.

Speaker 3: We mentioned that our focus for the remainder of 2023 was to develop and strengthen our partnership relationships and selling our unique computer vision solution.

We mentioned that our focus for the remainder of 2023 what's the develop and strengthen our partnership relationships and selling our unique computer vision solutions.

Speaker 3: In the last few months, we have entered into partnerships with NVIDIA, PNY, AeroTechnology,

In the last few months, we have entered into partnerships with Nvidia.

N Y our technology and Intel.

Speaker 3: Our partnerships with them have started off with very encouraging initial results.

Our partnerships with them has started off with very encouraging initial results.

Speaker 3: And because of this initial success, our partners have already engaged us to do much more.

Cause of this initial success our partners have already engaged us to do much more.

Speaker 3: For example, we've already deepened our partnership relationships with both NVIDIA and PNY Technologies.

For example, we have a really deepened our partnership relationships with both Nvidia M. P N y technologies.

Speaker 3: NVIDIA's technology and product roadmap, and ours, will be more closely integrated, which means we will be involved in the new product and feature launch.

And video technology and product roadmap and ours will be more closely integrated which means we will be involved in the new product and feature launches.

Speaker 3: with PNY Technologies. We'll be working to develop our product market materials together, introduce our products to their sales team, and train their sales teams on how to sell our products.

With P. N Y technologies will be working to develop a product market materials together introduce our products to their sales team in and train their sales teams on how to sell our products.

Speaker 3: And PNY has a very strong existing sales and partners in the Middle East.

You want P. N Y is it's a very strong existing sales and partners in the middle East.

Speaker 3: Already, they're introducing to projects in the Middle East. For example, we are already down the path and working with one of the new high speed railways in the Middle East, using our computer vision to help them with traffic analysis and insight.

Already they are introducing to projects in the Middle East for example, we are already down the path in working with one of the new high speed Railways and the middle East using our computer vision to help them with traffic analysis and insight.

Speaker 3: In addition, we also expect a breakthrough into France, utilizing our AI to help manage five marine sites in its most high-profile area.

In addition, we also expect to breakthrough into France, utilizing our AI to help manage 5 million flights and it's most high profile area.

Speaker 3: Other areas that we talked about in the press release is our expansion to Malaysia, Colombia, India, and Mexico. You'll see more details in the future, but just for example, with Mexico City, we've begun our POC with one of Mexico's largest banks.

Other areas that we talked about in the press release is our expansion into Malaysia.

Colombia, India and Mexico.

You'll see more details in the future, but just for example, with Mexico City, where we've begun our plc with one of Mexico's largest banks.

Speaker 3: in Mexico City. In this particular case, they'll be deploying our facial recognition for VIP and blacklist, queue management, and people counting to enhance the in-branch customer experience.

In Mexico City.

In this particular case there'll be deploying our facial recognition for VIP and blacklist to management and people counting to enhance the in branch customer experience.

We expect this.

Speaker 3: to begin at the end of November and are running for 30 days.

To begin at the end of November and are running for 30 days.

Speaker 3: This particular bank has over 1,500 branches in Mexico, and upon the successful completion, we will roll out our analytics to all the branches in Mexico.

This particular bank has over 1500 branches in Mexico.

And upon the successful completion, we will rollout our analytics to all the branches in Mexico City.

Speaker 3: in Q1 and then a similar rollout per quarter to the rest.

In Q1, and then a similar rollout per quarter through the rest of the country.

Speaker 3: Our pipeline, as we mentioned, is very broad and deep.

Our pipeline as we mentioned is very.

Broad and deep.

Speaker 3: which leads us to looking forward to signing a large partnership deal in Q4 with one of the world's top three cloud providers installing our system.

Which leads us to looking forward to signing a large partnership deal in Q4 with one of the world's top three cloud providers.

Installing our systems, our computer vision AI is very unique in its service and capabilities and we look forward to being able to leverage upon the salesforce.

Speaker 3: Our computer vision AI is very unique in its service and capabilities and we look forward to being able to leverage upon the sales force to really marketing our opportunities around the world.

So really marketing our opportunities around the world.

With that I'll pass it over to Todd.

Speaker 4: Thank you, Sheng, and thank you to everybody for joining us on today's call.

Thank you Shang and thank you to everybody for joining us on today's call.

Speaker 4: Our revenue for the third quarter of 2023 totaled $0.2 million, compared to the $2.8 million during the same quarter in 2022.

Our revenue for the third quarter of 2023, total 0.2 million compared to the 2.8 million during the same quarter in 2022.

Speaker 4: The 0.2 million of revenue we did recognize during this third quarter of 2023 resulted primarily from additional installations of our campus solution in China.

Airplane 2 million of revenue we did recognize during this third quarter of 2023 resulted primarily from additional installations of our <unk>.

The solution in China.

Speaker 4: We did also complete certain projects during the same time period worth approximately $1.4 million, but the agreement with our new customer did not yet meet the requirements for revenue recognition during the quarter.

We did also complete certain projects during the same time period.

Approximately 1.4 million, but the agreement with our new customer did not yet meet the requirements for revenue recognition during the quarter.

Speaker 4: Overall, our project completions flowed in China due to the business and economic recovery efforts that related restrictions were lifted at the end of last year, as well as due to the political tensions that Xing mentioned, which have been increasing between the U.S. and China.

Overall, our project completions slowed in China due to the business and economic recovery efforts that related restrictions were lifted at the end of last year.

As well as due to the political tensions that Shang mentioned, which had been increasing between the U S and China.

Speaker 4: All of those conditions made it more difficult than expected for us to complete projects on a steadily... Pardon me, a steadily increasing basis.

All of those conditions made it more difficult to unexpected for us to complete projects on the settlement.

Pardon me a steadily increasing pace.

Yeah.

Speaker 4: Our operating loss decreased to $4.1 million in the 2023 third quarter, compared to $6.7 million in the same period of 2022.

Our operating loss decreased to $4 1 million in the 2023 third quarter compared to $6 7 million in the same period of 'twenty to 'twenty two.

Speaker 4: In addition to the decrease in revenue and a $2.2 million decrease in cost of revenue, operating loss primarily decreased due to activity in general and administrative expense.

In addition to the decrease in revenue and a $2.2 million decrease in cost of revenue operating loss, primarily decreased due to activity in general and administrative expense, including decreases of <unk>.

Speaker 4: including decreases of $2.3 million in the amount of reserve for doubtful accounts recorded.

$2 $3 million and the amount.

Our reserve for doubtful accounts recorded.

Speaker 4: $0.8 million in legal and professional fees.

Zero point $8 million in legal and professional fees.

Speaker 4: $0.5 million in stock-based compensation expense.

Zero point $5 million and stock based compensation expense.

Speaker 4: and $0.3 million in business development expense.

Zero point $3 million in business development expense.

Speaker 4: The decreases in administrative and general expense were partially offset by a $0.7 million increase in technology and development expenses.

The decreases in administrative and general expense was partially offset by 0.7 million dollar increase in technology and development expense.

Speaker 4: Net loss totaled $7.2 million or $0.39 per basic and diluted share in the 2023 third quarter compared to a net loss of $8.9 million or $0.85 per basic and diluted share in the same quarter of 2022.

Net loss totaled $7 2 million or 39 cents per basic and diluted share in the 'twenty to 'twenty three third quarter compared to a net loss of $8 9 million or 85 cents per basic and diluted share in the same quarter of 'twenty to 'twenty two.

In addition to the 39% decrease in operating loss compared to the same quarter of 2022.

Speaker 4: In addition to the 39% decrease in operating loss compared to the same quarter of 2022, the decrease in net loss was primarily the result of the 2022 third quarter, including $0.4 million of an accrual that did not recur in the 2023 third quarter, as well as a $0.3 million loss on investment that did not recur in the 2023 third quarter.

The decrease in net loss was primarily the result of the 2022 third quarter, including zero point $4 million of an accrual that did not recur in the 'twenty to 'twenty three third quarter.

As well as the zero point $3 million loss on investment that did not recur in the 'twenty to 'twenty three third quarter.

Speaker 4: At September 30, 2023, our cash balance was approximately $0.3 million compared to a cash balance of less than $0.1 million at December 31, 2022.

At September 30th 2023, our cash balance was approximately zero point $3 million compared to a cash balance of less than 0.1 billion at December 31st 2022.

Speaker 4: Net cash used in operating activities was $9.1 million during the nine months ended September 30, 2023, which was a 33% decrease compared to the $13.6 million used in operating activities during the nine months ended September 30, 2022.

Net cash used in operating activities was $9 $1 million. During the nine months ended September 30th 2023, which was a 33% decrease compared to the $13.6 million used in operating activities. During the nine months ended September 30th 'twenty to 'twenty two.

Speaker 4: And with that, I'll turn the call back over to the moderator to begin the question and answer portion of the call.

And with that I'll turn the call back over to the moderator to begin the question and answer portion of the call.

Thank you.

Speaker 1: Thank you. We will now begin the question and answer session.

We will now begin the question and answer session.

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Speaker 1: At this time, we will pause momentarily to assemble our roster.

At this time, we will pause momentarily to assemble our roster.

Speaker 1: Showing no questions, I would like to turn the conference back over to Faye Tan for any closing remarks.

Showing no questions I would like to turn the conference back over to fake Tan for any closing remarks.

Speaker 2: Thank you, Sarah, and thank you, everyone, for participating in Remark Holdings' third quarter fiscal 2023 financial results conference call. A replay will be available in approximately four hours through the same link issued in our November 15 press release. Have a good afternoon. Thank you.

Thank you Sarah and thank you everyone for participating in remark holdings third quarter fiscal 2023 financial results conference call. A replay will be available in approximately four hours through the same link issued in our November 15 press release have a good afternoon. Thank you.

Speaker 1: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

The conference has now concluded. Thank you for attending today's presentation you may now disconnect.