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Reports Q3 Revenue of $6.3 million and Gross Profit of $2.1 million, approximately double compared to the third quarter of last year, and swing to Positive EBITDA of $0.4 million
TEL AVIV, Israel, Oct. 26, 2022 /PRNewswire/ -- SuperCom (NASDAQ: SPCB), a global provider of secured solutions for the e-Government, IoT, and Cybersecurity sectors, today reported results for the third quarter of 2022, ended September 30, 2022.
Third Quarter Financial Highlights Ended September 30, 2022 (Compared to the Third Quarter of 2021)
Recent Business Highlights:
Management Commentary:
"In recent years, we have worked tirelessly to build Supercom's reputation in the IoT offender tracking space while gradually climbing the value chain of the projects we've won and executed. We are proud to have won the largest European Electronic Monitoring project launched this year, valued at over $33 million. We believe that we have developed the best technology in the market and the necessary infrastructure to support EM projects of almost any complexity and magnitude, as we've repeatedly demonstrated over the past years. We also believe that the stellar reputation that we've built will serve us well as we strive for further growth and continue to participate in tenders for additional projects around the world," commented Ordan Trabelsi, President and CEO of SuperCom.
"We're gratified to start to realize the significant return we had expected from our years of investment in the IoT division, as reflected in our third quarter financial results. Revenue reached $6.3 million, a year-over-year increase of 102%, and a quarterly sequential increase of 98%. New project launches and orders from existing customers in Europe and North America also supported revenue growth. This quarter the IoT division grew 150% year over year, which was significantly more than the decline in the legacy business, leading to strong total revenue growth."
"In the third quarter, we also returned to positive EBITDA, which reached $0.4 million compared to negative EBITDA of $0.7 million in the previous sequential quarter. The positive swing of $1.1 million reflects the benefits of operating leverage and scalability associated with deploying new IoT projects on top of a stable and robust operating structure."
"We expect our significant investments in R&D and sales and marketing to continue to yield nice returns as we work hard to maintain our leading edge in technology and expedite market expansion with our new proactive sales approach. Taken together with our high win rates in competitive RFPs and a steady recurring revenue base of over 80%, we are excited and feel confident about SuperCom's growth in the years ahead," concluded Mr. Trabelsi.
Conference Call
The Company will hold a conference call on October 26, 2022, at 10:00 a.m. Eastern time (7 a.m. Pacific time) to discuss the second quarter results, followed by a question and answer session.
Conference Call Dial-In Information:
Date: Wednesday, October 26, 2022
Time: 10:00 a.m. Eastern Time / 7:00 a.m. Pacific Time / 17:00 p.m. Israel Time
U.S. toll-free: 877-545-0320
Israel toll-free: 1-809-423-853
International: 973-528-0002
Access Code: 577031
Link: https://www.webcaster4.com/Webcast/Page/2259/46925
Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization.
SuperCom Investor Relations:
ir@supercom.com
About SuperCom
Since 1988, SuperCom has been a global provider of traditional and digital identity solutions, providing advanced safety, identification and security solutions to governments and organizations, both private and public, throughout the world. Through its proprietary e-government platforms and innovative solutions for traditional and biometrics enrollment, personalization, issuance and border control services, SuperCom has inspired governments and national agencies to design and issue secure Multi-ID documents and robust digital identity solutions to its citizens and visitors. SuperCom offers a unique all-in-one field-proven RFID & mobile technology and product suite, accompanied by advanced complementary services for various industries including healthcare and homecare, security and safety, community public safety, law enforcement, electronic monitoring, livestock monitoring, and building and access automation. For more information, visit www.supercom.com.
Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Statements preceded or followed by or that otherwise include the words "believes", "expects", "anticipates", "intends", "projects", "estimates", "plans", and similar expressions or future or conditional verbs such as "will", "should", "would", "may" and "could" are generally forward-looking in nature and not historical or current facts. These forward-looking statements are subject to risks and uncertainties that could cause our actual results to differ materially from the statements made. Examples of these statements include, but are not limited to, statements regarding business and economic trends, the anticipated effects of the COVID-19 outbreak on travel and physical locations, the levels of consumer, business and economic confidence generally, the duration of the COVID-19 outbreak and severity of such outbreak, the pace of recovery following the COVID-19 outbreak, the effect on our supply chain, our ability to implement cost containment and business recovery strategies and resulting anticipated impact of such outbreak on our business, financial condition and results of operations, the adverse effects of the COVID-19 outbreak on our business or the market price of our ordinary shares, and other risks and uncertainties described in the forward looking statements and in the section captioned "Risk Factors" in our Annual Report on Form 20-F for the year ended December 31, 2021, filed with the U.S. Securities and Exchange Commission (the "SEC") on April 4, 2022, our reports on Form 6-K filed from time to time with the SEC and our other filings with the SEC. Except as required by law, we not undertake any obligation to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this press release.
Results presented in this press release are based on management's estimated unaudited analysis of financial results for the presented periods. SuperCom's independent registered accounting firm has not audited the financial data discussed in this press release. During the course of SuperCom's quarter- and fiscal year-end closing procedures and review process, SuperCom may identify items that would require it to make adjustments, which may be material, to the information presented in this press release. As a result, the estimate financial results constitute forward-looking information and are subject to risks and uncertainties, including possible adjustments to such results.
Use of Non-GAAP Financial Information
In addition to disclosing financial results calculated in accordance with United States generally accepted accounting principles (GAAP), this release of operating results also contains non-GAAP financial measures, which SuperCom believes are the principal indicators of the operating and financial performance of its business. Management believes the non-GAAP financial measures provided are useful to investors' understanding and assessment of the Company's on-going core operations and prospects for the future, as the charges eliminated are not part of the day-to-day business or reflective of the core operational activities of the Company. Management uses these non-GAAP financial measures as a basis for strategic decisions, forecasting future results and evaluating the Company's current performance. However, such measures should not be considered in isolation or as substitutes for results prepared in accordance with GAAP. Reconciliation of the non-GAAP measures to the most comparable GAAP measures are provided in the schedules attached to this release.
SUPERCOM LTD. | ||||
CONSOLIDATED BALANCE SHEETS | ||||
(U.S. dollars in thousands) | ||||
As of September 30, | As of | |||
Unaudited | Audited | |||
CURRENT ASSETS | ||||
Cash and cash equivalents | 2,114 | 3,537 | ||
Restricted bank deposits | 1,017 | 1,067 | ||
Trade receivable, net | 13,704 | 11,061 | ||
Patents | 5,283 | 5,283 | ||
Other accounts receivable and prepaid expenses | 1,865 | 1,599 | ||
Inventories, net | 3,592 | 3,561 | ||
Total current assets | 27,575 | 26,108 | ||
LONG-TERM ASSETS | ||||
Severance pay funds | 465 | 487 | ||
Deferred tax long term | 202 | 202 | ||
Customer Contracts | 699 | 936 | ||
Software and other IP | 2,211 | 2,495 | ||
Operating lease right-of-use assets | 584 | 882 | ||
Other Assets, net | 2,443 | 2,179 | ||
Goodwill | 7,026 | 7,026 | ||
Property and equipment, net | 1,640 | 1,804 | ||
Total long-term assets | 15,270 | 16,011 | ||
Total Assets | 42,845 | 42,119 | ||
CURRENT LIABILITIES | ||||
Short-term loans and other | - | 207 | ||
Trade payables | 1,188 | 1,395 | ||
Employees and payroll accruals | 1,682 | 2,119 | ||
Related parties | 159 | 172 | ||
Accrued expenses and other liabilities | 1,374 | 1,559 | ||
Deferred revenues ST | 685 | 151 | ||
Total current liabilities | 5,088 | 5,603 | ||
LONG-TERM LIABILITIES | ||||
Long-term loan | 33,332 | 30,451 | ||
Accrued severance pay | 505 | 529 | ||
Deferred tax liability | 170 | 170 | ||
Deferred revenues | 49 | 49 | ||
Operating lease liabilities | 600 | 925 | ||
Total long-term liabilities | 34,656 | 32,124 | ||
SHAREHOLDERS' EQUITY: | ||||
Ordinary shares | 3,057 | 2,028 | ||
Additional paid-in capital | 102,862 | 97,833 | ||
Accumulated deficit | (102,818) | (95,469) | ||
Total shareholders' equity | 3,101 | 4,392 | ||
Total liabilities and equity | 42,845 | 42,119 |
SUPERCOM LTD. | |||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||
(U.S. dollars in thousands) | |||||||
Three months ended | |||||||
September | September | ||||||
Unaudited | Unaudited | ||||||
REVENUES | 6,263 | 3,108 | |||||
COST OF REVENUES | (4,132) | (2,022) | |||||
GROSS PROFIT | 2,131 | 1,086 | |||||
OPERATING EXPENSES: | |||||||
Research and development | 958 | 625 | |||||
Selling and marketing | 652 | 457 | |||||
General and administrative | 1,370 | 1,107 | |||||
Other expenses | - | 689 | |||||
Total operating expenses | 2,980 | 2,878 | |||||
OPERATING LOSS | (849) | (1,792) | |||||
FINANCIAL EXPENSES, NET | (1,253) | (647) | |||||
LOSS BEFORE INCOME TAX | (2,102) | (2,439) | |||||
INCOME TAX EXPENSE | - | - | |||||
NET LOSS FOR THE PERIOD | (2,102) | (2,439) | |||||
SUPERCOM LTD. | ||||
Reconciliation Table of GAAP to Non-GAAP Figures and EBITDA to Net Income | ||||
(U.S. dollars in thousands) | ||||
Three months ended | ||||
September | September | |||
Unaudited | Unaudited | |||
GAAP gross profit | 2,131 | 1,086 | ||
Amortization of intangible assets | 88 | 88 | ||
Non-GAAP gross profit | 2,219 | 1,174 | ||
GAAP Operating Loss | (849) | (1,792) | ||
Amortization of intangible assets | 484 | 380 | ||
Foreign Currency Loss | 595 | 538 | ||
One-time expense related to settlement | - | 689 | ||
Non-GAAP operating profit | 230 | (185) | ||
GAAP net Loss | (2,102) | (2,439) | ||
Amortization of intangible assets | 484 | 380 | ||
One-time expense related to settlement | - | 689 | ||
Foreign Currency Loss | 595 | 538 | ||
Non-GAAP net Loss | (1,023) | (832) | ||
Non-GAAP EPS | (0.02) | (0.03) | ||
Net loss for the period | (2,102) | (2,439) | ||
Financial expenses (income), net | 1,253 | 647 | ||
Depreciation and Amortization | 665 | 512 | ||
One-time expense related to settlement | - | 689 | ||
Foreign Currency Loss | 595 | 538 | ||
EBITDA * | 411 | (53) | ||
* EBITDA is a non-GAAP financial measure generally defined as earnings before interest, taxes, depreciation and amortization and |
SUPERCOM LTD. | |||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||
(U.S. dollars in thousands) | |||||||
Nine months ended | |||||||
September | September | ||||||
Unaudited | Unaudited | ||||||
REVENUES | 12,527 | 9,233 | |||||
COST OF REVENUES | (7,780) | (4,691) | |||||
GROSS PROFIT | 4,747 | 4,542 | |||||
OPERATING EXPENSES: | |||||||
Research and development | 2,750 | 1,871 | |||||
Selling and marketing | 2,115 | 1,204 | |||||
General and administrative | 3,858 | 2,913 | |||||
Other expenses, net | - | 689 | |||||
Total operating expenses | 8,723 | 6,677 | |||||
OPERATING LOSS | (3,976) | (2,135) | |||||
FINANCIAL EXPENSES, NET | (3,285) | (2,566) | |||||
LOSS BEFORE INCOME TAX | (7,261) | (4,701) | |||||
INCOME TAX EXPENSE | - | (5) | |||||
NET LOSS FOR THE PERIOD | (7,261) | (4,706) | |||||
SUPERCOM LTD. | ||
Reconciliation Table of GAAP to Non-GAAP Figures and EBITDA to Net Income | ||
(U.S. dollars in thousands) | ||
Nine months ended | ||
September | September | |
Unaudited | Unaudited | |
GAAP gross profit | 4,747 | 4,542 |
Amortization of intangible assets | 265 | 264 |
Non-GAAP gross profit | 5,012 | 4,806 |
GAAP Operating Loss | (3,976) | (2,135) |
Amortization of intangible assets | 1,411 | 1,135 |
One-time expenses | - | 723 |
Foreign Currency Loss | 1,479 | 1,195 |
Non-GAAP operating profit | (1,086) | 918 |
GAAP net Loss | (7,261) | (4,706) |
Amortization of intangible assets | 1,411 | 1,135 |
One-time expenses | - | 723 |
Foreign Currency Loss | 1,479 | 1,195 |
Non-GAAP net Loss | (4,371) | (1,648) |
Non-GAAP EPS | (0.01) | (0.01) |
Net loss for the period | (7,261) | (4,706) |
Income tax expense (benefit) | - | 5 |
Financial expenses (income), net | 3,285 | 2,566 |
Depreciation and Amortization | 1,928 | 1,501 |
One-time expense | - | 723 |
Foreign Currency Loss | 1,479 | 1,195 |
EBITDA * | (569) | 1,284 |
* EBITDA is a non-GAAP financial measure generally defined as earnings before interest, taxes, depreciation and amortization and other non-cash or one-time expenses. |
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SOURCE SuperCom Ltd.
