Q3 2024 OMNIQ Corp Earnings Call

Ali: Hello and welcome to the OmniQ Corporation's third quarter 2024 earnings conference call. My name is Ali and I will be your coordinator for your call today.

Ali: With us on the call is Mr. Shai Lustgarten, Chief Executive Officer and Acting Chief Financial Officer.

Ali: Today's call is being recorded and you should have access to the company's third quarter 2024 earnings press release issued after the markets closed yesterday.

Ali: During the course of this conference call, we will make certain forward-looking statements. All statements that address expectations, opinions or predictions about the future are forward-looking statements.

Ali: Although they reflect OmniQ's current expectations and are based on the best view of the industry, current expectations and their business as they see them today, they are not guarantees of future performance.

Ali: These statements involve a number of risks and uncertainties. Since these elements can change and in certain cases are not within our control, we ask you would consider that and interpret them in that light.

Ali: We urge you to review the company's Forms 8K, 10Q and other SEC filings for a discussion of the principal risks and uncertainties that affect the company's business and performance, and the factors that could cause actual results to differ materially.

Ali: Following the prior remarks, the company will be taking questions as time permits.

Speaker Change: Now I will turn the call over to Shai Lustgarten, CEO. Mr. Lustgarten, please go ahead.

Shai Lustgarten: Thank you, Ali, and welcome everyone. I appreciate you joining us today to discuss OmniQ's third quarter results.

Shai Lustgarten: I'm excited to share the progress we've made, the strategic initiatives we're implementing, and how we are positioned in OmniQ for continued growth and success.

Shai Lustgarten: Your support and interest are extremely important to us and I'm looking forward to discussing the details with you.

Let's get started.

Shai Lustgarten: At OmniCube, we believe in enhancing workflows through automation and creating proactive solutions to everyday problems.

Shai Lustgarten: We do this both through our patented AI-based applications and through our network of partnerships. In this way, we can offer practical, customized solutions to the problems our customers are facing today and tomorrow.

Shai Lustgarten: In alignment with this vision, we've had a very busy quarter.

Shai Lustgarten: I'm proud to share several key achievements from the third quarter that highlight our progress and strategic direction.

First, we were selected by NEC.

Shai Lustgarten: They use our machine vision proprietary technology for facial recognition at critical checkpoints.

Shai Lustgarten: This new combined solution is already deployed today in an active project and we expect to win some large projects in 2025 and going forward.

Shai Lustgarten: Our technology attracts major interest in the defense, homeland security, and transportation markets by creating a revolutionary way of pre-screening cars without bias.

by capturing facial images.

Shai Lustgarten: of drivers and passengers in a vehicle, then comparing those images to national databases.

Shai Lustgarten: That information is used proactively to alert the officers on site, all in real time.

Speaker Change: What is unique about our technology is that we can capture faces in the back seat as well as in the driver and passenger seats.

Next, we've advanced our access control technology in active deployments.

Speaker Change: The new upgrade allows us to create different levels of access.

Speaker Change: We've deployed this in two medical centers successfully so that we can differentiate between staff parking, short-term parking, and much more.

Speaker Change: This is a very practical solution that many of our customers will need because it doesn't require an enforcement officer to manually check for parking tags.

Speaker Change: Next, we've made more advances in fintech with our partnership network. Codeblocks, which we discussed the acquisition of last quarter, has developed a payment software solution that is practical and easy to implement at points of sale in retail and many other industries.

Speaker Change: This solution is being actively sold now in international markets and we're developing the version to be launched in the United States in 2025.

These partnerships allow us to further enhance our capabilities.

Another new development is growth in our IoT business.

Speaker Change: We've received several large purchase orders recently between 1 and 3.4 million dollars. These orders are for upgraded technology for our existing customers.

Speaker Change: It is positive to see that our customers continue to trust us again and again to bring them practical solutions that will streamline their operations.

Speaker Change: We intend to continue developing these strong relationships, as well as bring new long-term customers.

Thank you.

Next, we will discuss economic conditions and market trends.

ensuring greater margin stability.

Speaker Change: Regarding market trends, we see growth in AI and smart city markets.

Speaker Change: OmniQ's core markets, such as AI-driven supply chain and public safety solutions, are projected to grow as governments and private companies increasingly invest in automation, smart city projects, and enhanced security solutions.

Speaker Change: The global smart city market, for example, is expected to grow substantially, driven by increased urbanization and public safety needs.

Speaker Change: OmniQ's investment in AI and machine vision positioned it well to capture market share in these expanding sectors, particularly as municipalities seek practical solutions for traffic management and security.

Speaker Change: Public safety and health care are relatively resilient sectors as demand tends to remain steady or even increase during economic downturns.

demand

particularly from government or healthcare clients.

Speaker Change: Since OmniQ operates globally, it is important that we consider the impacts of geopolitical factors.

Speaker Change: Now, let's discuss the financial results for the third quarter 2024, which showcased significant progress compared to the same period last year.

Speaker Change: First, I am pleased to announce our revenue was $18.5 million this quarter, which is an increase from $17.2 million in the third quarter of 2023.

Speaker Change: This represents approximately a 7.6% increase year over year. Next, our operating expenses have decreased significantly to $4.9 million in the third quarter of 2024.

Next, our net loss was down approximately 63%.

Speaker Change: OmniQ reported a net loss of approximately 1.6 million dollars this quarter compared to a net loss of 4.3 million dollars in the third quarter of 2023.

S-G-N-A

Speaker Change: SG&A expenses decreased by 21%. SG&A expenses were $4.4 million in the third quarter compared to $5.6 million in the same period of 2023.

Speaker Change: The decreases are related to the cost reduction plan put in place by management.

Net Cash

Speaker Change: In the nine months ended September 30th, 2024, we generated net cash of $230,000. This is an improvement from a net use of $2.1 million in the same period of 2023.

Gross Profits

Speaker Change: Our gross profit slightly decreased to $3.95M in Q3 2024 from $4M in Q3 2023, reflecting a slight reduction of 1.45%.

Lastly, earnings per share.

Speaker Change: Basic loss per share improved to negative 15 cents in Q3 2024 from a negative of 55 cents in Q3 2023.

Speaker Change: These financial highlights reflect our strategic plan to reduce costs and enhance shareholder value.

Speaker Change: The results are a testament to our team's hard work and the strategic initiatives we have implemented.

Speaker Change: As we move forward, our expansion strategy remains focused on deepening our relationships with our existing customers while simultaneously broadening our market reach.

Speaker Change: We're doing this through several key initiatives that leverage our strength in SaaS business models as a basis to our FinTech and AI-driven solutions.

Now, let's discuss our forward-looking strategy.

Speaker Change: As OmniQ moves forward, we're focused on building resilient and high-margin recurring revenue streams that position us for success.

Speaker Change: With targeted marketing and a strengthened sales approach, we're already seeing an impressive adoption rate among our customers.

Speaker Change: We are strategically positioned in high growth sectors, including smart city infrastructure, public safety, logistics, and healthcare. These areas, which demand both innovation and operational excellence, align perfectly with OmniQ's strengths.

Reducing upfront costs and opening

strategic acquisitions that amplify our

Speaker Change: all to align with OmniQ's growth objectives, expand our operational capacity, and ultimately strengthen our ability to generate meaningful, sustainable growth.

Speaker Change: Through these efforts, we're building a powerful foundation for our long-term shareholder value and positioning OmniQ as a transformative leader in the markets we serve.

solidifying OmniQ's position as a leader in the technology industry.

Speaker Change: Thank you for your continued support and trust. Now, let's go back to the moderator for questions.

Speaker Change: Thank you. At this time, we will be conducting our question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad.

Speaker Change: A confirmation tone will indicate your line is in the question key.

Speaker Change: You may press star 2 if you would like to remove your question from the queue, and for those participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Speaker Change: Once again, that's star 1 on your keypad if you wish to ask a question.

Thank you.

Speaker Change: I want to express my heartfelt gratitude to our shareholders, their trust and confidence in OmniQ.

This is deeply valued and never taken for granted.

Speaker Change: We remain steadfast in our commitment to enhancing shareholder value and fulfilling our potential as a company.

Speaker Change: I appreciate you taking the time to join us today and look forward to reconnecting during our next call. Together, we're building a strong and successful future for OmniCube. Thank you.

Speaker Change: Thank you ladies and gentlemen. This concludes today's call and you may disconnect your lines at this time. We thank you for your participation.