Q4 2023 Vislink Technologies Inc Earnings Call
None: [music].
That sounds like.
None: [laughter], Okay, well good morning, good morning, everyone. Welcome to this links fourth quarter and full year 2023 earnings conference call.
Allison: My name is Allison and I will be your operator for today's call. All participants are in listen only mode. If you need assistance. Please signal a conference specialist by pressing the star key followed by zero.
Allison: After todays presentation, there will be an opportunity to ask questions to ask a question you May press Star and then one on your Touchtone phone.
Allison: To withdraw your question. Please press Star and then two.
Allison: Joining us for today's presentation are the company's CEO Micky Miller and CFO, Mike Bond, who will report results for the fourth quarter and full year ending December 31 2023.
Allison: A copy of the press release, it's available on the company's website.
None: Before we begin the call I'd like to provide this link safe Harbor statement, which includes cautions regarding forward looking statements made during this call manner.
None: Management will make statements during the call that include forward looking statements within the meaning of the federal Securities laws, which are made pursuant to the safe Harbor provisions of the private Securities Litigation Reform Act of 1995.
None: Any statements contained in this call that are not statements of historical facts should be deemed to be forward looking statements.
None: All forward looking statements, including without limitation, our examination of operating trends and financial expectations are based upon the company's current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those in.
None: Dissipated or implied by these forward looking statements.
None: Accordingly, you should not rely on these statements for a list of risks and uncertainties associated with the company's business. Please see the company's filings with the Securities and Exchange Commission.
None: This linked disclaims any intention or obligation, except as required by law to update or revise any financial projections or forward looking statements, whether because of new information future events or otherwise.
This conference call contains time sensitive information that is accurate only as of the live broadcast this morning April 1st 2024.
None: Please note today's event is being recorded now I would like to turn the call over to visit link CEO Mr. Mickey Miller, Sir. Please proceed.
Thank you Allison and thank you everyone for joining US today. This morning, we will provide our financial results for the fourth quarter and full year ended December 31, 2023, along with highlighted business accomplishments.
Carleton M. Miller: As a brief overview for today's call I'll start by highlighting our 2023 performance highlight our strategic direction and detailing our three year financial goals.
Carleton M. Miller: I'll pass the call to Mike to discuss our financial results. I'll, then come back to discuss recent updates within our key target markets product development and updates around our go to market strategies with that let me begin by saying how encouraged we are about our progress and how excited we are about the future of digitally.
Mike Bond: 2023 marked a pivotal year for his life as we position ourselves.
Mike Bond: Shelves for accelerated revenue growth.
Mike Bond: Cash flow performance in 'twenty, four and beyond our vision to leverage our proprietary hardware infrastructure to drive new recurring software and service sales is gaining traction our software and service revenue climb north of 10% of total revenue in 2023 exceeding the 90 10 software and services hardware ratio we talk.
Mike Bond: At the beginning of last year.
Mike Bond: The recent announcement of our air to anywhere platform will be an accelerant to the software service sales.
Mike Bond: We made significant strides in advancing our presence in the global public safety markets, driven primarily by our airborne video downlink systems or <unk> solutions, our efforts to secure new customer wins or class local state in U S federal agencies and large governments worldwide.
Mike Bond: To punctuate the progress we've made we've recorded an impressive 75% year over year increase in mortgage revenue in 2023.
Mike Bond: Our efforts were bolstered by our strategic acquisition of BMS assets in September, which solidified <unk> leadership in Evs, particularly in U S Federal Global OEM and EMEA region.
Mike Bond: The <unk> customer base significantly broadens, our market reach and growth potential in the years ahead. It allows us to drive returns on our extensive new product introductions beyond the traditional visiting customer base. The acquisition has quickly demonstrated its value evidenced by $1 million plus order we received recently in EMEA.
Mike Bond: Our growth Meredith extends beyond avs as we gained revenue traction in the video data transport market heading into 2024 as noted by a million dollar order for border surveillance project in Asia connected cameras from all types of venues and vehicles is a growing market, where our bonded cellular technology.
Mike Bond: Plays a key role.
Mike Bond: In addition to the video data transport market sector, we are seeing growth in the drone command and control our drone situ area.
Mike Bond: The BMS acquisition, we have secured one OEM market leader and are targeting others well. This is a nascent market for us we expect it to grow 75% this year to just under $2 million in revenue.
Mike Bond: As we reshaped our revenue profile, there's like has undergone a significant transformation streamlining our product and operations over the past two plus years.
Mike Bond: By optimizing our product lineup, we were able to consolidate manufacturing, including moving most of our U K operations in the U S and third party contract manufacturers, while eliminating noncore products impacted our revenue growth it has enhanced efficiency and profitability laying the groundwork for our new three year strategic plan.
Mike Bond: With profitable growth.
Mike Bond: With the strategic execution throughout 'twenty, three and enter 2024, we believe we are on track to achieve positive cash flow and we are targeting cash flow positivity in 2025, our accelerated 1000 Gov sales combined with increasing software and service sales and operating leverage are expected to drive significant.
Mike Bond: Gross as.
Mike Bond: As we enter the second quarter of 2024.
Mike Bond: This link stand stronger than ever.
Mike Bond: The sales pipeline is your boats robust at $48 million and our backlog is at the highest since the pandemic high.
Mike Bond: Highlighting the growth opportunities that lie ahead. Furthermore, our improved book to ship ratio and significantly enhance out of box success rates shows the effectiveness of our operational enhancements and they'd be less do you deliver higher quality products at an accelerated pace.
We are in full swing to start the year, making substantial progress toward our goals behind our leading technology.
Mike Bond: We believe we are positioned to gain further market share in our key markets this year and drive meaningful top and bottom line financial improvements.
CFO, Mike: Before I go any further I'd like to pass the call to our CFO, Mike Bob will discuss our fourth quarter and full year 2023 results Mike.
Mike Bond: Thank you Mickey and good morning, everyone.
Mike Bond: Looking at our financial results for the fourth quarter and full year.
Mike Bond: Our total revenue for the fourth quarter of 2023 was $8 1 million.
Mike Bond: An increase from $7 4 million in Q4 2022.
Mike Bond: This improved revenue performance, primarily stemmed from the growth of our solutions 1000, Gov markets aided by strategic acquisition of the BNS assets and the increased adoption of service level agreements.
Mike Bond: For the full year, our total revenue was $27 5 million compared to $28 1 million in 2022.
Mike Bond: The change was primarily due to product rationalization efforts and the discontinuation of lower margin subscale product lines.
Mike Bond: Gross profit for the fourth quarter of 2023 was $3 7 million.
Mike Bond: With our gross profit margin for the quarter at 46%.
Mike Bond: This was compared to a gross profit of $2 4 million and a 33% gross profit margin in the fourth quarter of 2022.
Mike Bond: Gross margin improvement was due to the greater contribution of 1000, Gov and software and services to the total revenue.
Mike Bond: Partially offset by some onetime manufacturing charges related to new product introduction.
For the full year gross profit was $14 1 million compared to $12 9 million in the prior year.
Mike Bond: Our gross profit margin for 2023 was 51% a strong improvement from 46% in 2022.
Mike Bond: Total expenses in the fourth quarter of 2023 were $10 6 million.
Mike Bond: A 21% decrease from $12 9 million.
Mike Bond: Same period in 2022.
Mike Bond: For the full year, our total expenses were $38 1 million and 11% decrease from $42 2 million in 2022.
None: Turning to our profitability measures.
None: We recorded an operating loss of $2 6 million in the fourth quarter, an improvement from $5 6 million loss in the prior year.
None: For the full year 2023, our operating loss was $10 6 million compared to $14 1 million loss in the prior period.
None: These improvements reflect a strategic cost management efforts and the increase in high margin software services and 1000 Gov revenue.
None: Net loss attributable attributable to common shareholders in the fourth quarter of 2023 was $2 4 million a 99 cents per share.
None: An improvement compared to five 5 million or $2.36 per share in the prior year period.
None: For the full year net loss attributable to common shareholders was.
None: It was nine negative $9 1 million.
None: Or $3.83 per share, a 25% improvement compared to $13 5 million or $5 81 per share in the prior year.
None: EBITDA for the full year 2023 was a loss of 9 million compared to a loss of $12 million in the prior year period.
None: Adjusted EBITDA, a non-GAAP metric for the year was a loss of $6 4 million compared to a loss of $7 8 million in 2022.
None: A reconciliation of EBITDA to GAAP measures is contained in our earnings release issued earlier today.
None: On slide six moving to the balance sheet as of December 31, 2023, we had a cash and short term investments of $14 2 million compared to $18 2 million at the end of the third quarter.
None: Improving cash performance remains a top priority for us in 2024, we maintain a strong working capital base with $31 8 million in working capital at the end of the fourth quarter compared to $33 4 million at the end of Q3.
None: We accept we expect to see improvements in our working capital turns in the coming quarters.
None: Our strong debt free balance sheet gives us the flexibility to actively seek strategic.
Acquisitions and partnerships to enhance our capabilities in channels, especially within the defense and public safety markets.
None: In summary, our efforts over the past two plus years.
None: Structure, our cost base redesign our product line integrate two key acquisitions and rejuvenate our sales channels have begun to bear fruit in 2023, marking a significant improvement in our profitability.
None: Our progress in 2023 is largely attributed.
None: Strategic cost management operations optimization, and an increased contribution from high margin sectors, such as software services and build up revenue.
None: As we progress in 2020 for these initiatives are expected to further solidify our position and give us a trajectory towards greater growth.
None: That concludes my prepared remarks for 2023, I'll now turn it back to Mickey.
Carleton M. Miller: Thanks, Mike I'd now like to provide more operational updates starting with our achievements in 1000 Gov.
Carleton M. Miller: Building on our solid foundation BMS has bolstered our position after only a little over three months as I mentioned, our revenue per 1000 Gov markets witnessed an impressive 75% year over year growth largely attributable to the success of our <unk> solution, we achieved over $2 million.
Carleton M. Miller: <unk> orders from North Americans public safety sector and secured another $1 billion, a b B S order with a leading air force in EMEA. The integration of BMS has been seamless and fruitful setting us up for sustained momentum, we're targeting an ambitious 50% compounded annual growth.
Carleton M. Miller: By continued execution of our strategic initiatives and ongoing industry trends, such as increased public safety and defense spending with the current global geopolitical backdrop.
Carleton M. Miller: Additionally, the recent appointment of Bill, Sweden, as our new managing director of 1000, Gov business brings valuable industry expertise to our leadership team enhancing our ability to foster strong client relationships and they integrate our services offering we have taken significant steps forward with the launch of air anywhere.
Carleton M. Miller: With our ABS platform. This innovation is a key part of our strategic roadmap incorporating initiatives to provide AI enhanced analytics to our customers.
Carleton M. Miller: In the life production markets, we continue to see steady growth and significant contribution to our revenue stream. Our products have played a pivotal role in delivering coverage of major cultural and sports and the sporting events globally reaffirmed our position as a trusted provider in this dynamic mark.
Carleton M. Miller: But notably our recent partnership with vocal.
Carleton M. Miller: <unk>.
Carleton M. Miller: Spire and the AQR L series is set to redefine the future of racing and by providing innovative Dr over RF wireless solutions.
Carleton M. Miller: Autonomous British cars, the groundbreaking technology will allow users to experience a real time via our views in the cockpit directly to headsets onsite.
Carleton M. Miller: Ultimately at home.
Carleton M. Miller: Earl is well funded in Abu Dhabi is targeting international expansion.
Carleton M. Miller: The large re eval and forging new partnerships to elevate the overall race experience.
Carleton M. Miller: The initiative enhances the spectators experience and aims to revolutionize how we engage with the sport a rating itself.
Carleton M. Miller: Actually the outlook for this partnership is promising initial deal in 2023 was $1 8 million and there are plans for upgrades in forthcoming years venture is just beginning and it represents a significant step forward.
Carleton M. Miller: Additionally, we partnered with zoom communication.
Carleton M. Miller: India's premier outside broadcast service provider for ultra low latency for K wireless camera systems. This collaboration.
Carleton M. Miller: This is particularly significant as it introduces the first ultra low latency systems to be deployed in India.
Carleton M. Miller: A new standard for live broadcast in the growing region.
Carleton M. Miller: This partnership expands our global footprint and underscores our delivery of industry leading technology.
Carleton M. Miller: Moving to our product updates technology innovation has been a key element to our customer and market success in 'twenty 'twenty, 470% of our sales are expected to come from products introduced in the last two years in.
Carleton M. Miller: In 2026, we expect they will account for close to a 100%.
Carleton M. Miller: Our <unk> solutions remain at the fore front of innovation empowered our customers with cutting edge technology to seamlessly capture and manage high resolution ultra low latency live video and associated data.
Carleton M. Miller: We're excited about the significant advancements in our device management ecosystem, particularly at our enhanced matrix platform, the bedrock of our software and services offering.
With link matrix, we've integrated cloud capabilities to improve remote workflows and collaboration which is an invaluable rely broadcast and efficient field operations, particularly in public safety scenarios.
Carleton M. Miller: Looking ahead, we have identified key initiatives to further elevate our solutions.
Carleton M. Miller: We see strong potential and leveraging AI for video processing and <unk>.
Carleton M. Miller: Willing us to detect illegal or abnormal activities based on air and static cameras, such as Kal crowd control drug trafficking and border control. Additionally, we aimed to utilize AI to create automatic summaries of video content for surveillance reporting use cases.
Carleton M. Miller: Enhancing operational efficiency and decision making capabilities for our customers.
Furthermore, we are committed to ensuring secure cloud distribution and storage or footage delivered via our ABS services, providing peace of mind and reliability to our customers. We're also focusing on remote management capabilities, allowing for the seamless management of all solutions.
Carleton M. Miller: Elements in delivering E Sim provisioning E services.
Carleton M. Miller: These and our other advancements are all based on our design strategy and methodology that we implemented over the last three years to leverage the same circuit architecture and component base to drive product commonality, and simplicity, which results in lower cost higher quality and scalability.
Carleton M. Miller: We will continue to push the boundaries of technology to deliver exceptional value to our customers and drive the industry forward.
Carleton M. Miller: As we continue to refine our strategic roadmap I'd like to highlight the strong growth potential across our four focus areas that form the cornerstone of our go to market strategy. These areas are live video connectivity.
Carleton M. Miller: Airborne video downlink systems video data transport and drone control and communications or drone see too.
Carleton M. Miller: The beauty of going to market in these four focus areas that we can leverage and repurpose our existing product lines to meet a variety of needs in applications. This approach allows us to achieve scale and capitalize on opportunities in these growing areas with agility and precision.
Carleton M. Miller: Our public safety go to market strategy continues to evolve and expand.
Carleton M. Miller: While maintaining strong partnerships with major aviation units.
Carleton M. Miller: Actively cultivating our relationships with large Oems and the BMS acquisition will accelerate this BMS has a strong position with military and public safety agencies throughout the middle East combining business ABS systems with BMS is it regional incumbency uniquely positions us to support agencies.
Carleton M. Miller: As they upgrade their networks to support the latest and low latency video centric IP networks.
Carleton M. Miller: We're only one full quarter into integrating BNS into our platform, but we're very encouraged about the possibilities of serving a wider audience and growing revenues accordingly.
Carleton M. Miller: Furthermore, we are actively identifying promising opportunities in drone communications Icontrol networks.
Carleton M. Miller: MFS is particularly active in this underpenetrated sector, providing us with additional avenues to enhance our presence and expand our mortgage business, we are well positioned to expand our customer base as we prioritize prioritize fortifying our partnerships and converting a robust pipeline in the tangible sales.
Carleton M. Miller: As we look ahead to the remainder of 'twenty 'twenty, four and beyond our strategic priorities remain clear.
Carleton M. Miller: To enable software and services sales.
Carleton M. Miller: Proprietary hardware platforms.
Carleton M. Miller: Increase our share in the 1000 Gov markets.
Carleton M. Miller: And exploit operating leverage to drive positive cash flow.
Carleton M. Miller: Our three year plan outlines ambitious financial targets and expansion initiatives, which we are confident in achieving.
Carleton M. Miller: With a strong sales pipeline.
Highest post pandemic backlog.
Carleton M. Miller: And our focus on operational excellence, we are well prepared to navigate the opportunities that lie ahead.
Carleton M. Miller: Allison please provide the appropriate instructions.
Allison: Thank you and we will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone.
Allison: If you're using a speaker phone please pick up your handset before pressing the keys.
Allison: To withdraw your question. Please press Star then two our first question today.
Will come from Brian Kinsinger of Alliance Global Partners. Please go ahead.
Brian David Kinstlinger: Great. Thanks, so much solid results.
Brian David Kinstlinger: High level, maybe you can talk about the revenue growth drivers.
Brian David Kinstlinger: How much of revenue came from BMS, and then maybe the contribution and or growth rates from day.
Brian David Kinstlinger: You know the different focus areas of your business.
None: Hi, Brian Good morning, Thanks for joining the morning, a couple of points.
Brian: You know the.
Brian: The BMS are the numbers from BMS for Q4 were were nominal as we just completed that end in September.
And when we look at where we see growth.
Brian: Yeah. So as we mentioned, we're seeing tremendous growth and we expect to see tremendous growth in that combined with the BMS acquisition.
Brian: Video data transport, where we bring.
Brian: Surveillance cameras back to control are typically over bonded cellular that area has been growing we see that you know in the 20% type growth range.
Brian: In the traditional.
Brian: Markets.
Brian: Hum.
Brian: Camera access video.
Brian: We expect those to be in the 10% range and then lastly, the the control C. Two area the new market for US We mentioned, we see 75% going into this year and you know.
Brian: As you can imagine with whats happening globally with a geopolitical events.
Brian: We see that as a tremendous market growth for us, but it's still early.
Brian: And what percentage in the fourth quarter was no doubt.
Brian: Mike do you want to you want to take that one.
Mike Bond: Yeah, I mean, it was it was roughly split Brian about half and half.
Mike Bond: I'll have Mel doesn't happen that has production or production yeah.
Mike Bond: About half and half.
Mike Bond: Okay.
None: Well, we didn't hear much about life production throughout the call. So.
None: What is happening there and.
None: Are you seeing increased demand there is that's a that's an area where you know I think that there's been weakness over the last few years. So maybe discuss you know that market environment.
None: Yeah.
None: We still do I think you know what we're seeing.
None: There's a tremendous appetite for for live entertainment and lifestyle Arts, Yeah, I think a great example of one of our partners.
None: Moto G. P was just acquired by Liberty Global this morning for over 4 billion euros.
So there's a massive appetite for that so we're seeing.
None: As we mentioned with zoom acquisition with the aspire E to R. L.
None: Deal. So we're seeing growth in that area I think.
None: The reason why we didn't talk a lot about is that we've made this.
None: 1000 Gov.
None: <unk> is growing at a higher rate.
None: With the combination of the BMS acquisition has positioned ourselves very well in those markets.
None: And the beauty of it to Brian as we mentioned there were just leveraging the same product effectively the same same hardware infrastructure and software overlay that we use that we're able to repurpose into those different use cases.
Brian: Got it and then as it relates to the pipeline.
None: Thanks for that can you breakdown that I mean, I assume she D. D. S is at the top but maybe break that in other 1000 gov opportunities versus ly production down maybe by.
None: Its contribution to.
None: And is there any geographic concentration as well.
Yeah, I think you know the geographic concentration consistent what we've seen you know typically.
None: 40% to 50% the Americas balanced rest of world.
None: And then we are seeing a higher percentage than traditionally around no gov.
None: The live production remains strong.
None: No I think one thing you asked us to talk about it is you know what what we see in Q1.
None: And when you are happy to report we expect Q1.
None: Our revenue will be higher than that before.
None: I hired him before meaning last tires, and a $4 1 million.
None: Hi, it is higher than Q4 higher than higher than what we just announced with before.
None: Got it. Thank you and then as it relates to BMS.
None: You said last call that.
I was just struggling business and you need to Reengage. The customer was there was opportunity to refresh the question on the basic technology.
None: All of those kind of conversations progressed.
None: Fantastic we're thrilled.
None: With the BNS acquisition the customer base.
None: Long tradition of working with BMS, they loved the team there and love the products and we're really concerned as they went through the difficulties they went through post pandemic.
None: 19 to your pre pandemic they were at $20 million business and then struggled.
None: Through the pandemic and customers are really very positive. The fact that now they had a well funded.
None: Our business, hence the quality of them.
None: So all of those all of those conversations.
None:
None: Due to the customer had been very positive.
None: And then you.
None:
None: And mentioned in the fourth quarter. It was a nominal contribution to revenue with those conversations and proving and and being fantastic. When do you expect this to be a.
None: Significant revenue contributor to your business.
None: In 2024.
None: First off Stefan a huh.
Stefan: I mean, I think what we'll see improvements each quarter.
Stefan: Okay.
Stefan: Lastly.
Stefan: Just you started the call with us.
Stefan:
Stefan: Saying that you wanted to provide some of your targets maybe I missed it did you provide actual revenue or margin profile, maybe any long term medical displays what could this business look like in three years or do you what are the goals of what this business will look like.
Stefan: Yeah, Brian This is Mike.
Mike Bond: Obviously, we're not providing guidance, but when we look at the business out over the next few years with the gross growth in 1000 Gov. You know the acquisition of BNS is at the higher percentage that we're looking for for the services.
Mike Bond: And software revenue.
Mike Bond: We we have our outward target of trying to double this business in the next three years.
Mike Bond: On the topline.
None: Okay. Thanks, so much.
None: Yeah, Brian well that's your question on BMS grow one thing to point out.
None: What does what this opportunity is giving us a strong customer base, what what they didn't have was a next generation product line and that's what we've been working on and that we brought to market in the Aero Lincoln Our ABTS platform.
None: We're in a process now transitioning their customer base to meet.
None: Meet their needs from a from a legacy standpoint with the historical BMS product line, and then make the technology transformation.
None: And the value that the acquisition brings us is now.
None: Our transmitters will.
None: We'll work with that we will operate with their.
None: Receivers that are incumbent in the market and then as those customers upgrade to receive site and the overall software platforms will be the obvious solution for that.
None: Okay. Thank you.
None: Thanks, Brian.
None: Thanks, Brian.
None: And at this time, we will conclude our question and answer session I'd like to turn the conference back over to Mickey Miller for closing remarks.
None: Okay.
None: Yeah.
Carleton M. Miller: Thanks Allison.
Carleton M. Miller: Our vision.
Carleton M. Miller: First of all thanks for joining us today, everyone. Our vision of innovation to entertain the masses and it would make the world safer continues to drive our path forward.
Carleton M. Miller: As we execute our mission to deliver high quality products and services to our clients, while providing returns to our investors.
Carleton M. Miller: We are humbled to have the opportunity to do so and.
Carleton M. Miller: And very much appreciate the support of our investors and ensure that we are acutely focused on growing this business and providing our investors with solid returns.
Carleton M. Miller: With our collective efforts and shared vision I believe that does links best days are ahead of us.
Carleton M. Miller: <unk>.
None: Thank you for joining us today for this links fourth quarter and full year 2023 conference call you may now disconnect.
None: [music].