Q4 2024 SuperCom Ltd Earnings Call
Operator: Ladies and gentlemen, good morning and welcome to Supercom's fourth quarter and year-end 2024 financial results and corporate update conference call. At this time, all participants are in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key, followed by zero.
Ladies and gentlemen, good morning, and welcome to the Super Com's fourth quarter and year end 2024 financial results and corporate update conference call. At this time all participants are in a listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by zero.
Operator: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad. To withdraw your question, please press star, then two.
After todays presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on your telephone keypad to withdraw your question. Please press Star then two.
Operator: Participants of this call are advised that the audio of this conference call is being broadcast live over the internet and is also being recorded for playback purposes.
Participants of this call are advised that the audio of this conference call is being broadcast live over the Internet and is also being recorded for playback purposes.
Operator: Joining me from Supercom's leadership team is Ordan Trabelsi, Supercom's President and Chief Executive Officer. I'd like to remind you that during this call Supercom management may be making forward looking statements, including statements that address Supercom's expectations for future performance or operational results. Forward-looking statements involve risks, uncertainties, and other factors that may cause Supercom's actual results to differ materially from those statements.
Arden Trabelsi: Joining me from Supercars leadership team is Arden, Trabelsi, Supercomm, President and Chief Executive Officer.
Arden Trabelsi: I'd like to remind you that during this call Supercomm managements may be making forward looking statements, including statements that address supercomm its expectations for future performance or operational results.
Arden Trabelsi: Forward looking statements involve risks uncertainties and other factors that may cause super com's actual results to differ materially from those statements for more information about these risks uncertainties and factors. Please refer to the risk factors described in Supercomm 's. Most recently filed periodic reports on form 20-F, and form 6K and Super.
Operator: For more information about these risks, uncertainties, and factors, please refer to the risk factors described in Supercom's most recently filed periodic reports on Form 20-F and Form 6-K, and Supercom's press release that accompanies this call, particularly the cautionary statements in it. Today's conference call includes EBITDA and non-GAAP financial measures that Supercom believes can be useful in evaluating its performance. You should not consider this additional information in isolation or as a substitute for results prepared in accordance with GAAP. For a reconciliation of this non-GAAP financial measure to net loss, a comparable GAAP financial measure, please see the reconciliation table located in Supercom's earnings press release that accompanies this call.
Arden Trabelsi: <unk> press release that accompanies this call, particularly the cautionary statements in.
Arden Trabelsi: Today's conference call includes EBITDA and non-GAAP financial measures that Supercomm believes can be useful in evaluating its performance you should not consider this additional information in isolation or as a substitute for results prepared in accordance with GAAP.
Arden Trabelsi: For a reconciliation of this non-GAAP financial measure to net loss of comparable GAAP financial measure. Please see the reconciliation table located in Super comps earnings press release that accompanies this call.
Arden Trabelsi: Reconciliations for other non-GAAP financial measures and comparable GAAP financial measures are available there as well.
Operator: Reconciliations for other non-GAAP financial measures and comparable GAAP financial measures are available there as well.
Operator: The content of this call contains time-sensitive information that is accurate only as of today, April 28, 2025. Except as required by law, Supercom disclaims any obligation to publicly update or revise any information to reflect any of the circumstances that occur after this call.
Arden Trabelsi: The content of this call contains time sensitive information that is accurate only as of today April 28 2025.
Speaker Change: That does required by law Supercomm disclaims any obligation to publicly.
Arden Trabelsi: Update or revise any information to reflect any of the circumstances that occur after this call.
Ordan Trabelsi: It is now my pleasure to turn the call over to Supercom's President and CEO, Ordan Trabelsi. Ordan, the floor is yours. All right, I'm here. Thank you, Operator, and good morning, everyone. Thank you for joining us today.
Arden Trabelsi: My pleasure to turn the call over to Super Com's, President and CEO Gordon Trabelsi.
Arden Trabelsi: Gordon the floor is yours.
Arden Trabelsi: I'm here. Thank you operator, and good morning, everyone. Thank you for joining us today.
Ordan Trabelsi: Earlier this morning, we released our financial results for the fourth quarter and full year ended December 31st, 2024. You can find a copy of the press release in the investor relations section of our website at supercom.com. We also filed a 2024 annual report on Form 20-F earlier today. Today, I'll provide you a detailed overview of our 2024 performance, including financial highlights, recent business development. Strategic Direction, followed by a Q&A session. I'm pleased to share Supercom's outstanding performance for 2024, a year marked by continued momentum across our financial and operating fronts. We achieved revenue of $27.6 million, a record over the past 7 years, and a 134% increase from our 2020 revenue low, highlighting a 4-year growth trajectory in social inclusion across our market.
Arden Trabelsi: This morning, we released our financial results for the fourth quarter and full year ended December 31 2024.
Arden Trabelsi: You'll find a copy of the press release in the Investor Relations section of our website.
Arden Trabelsi: <unk> Dot Com, we also filed our 2024 annual report on form 20-F earlier today.
Arden Trabelsi: Today I'll provide you a detailed overview of our 2020 for performance, including financial highlights recent business developments.
Arden Trabelsi: And strategic direction, followed by Q&A session.
Arden Trabelsi: I'm pleased to share some programs outstanding performance in 2024, a year marked by continued momentum across our financial and operating fronts, Richard revenue of $27 $6 million a record over the past seven years, and 100 and 134% increase from our 2020 revenue low highlighting for your growth trajectory of this that's not exclusive.
Arden Trabelsi: Across our markets.
Ordan Trabelsi: Gross profit increased 31% year over year to $13.4 million, reflecting a favorable revenue mix of more later stage projects and continued scale efficiency. Gross margin expanded to 48.4%, up nearly 10% points for 2023, and our strongest level since 2021. We also reported positive gap net income of $661,000 compared to $4 million net loss in 2023, representing our first full year of gap profitability since 2015 and a nine-year record net income. In addition, EBITDA rose to $6.3 million, up 31% year-over-year, supported by strong margins and operational leverage. This marks our 10th consecutive quarter of positive EBITDA, underscoring the consistency of our core business.
Arden Trabelsi: Gross profit increased 31% year over year to $13 4 million, reflecting a favorable revenue mix of more later stage projects and continued scale efficiencies.
Arden Trabelsi: Gross margin expanded to 48.
4% up nearly 10% points for 2023, and our strongest level since 2021.
Arden Trabelsi: We also reported positive GAAP net income of $661000 compared to $4 million net loss in 2023, representing our first full year of GAAP profitability since 2015 and on year record net income.
Arden Trabelsi: In addition, EBITDA rose to $6 $3 million up 31% year over year supported by strong margins in operator channel leverage this marks our 10th consecutive quarter of positive EBITDA underscoring the consistency of our core business. We've also made consistent progress to improve our operating cash flows year over year from a use of $9 4 million in 2021 to $4 <unk>.
Ordan Trabelsi: We've also made consistent progress to improve our operating cash flows year-over-year, from a use of $9.4 million in 2021 to $4.7 million in 2022, $2.4 million in 2023, and now just $1.3 million of operating cash use in 2024. This 85% reduction over the three years reflects strong execution across both new and legacy projects and positive change towards financial self-sufficiency. Together, with our growth and revenue profitability, these improvements in cash flow underscore the success of our strategic initiatives and the operational leverage in our business model, whereby we see improved margins as revenues grow, especially when we're growing in regions where we have an existing project.
Arden Trabelsi: $7 million in 2020 to $2 4 million in 2023, and now just $1.3 million of operating cash use in 2020 for this 85% reduction over the three years reflect strong execution across both new and legacy projects and positive change towards financial self sufficiency.
Arden Trabelsi: Together with our growth in revenue and profitability. These improvements in cash flow underscore the success of our strategic initiatives and the operational leverage in our business model, whereby we see improved margins as revenues grow, especially when we're growing in regions, where we have an existing projects.
Ordan Trabelsi: The U.S. market is an excellent example of that, but we will get to that a bit later. I'd like to take a moment to thank our incredible team for their tireless work and dedication, which made this success possible. We're proud of what we've accomplished together and look forward to the next chapter. During the past year, we won several important contracts in the U.S. and Europe, and we're excited about the opportunities we see ahead. I'll go into more details in a few moments. This year was particularly exciting as we further establish our leadership position through a series of competitive wins, including the prestigious National Israeli Electronic Monitoring Project.
Arden Trabelsi: The U S market is in a is an excellent example of that but we will get to that a bit later I'd like to take a moment to thank our incredible team for their tireless work and dedication.
Arden Trabelsi: Which made this success possible, we're proud of what we've accomplished together and look forward to the next chapters.
Arden Trabelsi: During the past year, we won several important contracts in the U S and Europe.
Arden Trabelsi: We're excited about the opportunities we see ahead I will go into more details in a few moments.
Arden Trabelsi: This year was particularly exciting as we further establish our leadership position through a series of competitive wins, including the prestigious national Israeli electronic monitoring project.
Ordan Trabelsi: This landmark contract not only displays a long standing incumbent of nearly 20 years, but also validate our technology and operational capabilities on a national scale. In the U.S., we significantly expanded our footprint with more than 20 new contracts secured since mid-2024. This included strategic entries to West Virginia, Maryland, New York, South Dakota, Alabama, Ohio, Arizona, Wisconsin, Minnesota, Michigan, and Kentucky. These contracts win, continue to diversify our revenue base and support recurrent income streams across multiple jurisdictions. We are particularly proud of the successful integration and expansion of our Tier 1 solution across these regions. This positive reception underscores both the technical strength and adaptation of our platform.
Arden Trabelsi: Landmark contract not only displays the long standing incumbent in nearly 20 years, but also validate our technology and operational capabilities on a national scale.
Arden Trabelsi: In the U S. We significantly expanded our footprint with more than 20, new contract secured since mid 2024.
This includes strategic entries to West, Virginia, Maryland, and New York, South Dakota, Alabama, Ohio, Arizona, Wisconsin, Minnesota, Michigan and Kentucky.
Arden Trabelsi: These contracts wins continue diversify our revenue base and support recurring income streams across multiple jurisdictions.
Arden Trabelsi: Particularly proud of this asphalt duration expansion of our tier one solution across these regions. Its positive reception underscores both the technical strength and adaptation of our platform. These strategic wins, coupled with our product led growth model position us to accelerate our momentum.
Ordan Trabelsi: These strategic wins, coupled with our product-led growth model, have positioned us to accelerate our momentum and deliver sustained value to our customers and stakeholders.
Arden Trabelsi: Deliver sustained value to our customers and stakeholders.
Ordan Trabelsi: For those new to Supercom. Our mission is to revolutionize the public safety sector worldwide with our proprietary electronic monitoring technology data intelligence and suite of complimentary services with over 36 years of experience. Since our founding in 1988, we've been a trusted partner to dozens of national governments worldwide, providing cutting edge, electronic and digital security solutions. Our strategic blueprint is straightforward yet powerful. Firstly, we lead with innovative technology. Our proprietary technology, electronic monitoring technology, scores highly in competitive government tenders, supports various programs such as house arrest, GPS monitoring, rehabilitation services, domestic violence prevention, and more. Moreover, we have recently broadened our portfolio to include advanced AI-driven analytics, which are an integration into our electronic monitoring solutions.
Speaker Change: Are those new to Supercomm.
Speaker Change: Our mission is to revolutionize the public safety sector worldwide with our proprietary electronic monitoring technology data intelligence suite of complementary services with over 36 years of experience since our founding in 1988, we've been a trusted partner to dozens of national governments worldwide, providing cutting edge electronic and digital security solutions.
Speaker Change: Our strategic blueprint is straightforward we are powerful.
Speaker Change: Firstly, you would either with innovative technology, our <unk> technology.
Speaker Change: I'll try and go on technology scores highly competitive government tenders for various programs such as house, Ross GPS monitoring rehabilitation services domestic violence prevention and more more.
Speaker Change: We have recently broadened our portfolio to include advanced AI, driven analytics, which are integration into our electronic monitoring solutions. This addition, enhances our ability to provide predictive insights and improve outcomes for our clients.
Ordan Trabelsi: This addition enhances our ability to provide predictive insights and improve outcomes for our clients. developed superior solutions. The second, since 2018, Supercom has created 50 new multi-year government projects. The third is to expand our global presence with a strong growing reputation as a premium provider of electronic monitoring solutions and services, enhance our market position with each new win. And our fourth pillar will be the delivering of outstanding service. We have a strategic focus on IoT tracking business in developed markets with opportunities With the electronic monitoring market projected to reach 2.3 billion by 2028, the US and Europe constitute about 95% of these markets.
Speaker Change: Developed superior solutions the second.
Speaker Change: Since 2000, eighteens or becomes curator of 50, new multiyear government projects third is to expand our global presence.
Speaker Change: Strong growing reputation as a premium provider of electronic monitoring solutions and services enhance our market position with each new win and our fourth pillar would be the delivering of.
Speaker Change: Outstanding service.
Speaker Change: Have a strategic focus on the Iot tracking business in developed markets with opportunities are greatest with electronic monitoring market projected to reach $2 $3 billion by 2028, the U S and Europe.
Speaker Change: Constitute about 95% of these markets.
Ordan Trabelsi: We continue to amplify our technological leadership with significant R&D investments, leading to the launch of advanced solutions like PrayerProtect, also branded as PureShield, and PureOne. These offerings are already making headway in various markets, including the US, and are pivotal in Supercom's expansion. Pure Protect or Pure Shield is a lifesaving domestic violence monitoring solution providing preventive measures to families suffering from domestic violence or stalking, thereby increasing their safety. Pure One is an all-in-one GPS tracking and cobracement monitoring solution integrating comprehensive monitoring capabilities into a single device, like many of our products, that offers top-notch features placing it above the competition in most metrics.
Speaker Change: We continue to amplify our technological leadership with significant R&D investments leading into the launch of advanced solutions like prayer protect also brands lately as pure shield and pier. One these offerings are already making headway in various markets, including the U S. In our pivotal <unk> expansion.
Speaker Change: Pure per tax shield.
Speaker Change: As a lifesaving domestic violence, one term solution, providing preventive measures to families suffering from domestic violence are stalking, thereby increasing their safety.
Speaker Change: Pier one is it all one GPS tracking ankle bracelet monitoring solution integrating comprehensive monitoring capabilities into a single device like many of our products that offers top notch features placing it above the competition in most metrics are cloud based software enabled pure security product line has been particularly effective and monitoring of offenders and managing real time information.
Ordan Trabelsi: Our cloud-based software enabled Pure Security product line has been particularly effective in monitoring offenders and managing real-time information. This real-time advantage is a game changer, empowering authorities with actionable insights and timely intervention to mitigate potential risks and enhance public safety. Our investment in product innovation have directly translated into meaningful market expansion. The launch and successful adoption of Pure Protect and Pure One have significantly increased our addressable market, enabling us to penetrate new territories and deepen our presence in existing ones. We've been very pleased with the reception and traction and expect them to help facilitate the accelerated expansion of Supercom into the US market and further European countries.
Speaker Change: This real time advantage is a game changer.
Speaker Change: Empower and authorities with actionable insights and timely intervention to mitigate potential risks and enhance public safety.
Speaker Change: Our investment in product innovation had directly translated into meaningful market expansion.
Speaker Change: The launch and successful adoption of superior security.
Speaker Change: Protect <unk> have significantly increased our addressable market, enabling us to penetrate new territories and deepen our presence in existing ones. We've been very pleased with the reception and traction.
Speaker Change: Let them to help facilitate accelerated.
Speaker Change: The accelerated expansion of Supercomm into the U S market for the European countries.
Ordan Trabelsi: We fortified our operational infrastructure to support our growth and have revamped our sales strategy with a proactive outreach approach. Our sales team, with deep industry expertise, has been instrumental in achieving new wins and driving growth.
Speaker Change: Fortifying, our operational infrastructure to support our growth and have revamped our sales strategy practice outreach approach our sales team with deep industry expertise has been instrumental in achieving new wins and driving growth.
Ordan Trabelsi: In the fourth quarter, together with our prime partner, Electric Security, we were awarded a high-profile multi-year contract in the Israeli Prison Service, IPS, to deploy our Pure Security electronic monitoring suite, including PureComm, PureTrack, PureTag, and PureBeacon. The nationwide program is expected to cover all EM offender monitoring in the country, with an estimated 1,500 enrollees and potential for expansion. The five-year contract is already in effect, with hundreds of units already deployed, and includes the option for up to four one-year extensions for a total of nine potential year contract terms. This project was secured through a highly competitive bidding process involving multiple evaluation rounds, demonstrations, and technical reviews supervised by the IPS.
Speaker Change: In the fourth quarter together with our Prime partner Electric security, we were awarded a high profile multi year contract and the Israeli prison.
Speaker Change: Service Ips to deploy our pure security module suite, including pure Com pure track for tag and for Beacon and nationwide program is expected to cover all emo Fender monitoring in the country with an estimated 500 enrollees and potential for expansion.
Speaker Change: <unk> your contract is already in effect with hundreds of units already deployed.
Speaker Change: And includes the option for up to four one year extensions for a total of nine potential your contractor.
Speaker Change: This project was secured through a highly competitive bidding process involving multiple valuation rounds demonstrations and technical reviews supervised by the Ips were just placed in us or incumbent as I said before that held the contract for nearly 20 years the.
Ordan Trabelsi: We displaced an Israeli incumbent, as I said before, that held the contract for nearly 20 years. The winner exemplifies our commitment to excellence, technology, leadership, and strong partnership. Our comprehensive set of offerings positions us well to win multifaceted national projects, which is the one that are set to encompass all trans-monitoring programs in the country. Across Europe and the United States, we continue to gain traction in competitive tenders, often displacing incumbent vendors. A strong track record, supported by our proven technology and operational excellence, continues to be a key driver of new project awards and long term partnership.
Speaker Change: The win exemplifies our commitment to excellence technology leadership and strong partnership.
Speaker Change: A comprehensive set of offerings positions us well to win multifaceted national projects to the ones that are set to encompass all Chinese module programs in the country.
Speaker Change: Across Europe, and the United States, we continue to gain traction competitive tenders.
Speaker Change: Often displaced incumbent vendors a strong track record supported by our proven technology and operational excellence continues to be a key driver of New project Awards and long term partnership.
Ordan Trabelsi: In Europe, we continue to execute on a strategy that's delivering tangible growth and long-term opportunity. Over the past several years, we've expanded our footprint into many countries in Europe with over winning over 15 national electronic monitoring programs for competitive tenders. These include large scale, domestic violence, tracking initiatives that align with growing public safety priority across the region. A standout example is our success in Romania, where we secured largest industry award of 2022 national electronic monitoring projects valued approximately $33 million designed to serve the 15,000 monitoring individuals simultaneously for over a period of six years. The program is actively running and shows the scalability of the peer security suite.
Speaker Change: In Europe, we can see.
Speaker Change: We need to execute on our strategy that is delivering tangible growth and long term opportunity.
Speaker Change: Over the past several years have expanded our footprint into many countries in Europe with over winning over 15 national electronic monitoring programs for competitive tenders. These include large scale domestic violence tracking initiatives that align with growing publix of safety priority across the region.
Speaker Change: A standout example is our success in Romania, where we secured largest industry award of 2022.
Speaker Change: National electronic monitoring projects valued at approximately $33 million designed to serve the 15000 monitor individuals' simultaneously for over a period of six years.
Speaker Change: The program is actively running and shows.
Speaker Change: The scalability of our pure security suite.
Ordan Trabelsi: The program is actually running. and shows the scalability of our peer security suite in managing complex deployments such as this. They also strengthened our presence in Finland. with the national level deployments of our domestic violence monitoring solution. This contract builds on our growing reputation in the region and reflects the confidence our European government partners have in our technology and support infrastructure. Most recently, we launched a new national project in Latvia, our third in the country, focusing again on domestic violence offender monitoring. Ordered following competitive tender, this initiative leverages the peer security platform to support the Latvian State Police with enhanced offender compliance and victim protection.
Speaker Change: The programs are actually running.
Speaker Change: And shows the scalability of our pure security suite and managing complex deployments such as this one.
Speaker Change: <unk> also strengthened our presence in Finland.
Speaker Change: With a national level deployment of our domestic violence monitoring solution.
Speaker Change: This contract builds on our growing reputation.
Speaker Change: In the region and reflects the confidence our European government partners have in our technology and support infrastructure.
Most recently.
Speaker Change: We launched a new national projects in Latvia are third in the country, focusing again on domestic violence offender monitoring.
Speaker Change: Ordered following a competitive tender this initiative leverages appear security platform to support the Latvian state police with enhanced offender compliance and patent protection tools.
Ordan Trabelsi: In parallel, we are actively receiving additional orders from current partners across Europe, demonstrating the strength and stickiness of our solution. As more governments transition toward proactive monitoring approaches, we believe a strong European foundation and proven delivery model position us for continued success in the region.
Speaker Change: In parallel we are actively receiving additional orders from current partners across Europe, demonstrating the strength and stickiness of our solution as more governments transition toward proactive monitoring approaches we believe strong European Foundation and proven delivery model position us for continued success in the region.
Ordan Trabelsi: While Europe remains an important growth driver, the U.S. market presents an even greater long-term opportunity, estimated to reach up to six times the size of the European market in the coming years. with the introduction of the PURE1 electronic monitoring product. Now available in the US, an expansion of our domestic violence tracking solutions, we believe Supercom is well positioned to unlock substantial growth potential in this untapped market. In line with this, our expansion strategy in the US has accelerated meaningfully over the past 18 months. Although Supercom already does business in multiple U.S. states, we are actively focused on further expanding our presence in the U.S.
Speaker Change: While Europe remains an important growth driver the U S market presents an even greater long term opportunity estimated to reach up to six times the size of the European market in the coming years.
Speaker Change: With the introduction of the pure one electronic monitoring product.
Speaker Change: Now available in the U S and the expansion of our domestic violence tracking solutions, we released Supercomm is well positioned to unlock substantial growth potential in this untapped market.
Speaker Change: In line with this our expansion strategy in the U S has accelerated meaningfully over the past 18 months.
Speaker Change: Although supercomm already does business in multiple U S States. We're actively focused on further expanding our presence in the U S.
Ordan Trabelsi: Our wholly-owned subsidiary, LCA, located in California, is actively expanding the size and scope of its existing programs, winning rebates with Existing Customers and Winning New Programs with New Customers. The company strategically prioritizes Pure1's expansion into new markets and geographies. The Pure1 has already received high praise during its introduction into various regions of the U.S., where it has been successfully deployed and is actively utilized to monitor live offenders. Moreover, sales activities for Pure1 have commenced in promising new markets outside Europe and North America. www.pure1.com Despite our long-standing presence in parts of California, the U.S. market remains largely untapped.
Speaker Change: Our wholly owned subsidiary LCA located in California is actively expanding the size and scope with existing programs with angry birds.
Speaker Change: With existing customers and winning new programs with new customers the company strategically prioritize <unk> expansion.
Speaker Change: Into new markets and geographies. The peer one has already received high praise during its introduction into various regions of the U S. Whereas been successfully deployed.
Speaker Change: It is actively utilize to monitor lie with vendors. Moreover, sensitivities for tier one have commenced and promising new markets outside Europe and North America.
Speaker Change: Despite our long standing presence in parts of California. The U S market remains largely untapped since we began investing in outbound sales efforts with secured numerous contract wins.
Ordan Trabelsi: Since we began investing in outbound sales efforts, we have secured numerous contract wins across the U.S. with over 20 new contracts since mid-2024. The recent launch of Pure 1 coupled with the positive feedback from initial deployments positions us to accelerate market capture in the U.S., unlocking significant growth opportunities. Our newly expanded strategic sales team has already delivered tangible results. Beyond contract wins, we've seen a significant uptick in demos, pilot programs, and qualified leads, all of which are contributing to a sharp increase in our U.S. pipeline.
Speaker Change: Across the U S with over 20, new contracts since mid 2020 for the recent launch of tier one coupled.
Speaker Change: With the positive feedback from this deployment positions us to accelerate market capture in the U S unlocking significant growth opportunities.
Speaker Change: Our newly expanded strategic sales team has already delivered tangible results beyond contract wins, we've seen a significant uptick in demos pilot programs and qualified leads all of which are contributing to a sharp increase in our U S pipeline.
Ordan Trabelsi: Launching our PureOne solution in the U.S. market was a defining milestone in our North America expansion strategy. Since our last earnings call, we have discussed new wins in West Virginia, Maryland, and New York. Supercom has continued to disrupt our expansion with several notable contracts. In South Dakota, we secured multiple contracts, and county sheriff agencies along with the agency's marketing our official entry into the state. These deployments leverage our pure one technology known for its dependable performance in both urban and rural environments and are already contributing recurring revenue. In Alabama, we signed a new government contract to deliver GPS tracking and monitoring violence.
Speaker Change: Launching our purion solution in the U S market was defining milestone in our North American expansion strategy since our last earnings call, we will discuss new ones in West, Virginia, Maryland, and New York Super comments continued its rapid expansion with several notable contracts in South Dakota, we secured multiple.
Speaker Change: Trax and county sheriffs agencies.
Speaker Change: Along with aegis assure if agencies marketing our official entry into the state. These deployments leverage our tier one technology known for its dependable performance in both urban and rural environments and are already contributing recurring revenue in Alabama, we sign a new government contract to deliver GPS tracking and monitoring violence.
Ordan Trabelsi: Monitoring Solution. Domestic Violence Monitoring Solutions, expanding our public safety footprint in the South Eastern U.S. and advancing victim protection initiatives. In Ohio, we secured a contract with juvenile probation agencies, successfully displacing an incumbent provider. The project utilizes our discrete and compliance-driven 301 solution, tailored specifically for juvenile justice programs. In Arizona, we partnered with a prominent statewide service provider, marketing our 7th new U.S. state entry since mid-2024. This partnership broadens our reach across the state's justice system and accelerates market penetration. Through a strategic regional partnership, we also expanded into Wisconsin, Minnesota and Michigan, where GPS domestic violence monitoring technologies are being introduced by an established provider network.
Speaker Change: Monitoring solutions.
Speaker Change: <unk> solutions, expanding our public safety footprint in the south Eastern U S and advancing the victim protection initiatives in Ohio, we secured a contract with juvenile probation agencies successfully displaced an incumbent provider.
Speaker Change: It utilizes our discrete and compliance driven tier one solution tailored specifically for juvenile justice programs in Arizona with part of the prominent statewide service provider marketing, our seventh New U S States.
Speaker Change: Since mid 2020 for this partnership broadens our reach across the states Joseph system accelerates broker penetration.
Speaker Change: Regional partnership we also expanded.
Speaker Change: Into Wisconsin, Minnesota, and Michigan, where our GPS domestic violence monitoring technologies are being introduced via an established for their provider network.
Ordan Trabelsi: And in Canada, we launched a new project with a longstanding tracking solutions partner, transitioning from RF-based to GPS technologies using our advanced 301 devices. This unit began generating revenue in early 2024.
Speaker Change: And in Canada, we launched a new projects with long tenure and tracking solutions partner transition from RF based GPS technologies, using our advanced <unk> devices. This year began training.
Speaker Change: Trading revenue in early 2024.
Ordan Trabelsi: As I mentioned earlier, introducing the Pure One solution was a game-changer in securing these contracts, underscores our competitive edge and commitment to developing innovative and superior technology solutions. This momentum highlights the strong market demand for our Pure1 and PureProtect solutions and reinforces our trajectory. for Continued Growth. in various regions of the market.
Speaker Change: As I mentioned earlier, introducing the pier one solution was a game changer in securing these contracts underscores our competitive edge and commitment to developing innovative and superior technology solutions.
Speaker Change: This momentum highlights the strong market demand for our peer one of your protect solutions and reinforces our trajectory.
Speaker Change: For continued growth.
Speaker Change: In various regions of the market.
Speaker Change: Oh.
Ordan Trabelsi: Despite macroeconomic uncertainties and ongoing global challenges, including those in Israel, Supercom solutions are becoming increasingly relevant. We continue to see growth driven by high recidivism rates, the escalating cost of incarceration, and the surge in the adaption of victim protection solutions worldwide. The company's pure security technology solutions have been designed to address these trends, offering an effective way for institutions to enforce home confinement, ease prison overcrowding, and lower costs significantly. For example, monitoring an offender at home confinement or GPS costs about 10 to $35 a day, which is 90% less than the $100 to $140 daily costs at a correctional facility.
Speaker Change: Despite macroeconomic uncertainties and ongoing global challenges, including those in Israel.
Speaker Change: <unk> solutions are becoming increasingly irrelevant, because you're going to see growth driven by high recidivism rates escalating cost of incarceration and a surge in adoption of victim protection solutions worldwide.
Speaker Change: Ladies pure security technology solutions have been designed to address these trends offering an effective way for institutions to enforce home confinement east prison overcrowding and lower cost significantly for example, monitoring and offender on home confinement or GPS cost about 10% to $35, a day, which is 95%, 90% less than the $100 to $140 Dale.
Speaker Change: The cost out of Correctional facility. Moreover, home confinement helps reduce repeat offenses highlighted its effectiveness in helping offenders improve their lives and communities.
Ordan Trabelsi: Moreover, home confinement helps reduce repeat offenses, highlighting its effectiveness in helping offenders improve their lives and communities. As we mentioned on previous calls, we believe there's also an opportunity to enhance our U.S. growth through strategic acquisitions of local electronic monitoring service providers with a strong reputation and customer base. in their local markets. He constantly monitored the market, potential acquisitions. that could generate significant value by immediately expanding market presence and providing vertical integration synergies.
Speaker Change: As we've mentioned on previous calls we believe there is also an opportunity to enhance our U S growth through strategic acquisitions of local electronic monitoring service providers with strong reputation and customer base.
Speaker Change: Their local markets.
Speaker Change: Constantly monitor the market for potential acquisitions.
Speaker Change: That could generate significant value by immediately expanding market presence and providing vertical integration synergies our acquisition of LCA in 2006, <unk> for $3 million is a great example of that successful acquisition has proven to be a great strategic value.
Ordan Trabelsi: Our acquisition of LCA in 2016 for $3 million is a great example of that. Successful acquisition has proven to be of great strategic value. through the over $35 million in new project wins it has generated since then in California alone.
Speaker Change: Through the over $35 million in New project wins. It has generated since then in California alone.
Ordan Trabelsi: Now I'll turn it over to the financials.
Speaker Change: Now I'll turn it over to the financials.
Speaker Change: Considering this quarter Q4, and full year 2024 in comparison to the same period last year.
Speaker Change: Note that our multiyear projects do not run on a quarterly scale and thus can have fluctuating FX with annualized quarterly we'll start with the full year performance, which helps neutralize some of the fluctuation.
Unknown Attendee: Unknown Attendee, Ordan Trabelsi, Supercom Unknown Attendee, Ordan Trabelsi, Supercom Full Year Performance of 2024. We achieved our fourth, second quarter of revenue growth. I'm sorry, our fourth consecutive year of revenue growth, which revenues increasing to $27.6 million. This represents our highest revenue since 2017 and 134% increase from the 2020. of 11.8, underscoring the strength of our multi-year recovery. Gross profit surged to $13.4 million, a 31% increase over the prior year, driven by continued scaling of our operations and favorable projects. This resulted in gross margin expansion to 48.4%, up from 38.5% in 2023, a nearly 10% improvement and our strongest margin level since 2021.
Speaker Change: Full year performance on slide 24, we achieved our fourth consecutive quarter of revenue growth.
Speaker Change: Sorry, our fourth consecutive year of revenue growth with revenues increasing.
Speaker Change: $27 $6 million. This represents our highest revenue since 2017 and 134% increase from the 2020.
Speaker Change: 11, eight underscoring the strength of our multi year recovery.
Speaker Change: Gross profit surged 11, $13 4 million or 31% increase over the prior year driven by continued scaling of our operations and favorable project mix.
Speaker Change: This resulted in gross margin expansion to 48, 4% up from 38, 5% in 2023, and the other 10% improvement and our strongest margin level since 2021.
Unknown Attendee: We reported positive net income of $661,000, a significant turnaround from that loss of $4 million in 2023. And as I've said, this marks our first full year of gap profitability since 2015 and highlights the durability of our operation model. Our net gap on a non-gap basis, where we excluded non-cash items like amortization of intangibles from prior acquisitions, among other things, net income rose to $6.33 million. Up from $3.19 million, a 99% increase, driven by core business strength excluding non-occurring and non-cash items. Non-GAAP EPS reached $3.66 for the whole year 2024. EBITDA reached $6.3 million reflecting 31% Year-over-year growth supported by strong gross margins and operating efficiencies.
Speaker Change: We reported positive net income of $661000, a significant turnaround from a net loss of $4 million in 'twenty three.
Speaker Change: I've said this marks our first full year of GAAP profitability since 2015 and highlights the durability of our operation model.
Speaker Change: Our net GAAP on a non-GAAP basis, where we exclude noncash items like amortization of intangibles from prior acquisitions. Among other things net income rose to $6 three $3 million.
Speaker Change: Upfront $3 9 million.
Speaker Change: 89% increase driven by core business trends, excluding nonrecurring and noncash items.
Speaker Change: non-GAAP EPS reached $3 six $6 for the full year of 2024, EBITDA reached $6 $3 million, reflecting 31%.
Speaker Change: Year over year growth supported by strong gross margins and operating efficiencies. This marks our 10th consecutive quarter of positive EBITDA.
Unknown Attendee: This marks our 10th consecutive order of positive EBITDA. and Operating Cashflow Improvement Materials with usage reduction to $1.3 million in 2024, continuing the positive trend from $9.4 million, $4.7 million, $2.4 million in 2021, 2022, and 2023. This marks a 85% reduction in cash over the last few years, highlighting enhanced cash generation for both new and legacy projects.
Speaker Change: And operating cash flow improved materially with usage reduction to $1 3 million in 2024 continue the positive trend from $9 4 million $4 7 million $2 4 million in 'twenty, one 'twenty, two and 'twenty three.
Speaker Change: This marks 85% reduction in cash over the last few years, highlighting enhanced cash generation from both new and legacy projects.
Unknown Attendee: for the performance. We'll look at currently revenue increased in the fourth quarter to 6.33 million up from 5.7 million in the prior year. Period, this growth is driven by new project wins and expansion of existing programs, both in the US and Europe, gross profit increased to 2.7Million up from 2.35Million with margin improving to 42.7% up from 41 in the prior year period. This margin expansion reflects improved scale and favorable project dynamics. Importantly, our EBITDA increased to 1.6Million dollars from 1.09Million achieved in Q4 last year, marketing our 10th consecutive quarter set of positive EBITDA. While GAAP net loss for the quarter was 1.86 million compared to loss of 1.56 million last year, this is primarily driven by timing of revenue recognition and certain operating items, such as $2 million in one-time items, including doubtful debt breakdown.
Speaker Change: Quarterly performance.
Speaker Change: We will look at currently revenue increased in the fourth quarter to $6 $33 million up from $5 7 million in the prior year period. This growth was driven by new project wins and the expansion of existing programs. Both in the U S and Europe gross profit increased to $2 7 million up from $2 35 billion with margins improving to 42.7% up from 41 in the prior year.
Speaker Change: This margin expansion reflects improved scale and favorable project dynamics importantly, our EBITDA increased to $1 6 million from 109 million achieved in Q4 last year marketing, our 10th consecutive quarters of positive EBITDA.
Speaker Change: While GAAP net loss for the quarter was $1 eight 6 million compared to loss of $1 $5 6 million last year. This was primarily driven by timing of revenue recognition and certain operating items, such as $2 million in one time items, including doubtful debt write down.
Unknown Attendee: In addition to strong year-over-year results, it's worth it at this moment to take a step back and look at how Supercom has come over the past four years. Following the placement of a new management team and business strategy in 2021, Supercom executed a transformation that drove substantial improvements across key financial and operating metrics over the four-year period. While navigating global challenges, such as the COVID-19 pandemic, geopolitical conflicts, rising interest rates, changes in various policies, supply chain disruptions, and volatile capital markets. Between 2020 and 2024, we achieved a remarkable transformation in our financial operations and performance.
Speaker Change: In addition to strong year over year results. It's worth at this moment to take a step back and look at how Supercomm has come over the past four years.
Speaker Change: Following the placement of new management team.
Speaker Change: And business strategy in 2021, Supercomm executed a transformation that drove substantial improvements across key financial and operating metrics over the four year period.
Speaker Change: While navigating global challenges such as the COVID-19, pandemic geopolitical conflicts rising interest rates changes in various policies supply chain disruptions and volatile capital markets.
Between 2020 in 2024, which you remarkable transformation our financial operational performance.
Unknown Attendee: Revenue more than doubled. Rising from $11.8 million in 2020 to $27.6 million in 2024.
Speaker Change: Revenue more than doubled.
Speaker Change: Rising from $11 8 million in 2020 to $27 six and 2024.
Unknown Attendee: Gross Profit. also grew. from 5.6 million to 13 million. Operating losses narrowed substantially, improving by 90%. On a gap basis, net income improved from 7.4 million loss to a 661,000 profit, our first full year since 2015 of gap profitability. EBITDA more than doubled from 2.8 million to 6.3 million, reflecting 125% growth. and a non-gap basis net income improved from a loss of $1.7 million in 2020 to $6.3 million in 2024. $8 million dollar turnaround over this four-year period in a non-gap net income. Operating cash flow usage was reduced by 86% from $9.4 million to $1.3 million, affecting enhanced cash efficiency across project deployments and operational usage.
Speaker Change: Gross profit.
Speaker Change: Also grew.
Speaker Change:
Speaker Change: From pipeline 6 million to $13 million.
Speaker Change: Operating losses narrowed substantially improving by 90%.
Speaker Change: On a GAAP basis net income improved from $7 4 million loss to 661000 profit our first full year since 2015, GAAP profitability EBITDA more than doubled from $2 8 million to $6 $3 million, reflecting 125% growth.
Speaker Change: And on a non-GAAP basis net income improved from a loss of $1 $7 million in 'twenty to 'twenty to 'twenty, two $6 3 million.
Speaker Change: In 2024 $8 million turnaround over this four year period, and our non-GAAP net income.
Speaker Change: Operating cash usage was reduced by 86% from $9 4 million to $1 three months, I think enhanced cash efficiency or cost projects appointments and operational usage.
Unknown Attendee: This four-year turnaround demonstrates the success of our strategic roadmap, the scalability of our core solutions, and the strength of our global operations. We've shifted from financial recovery to consistent, profitable execution. We remain focused on building on this momentum into 2025.
Speaker Change: Turnaround demonstrates the success of our strategic roadmap the scalability of our core solutions and the strength of our global operations, we've shifted from a financial recovery to consistent profitable execution. We remain focused on building on this momentum into 2025.
Unknown Attendee: and beyond. Moreover, we achieved a longer-term goal of transitioning away from the legacy business of identification in Africa to the IoT business in developing countries. In 2024, over 97% of our revenues are from developed countries, in comparison to 2015 where over 89% of the revenues were from Africa alone. IOT revenues over this period of time grew from 1% of the company revenues. in 2015 to 91% of company revenues in 2024 regarding IOT revenue. Furthermore, in recent months, we've made substantial progress in strengthening our financial position. Since the end of 2023, we've reduced our total outstanding debt by 32%, from over $34 million to approximately $23 million, a reduction of more than $11 million in just over a year.
Speaker Change: And beyond <unk>.
Speaker Change: We achieved our longer term goal.
Speaker Change: Transitioning away from the legacy business of identification and Africa to the Iot business and developing countries and.
Speaker Change: In 2024 over 97% of our revenues are from developed countries in comparison to 2015 were over 89% of the revenues were from Africa alone.
Speaker Change: Iot revenues over this period of time grew from 1% of company revenues.
Speaker Change: In 2015% to 91% upcoming company revenues in 2024 regarding Iot revenues.
Furthermore, in recent months, we've made substantial progress in strengthening our financial position since the end of 2023, we've reduced our total outstanding debt by 32% from over 34 million to approximately $23 million a.
Speaker Change: A reduction of more than $111 million and just over a year. This was achieved in part through strategic exchanges of debt to equity and negotiated premiums up to a 100% or more of market prices as well as an amendment of our senior debt extending maturity to December 31, 2028, as well as an interest rate reduction that is expected to save the company more than $1 million in interest.
Unknown Attendee: This was achieved in part through strategic exchanges of debt to equity and negotiated premiums up to 100% or more of market price, as well as an amendment of our senior debt extending maturity to December 31st, 2028, as well as an interest rate reduction that is expected to save the company more than $1 million in interest and fees per the current loan term. Following the reduction in debt, we raised over $60 million in gross proceeds, $6 million through a registered direct offering, and an additional approximately $10.2 million from the cash exercise of investor warrants that were outstanding.
Speaker Change: And fees for the current loan term.
Speaker Change: Following the reduction in debt, we raised over $16 million in gross proceeds 6 million through a registered direct offering an additional approximately $10 2 million from a cash exercise of investor warrants that were outstanding. These combined initiatives have strengthened our balance sheet and provided the resources necessary to continue executing on our strategy and closing.
Unknown Attendee: These combined initiatives have strengthened our balance sheet and provided the resources necessary to continue executing our strategy.
Ordan Trabelsi: In closing... I'd like to thank our global teams for the hard, tireless work to achieve our company's record-setting performance in 2024. We've developed the right technology and products to help criminal justice system clients overcome challenges and make better use of over $80 billion spent annually in the USA on operating rehabilitation centers and prisons. With research showing an approximately 75% recidivism rate in the U.S., there is significant room for improvement when effective programs and technology are deployed. We're excited about the growth we've been experiencing and about the demand for our products. After several years through which we transitioned from our legacy business to the IoT tracking of a vendors business, we are happy to show the shift to strong growth in revenue and profit in recent years.
Speaker Change: I'd like to thank our global teams for the hard work to achieve our company's record setting performance in 2024, we've developed the right technology and products to help criminal Justice systems clients overcome challenges and make better use of over $80 million $80 billion spent annually in the USA on operating rehabilitation centres and prisons with research showing that approximately <unk> <unk>.
Speaker Change: <unk>, 5% for citizen right in the U S. There is significant room for improvement on effective programs and technology are deployed.
Speaker Change: We're excited about the growth we've been experiencing and about the demand for our products. After several years through which would transition from our legacy business did Iot tracking of offenders business. We are happy to show the shift to strong growth in revenue and profit in recent years and we believe that we're well positioned for continued <unk>.
Ordan Trabelsi: And we believe that we're well positioned for continued expansion of our solutions to more locations, geographies. as we capitalize on opportunities that lay before us. These are being driven by multiple factors, including a strong presence, reputation in the US and European markets, counter cyclical nature of the electronic monitoring industry, the growing public policy shift to monitoring the set of incarceration and the growing adaptation of domestic violence prevention solutions. We anticipate continued expansion in the US and Europe and potential other regions. Our commitment to preserving our technological advantage and our robust growth foundation remains steadfast as we continue to invest in these areas.
Speaker Change: Spansion of our solutions to more locations geographies.
Speaker Change: As we capitalize on opportunities that lay before us.
Speaker Change: These are being driven by multiple factors, including a strong presence reputation in the U S and European markets. The countercyclical nature of electronic monitoring industry, the growing public policy shifts to monitoring instead of incarceration and theyre growing into patient of domestic violence prevention solutions. We anticipate continued expansion in the U S and Europe and potential other regions are committed to preserving articles.
Speaker Change: Logical advantage and a robust growth foundation remains steadfast as we continue to invest in these areas.
Operator: With that, I'll turn the call over to our operator for opening questions. Operator. Thank you. Ladies and gentlemen, if you wish to ask a question on today's call, you will need to press star, then the number one on your telephone. If you were using a speakerphone, please pick up your handset before entering your request and speaking on the call. If your question has been answered and you wish to withdraw your question, you may do so by pressing star and two. One moment please. while we poll for questions.
Speaker Change: I will turn the call over to operator for opening questions.
Speaker Change: Operator.
Speaker Change: Thank you, ladies and gentlemen, if you wish to ask a question on today's call you will need to press Star then the number one on your telephone.
Speaker Change: If you were using a speakerphone please pick up your handset before entering your request and speaking on the call.
Speaker Change: Your question has been answered and you wish to withdraw your question you may do so by pressing star and two one moment. Please.
Speaker Change: While we pull for questions.
Matthew Galinko: The first question today is coming from Matthew Galinko from Maxim Group. Matthew, your line is live. Hey, congrats on the strong 2024. And thanks for taking my question. I think my first one is, it seems like I think it's six consecutive quarters above 40% gross margin now. Would you be comfortable calling 40% the floor at this point, just relative to where we were a couple of years ago? Or do you think there's, you know, room for more volatility in the gross margin line ahead?
Speaker Change: And the first question today is coming from Matthew <unk> from Maxim Group Matthew Your line is live.
Speaker Change: Hey, congrats on the strong 2024, and thanks for taking my questions.
Speaker Change: My first one.
Speaker Change: It seems like I think it six consecutive quarters above 40% gross margin now.
Speaker Change: Would you be comfortable calling 40% the floor at this point just relative to where we were a couple of years ago.
Speaker Change: Or do you think there.
Speaker Change: Room for more volatility in the gross margin line ahead.
Ordan Trabelsi: Great question. As you know, our gross margin comes with a factor of numerous projects at the same time from different regions. And we have shared and we continue to experience and we add more and more bracelets of monitoring into the same region margins improve significantly because you have the fixed cost per project of the inventory management of the deployment of the support of the training and the technology know-how servers. So all that is fixed and you add more and more bracelets you get higher margins. We have some very nice projects with the growing numbers currently and they're contributing to this higher gross margin.
Speaker Change: Great question.
Speaker Change: Our gross margin comes with a factor of numerous projects at the same time from different regions and.
Speaker Change: We have shared and we continue to experience then we add more and more bracelets.
Speaker Change: <unk> monitoring into the same region margins improve significantly because you have the fixed cost per project.
Speaker Change: Inventory management of the deployment of the support of the training and the technology Knowhow servers. So all of that is fixed and the more and more bracelets, even higher margins we have some very.
Speaker Change: Nice projects with growing numbers.
Speaker Change: And they are contributing to this this higher gross margin and as we as we plan to the U S markets and thought it was on the same platform centralized through the cloud we hope to see improved margins as numbers grow there, but currently it's still hard to say.
Ordan Trabelsi: And as we plan into the U.S. market, since a lot of it is on the same platform centralized through the cloud, we hope to see improved margins as numbers grow there. But currently, it's still hard to say how things will unfold as there's a lot of volatility depending on what happens with different projects. So it's hard for us to know how things will move. They can trend up and down, but over time, as our business plan unfolds, we believe that we'll have larger and larger unit numbers per customer and per region, and that will drive higher gross margins, actually.
Speaker Change: How things will unfold is theres a lot of volatility depending on what happens with different projects. So it's.
Speaker Change: Hard for us to know.
Speaker Change: Hopkins, who will move the can trend up and down.
Speaker Change: But over time as our business plan unfolds, we believe that we will have larger and larger.
Speaker Change: Numbers per for our customer.
Speaker Change: And per region and that will drive a higher gross margin is actually.
Ordan Trabelsi: and even we have today.
Speaker Change: We have today.
Matthew Galinko: Got it. Thank you.
Speaker Change: Got it.
Ordan Trabelsi: And I guess as a follow up, can we maybe focus a little bit more on US market? You've obviously had some pretty good success in that. evolving strategy. So maybe, you know, give us an idea of what's next. Is it, you know, kind of more quota carrying sales reps and, you know, acceleration in new customers and larger customers in the US market? Or do you start competing for, you know, kind of bigger contracts with bigger governments? Or, you know, just kind of what do you expect to, what should we expect to see from the US market in 2025?
Speaker Change: And I guess as a follow up.
Speaker Change: Can we maybe focus a little bit more on U S market.
Speaker Change:
Speaker Change: You've obviously had some pretty good success.
Speaker Change: Matt.
Speaker Change: Evolving strategy so maybe.
Speaker Change: Give us an idea of what's next.
Speaker Change: More quota carrying sales reps and.
Speaker Change: No.
Speaker Change: The acceleration in new customers and larger customers in the U S market.
Speaker Change: Start competing for kind of a bigger contracts with bigger governments or just kind of when do you expect to.
Speaker Change: <unk>.
Speaker Change: What should we expect to see from the U S market in 2025.
Ordan Trabelsi: Okay, so the US market, which we've started, we started expanding significantly into as of last year and since the mid of last year. So now we've already had over 20 new contracts and we're continuously signing more contracts and more, more partnerships to help us expand together with a local partner, which is also a very good thing. These partnerships and so far, the deployments are going well, we're getting good feedback and technology is a great fit and we didn't expand as much early in previous years because our technology is more focused on the European market. And now we adapted some of it, like the pure 1 to the US market.
Speaker Change: Okay. So the U S market, which we've.
Speaker Change: We started expanding significantly into the last year since the mid of last year till now we've already had over 20, new contracts from contingency signing.
Speaker Change: More contracts and more.
Speaker Change: More partnerships to help us expand together with our local partner, which is also a very.
Speaker Change: Good thing.
Speaker Change: These partnerships and so far the deployments are going well, we're getting good feedback on technology is a great fit.
Speaker Change: And to expand as much earlier than previous years, because our technology is more focused on the European market and how we adapted some of it like the peer one to the U S markets.
Ordan Trabelsi: So all that is going well, as we continue to expand into more locations and bring on more partners, we're going to grow also the size of the projects. As you remember, probably in Europe, we started with small projects over 100, 200, $400,000. And then we grew to 2 million, 4 million. And now you know, one of our latest ones was over $33 million. So same thing in the US, we're starting with small and going up to mediocre and then over time to larger and larger. So we'll see that we'll see that continue to progress over the coming years, we had a passive bidding strategy in Europe, we didn't have as much of a big sales team in the US, it's more fragmented.
Speaker Change: All of that is going well as we continue to expand into more locations and bring on more partners or are you going to grow also the size of the projects as you remember probably in Europe, we started with small projects over 100, $441000 and then you go to $2 million 4 million.
Speaker Change: One of our latest ones was over $33 million.
Speaker Change: So same thing in the U S were starting with small and going out to mediocre and then over time to larger and larger.
Speaker Change: So we'll see that we'll see that continuing to progress over the coming years, we had a passive.
Speaker Change: Bidding strategy in Europe, we didn't have as much of a big sales team in the U S. It's more fragmented. So we actually have more people that are quota carrying as you mentioned before together with sales support.
Ordan Trabelsi: So we actually have more people that are quota carrying, as you mentioned before, together with sales support. So we're actively in pilot and demos and the pipeline continues to evolve as we're doing that throughout the US market. All right, thank you.
So where we're actively in pilots and demos and the pipeline continues to evolve.
Speaker Change: As we're doing that they are the U S market.
Ordan Trabelsi: And last question for me is on the opportunity to consolidate some of the partners in the US market. Is that something that you see as being a, you know, more of a possibility, especially with, you know, your debt, you know, starting to come down, and, you know, breakeven cash getting pretty close or, you know, what do you think the likelihood of, you know, deals closing in the next, you know, 18 months. Looks like, or, you know, what are the biggest barriers to executing on that?
Speaker Change: Alright, Thank you and last question for me in on the.
Speaker Change: Opportunity too.
Speaker Change: Consolidate some of the partners in the U S market.
Speaker Change: <unk>.
Speaker Change: Is that something that you see in being a.
Speaker Change: Yes, more of a possibility, especially with your debt.
Speaker Change: Starting to come down and.
Speaker Change: Breakeven cash getting pretty close or.
Speaker Change: What do you think.
Likelihood of.
Speaker Change: Deals closing in the next.
Speaker Change: 18 months.
Speaker Change: Looks like or what are the biggest barriers to executing on that.
Ordan Trabelsi: Okay, great question. Thank you. We've mentioned in the past, just to give everyone context, some of these partnerships with local value added resellers, they'll provide the services, they'll take our technology or our competitor technology and provide the services, and they'll aggregate maybe 10 to 30 counties, because some of these small counties, it's hard for them to do everything themselves, and they go to a local player that does that for them. So, we sell to these partners already, and there's interesting opportunities with acquiring them. We did it once in California in 2016, and it worked very well, because you replace their technology with our technology, which is newer, and also creates a lot of synergies in significant profit quickly, but also it opens up your ability to grow that business with the newest technology in that region.
Okay Great question.
Speaker Change: Thank you.
Speaker Change: We've mentioned in the past just to get everyone context some of these partnerships.
Speaker Change: With with local value added resellers, they will provide the services they'll take our technology are a competitive technology and provide the services and the aggregate maybe tend to 30 counties because some of these small counties.
Speaker Change: It's hard for them to do everything themselves and they go to a local player who does that for them. So we sell to these to these partners already.
Speaker Change: And there is interesting opportunities without acquiring them, we did it once in California in 2016 and works very well because you replace that.
Speaker Change: Their technology with our technology, which is newer and also creates a lot of synergies.
Speaker Change: Significant profit quickly, but also it opens up your ability to grow that business.
Ordan Trabelsi: So, there certainly are opportunities. And we have been discussing this at some level over the past. over the recent years. As you've seen, we also had a big focus on trying to grow our organic operations, reduce our debt, strengthen our balance sheet, and we've been doing that. And that, of course, makes it easier for us to complete these deals. So it makes them more likely. We're still dependent on the price and fit, and we have to see that through diligence. We see that everything makes sense for us, and it's a good synergistic fit for us.
Speaker Change: The newest technology in that region. So there certainly are opportunities.
Speaker Change: And we have been discussing this at some level over the past.
Speaker Change: Over the recent years.
We've as you've seen we also had a big focus on trying to.
Speaker Change: Grow our organic operations reduce our debt.
Speaker Change: Strengthen our balance sheet and we've been doing that and that of course makes it easier for us to to complete these deals so it makes them more likely.
Speaker Change: Dependent on the price and fit and wait to see that through diligence, we cede everything makes sense for us and it's a good sort of synergistic fit for us.
Ordan Trabelsi: But it does certainly, the stronger balance sheet makes it easier. It also makes it easier to win larger projects. Because when you're looking at the very large projects, when you have a small cash base and a lot of debt, it was harder in the past, and now it's becoming easier together with a positive net income. That's also going to help us on various opportunities. So the general direction, the financial direction of the company and the balance sheet is helping us on multiple fronts. Thank you.
Speaker Change: But it does certainly the stronger balance sheet makes it easier also makes it easier to win.
Speaker Change: Larger projects because when you look at the very large projects.
Speaker Change: When you have a small cash base are and a lot of debt. It was harder in the past and now it's becoming easier together with a positive net income that's also going to help us on various opportunities. So the general direction of the financial direction of the company and the finance and the balance sheet is helping us on multiple fronts.
Speaker Change: Great. Thank you.
Greg Mesnaff: And the next question is coming from Greg Mesnaff from Kingswood Partners. Greg, your line is live. Yes, thank you.
Greg Mcginniss: Thank you. Thank you and the next question is coming from Greg Mcginniss from Kingswood partners. Greg Your line is live.
Ordan Trabelsi: Question on your entry into the US market. Obviously, that's a key cornerstone of your strategy now. And I'm wondering how you're addressing the recent tariff situation. As far as supply chain, product mix, you know, hardware versus software, just kind of give us a give us an overview of that. But it's a great question to say that that that our manufacturing for our products is done currently, and the manufacturing is done in Israel, we supply from various regions. And we have actually production here. We've done that. We change that throughout cobit. We know how to produce in other places as well, but throughout cobit and we're requested to create a lot of bracelets also for for cobit confinement.
Speaker Change: Yes. Thank you.
Speaker Change: Question on you.
Speaker Change: Our entry into the U S market, obviously, that's a key cornerstone of your strategy now and I'm wondering how you're addressing bill recent tariff situation.
Speaker Change: As far as <unk>.
Speaker Change: Supply chain product mix hardware versus software just kind of give us give us an overview of that thanks.
Speaker Change: Right.
Speaker Change: It's a great question.
Speaker Change: That debt.
Speaker Change: Our manufacturing for our products is done currently.
Speaker Change: The manufacturing is done in Israel.
Speaker Change: We supply from various regions and we have actually production here, we've done that we've changed that throughout Covid, we know how to produce and other places as well, but throughout Covid were requested to create a lot of price. It's also for for Covid confinement.
Ordan Trabelsi: We, we develop that ability here in Israel. So, we're doing from Israel, Israel in the US, it's still to be seen what the tariffs would be like. And we also have abilities to to do some manufacturing in the US, but as things evolve in, in the coming, say, weeks and months, we'll have more updates as we see how things resolve on tariffs between Israel and the US and our strategies around that. But currently, a big portion of our operations in the US, and the recipe from Israel in that regard. So, we don't expect something very high, but we'll, we'll see how that falls out.
Speaker Change: We developed that ability here in Israel, So, Brazil from Israel, Israel, and the U S. It's still to be seen what the tariffs would be like and.
Speaker Change: And we also have abilities to do some of the manufacturing in the U S, but as things evolve in the coming.
Speaker Change: The weeks and months.
Speaker Change: We'll have more updates as we see how the how things are resolved.
Speaker Change: Resolve on tariffs between Israel, and the U S and our strategies around that but currently a big portion of our operations in the U S.
Speaker Change: And the recipe.
Speaker Change: But from Israel in that regard. So we don't expect that's something very high, but we'll see how that falls out.
Ordan Trabelsi: Thank you.
Ordan Trabelsi: Also to also to on that to remind you a big part of our service is software as a service, you know, we have the monitoring software and that's what they're paying for. And they, a lot of them lease the bracelet rather than just selling hardware components. So that will help as well. Good point. Thank you.
Speaker Change: Thank you also to remember also too on that to remind you a big part of our service as software as a service.
Speaker Change: The monitoring software and that's what they are paying for and they've made a lot of them at least the bracelets are rather than just selling hardware components.
Speaker Change: So that will help as well.
Speaker Change: Good point thank you.
Speaker Change: Okay.
Ordan Trabelsi: And that does conclude today's Q&A session. At this time, I will pass the call back to Ordan for closing remarks. I want to thank you all for your participation in today's call, for your interest in Supercom. Please contact us directly if you have any additional questions. We look forward to sharing our progress with you on our next conference calls, filings, and press releases. Thank you and have a good day. Thank you. This does conclude today's conference. You may disconnect your lines at this time. Thank you for your participation.
Speaker Change: Thank you and that does conclude today's Q&A session. At this time I will pass the call back to <unk> for closing remarks.
Speaker Change: Okay.
Speaker Change: I want to thank you all for your participation in today's call for your interest in Supercomm. Please contact US directly if you have any additional questions. We look forward to sharing our progress with you on our next conference calls filings and press releases.
Speaker Change: And have a good day.
Speaker Change: Thank you. This does conclude today's conference you may disconnect. Your lines at this time. Thank you for your participation.