Revenue of $3 million; Gross Profit of 43.6%; Cash & Restricted Cash of $6.6 million
SuperCom (NASDAQ: SPCB), a global provider of secured solutions for the e-Government, IoT, and Cybersecurity sectors, today reported results for the three months ended March 31, 2022.
First Quarter Ended March 31, 2022, Financial Highlights (Compared to the First Quarter of 2021)
- Revenue increased to $3.05 million from $3.03 million last year.
- Additional progress was achieved on replacing revenue decline from the legacy business with new revenues from the IoT business.
- Gross margin of 43.3% compared to 55.3%, reflecting also transitional costs associated with deployment of new IOT projects ahead of recurring revenue streams.
- Research and Development expense of $0.86 million compared to $0.66 million.
- Sales and Marketing expenses of $0.7 million compared to $0.37 million, reflecting support in the Company’s new proactive growth strategy.
- EBITDA of -$0.3 million compared to $0.6 million, reflecting an increase of investment in R&D by 30% and an increase of 90% in sales and marketing.
- Cash and cash equivalents and restricted cash increased to $6.6 million compared to $4.6 million at the end of 2021.
- Working Capital increased to $23.4 million from $20.5 million at the end of 2021.
- Non-GAAP EPS of -$0.04.
Recent Business Highlights:
- Won and launched Croatia’s first full-scale electronic monitoring project in the country and will deploy SuperCom’s PureSecurity Electronic Monitoring Suite. The project was formally awarded earlier this year through a formal bid process by Croatia’s Ministry of Justice and Administration.
- Raised $4.65 million in gross proceeds in a registered direct offering with a single accredited institutional investor, providing additional capital to execute the Company’s business plan.
- Secured a new governmental electronic monitoring contract in Wyoming. The contracting agency is an Adult and Juvenile Probation Agency and plans to use SuperCom’s PureTrack GPS smartphone products to monitor their caseload for location compliance.
- Secured a new governmental electronic monitoring contract in Idaho. The contracting agency is a Juvenile Probation Office and will use SuperCom’s PureTrack GPS smartphone products to monitor their caseload for location compliance.
- Secured a new electronic monitoring contract in Texas for the PureTrack GPS tracking platform.
- Won and launched new projects in California, USA valued at up to over $5 million over five years to provide various programming and rehabilitation services.
- Through a competitive national RFP process, won a $3.6 million national electronic monitoring project in Finland and scored highly by offering SuperCom’s proprietary PureSecurity Electronic Monitoring Suite
- The Company announced that its cyber security division, Safend, plans to release a new version of its proven, robust and scalable cybersecurity software technology, with enhanced protection from cyber-attacks.
- Supercom’s cyber security division, Safend, was selected by government security agency and cyber security enterprises to grow their cyber security protection programs.
- Strengthened the Company’s global sales division, recruiting a new VP of sales and sales managers with industry expertise and shifting from passive bidding to an active outreach sales strategy.
- Strengthened the Company’s R&D division, recruiting a new VP of R&D and experienced engineers, product managers, quality assurance, and support personnel to serve the growing government customer needs for leading state-of-the-art technology.
Management Commentary:
“We are content with our achievements thus far in 2022. With new revenues from projects in our IoT business, we were able to offset revenue declines from the legacy business and keep revenue levels steady. In parallel, we enhanced our operational infrastructure, progressed with advanced technology leadership, and strengthened our workforce to support future growth. In addition, we honed our business plan and raised the needed financial resources to support it even during a time of volatility and uncertainty in the capital markets,” commented Ordan Trabelsi, President and CEO of SuperCom.
“Entering 2022, we continued to execute our strategy to expand our footprint and positioning in the public safety market. In Europe, we won and launched Croatia’s first full-scale electronic monitoring project in the country, adding Croatia to a long line of European countries selecting our proprietary technology. We won and launched new projects in the USA as well, both in California, where we have established a presence, and in three new US states, Texas, Idaho, and Wyoming, for the PureTrack GPS tracking platform serving adults and juveniles,” continued Ordan.
“We see an uplift in RFP activity with an expected over $200 million in upcoming project bid opportunities in the next 18 months, driven by correctional institutions looking for alternative solutions for the challenges associated with criminal justice and public safety. Meanwhile, our proprietary technology continues to score high on competitive tenders allowing us to displace incumbent vendors in different countries worldwide. Our electronic monitoring solutions address the challenges related to prison overcrowding, provide substantial cost savings, and aid in the reduction of recidivism among offenders promoting public safety in communities,” continued Ordan.
“We believe our investments in research and development, as well as in sales and marketing, are paying off as we are seeing continued interest in our unique IoT products and solutions, which we expect will drive continued growth in the long-term. While the sales cycles for these contract wins can be long, the resulting business typically lasts for years, providing steady recurring revenue streams. We anticipate additional new projects wins as we continue growing our pipeline and successfully converting opportunities to long-term recurring revenue streams,” Ordan concluded.
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