Duos Technologies Group Reports First Quarter 2024 Results
Duos Technologies Group (Nasdaq: DUOT) reported a 60% decrease in Q1 2024 revenues to $1.07 million, compared to Q1 2023. The decline was primarily due to delayed revenue recognition from a major customer, expected in Q4 2024. The company's gross margin decreased 82% to $94,000. Operating expenses increased by 6% to $2.86 million, resulting in a net loss of $2.75 million, up 28% from Q1 2023. Despite these setbacks, Duos achieved operational milestones, including a $2.7 million contract for a new Railcar Inspection Portal system and acquiring a significant patent. Duos expects $7 million in revenue from backlog contracts in 2024, with anticipated growth in the latter half of the year. Cash reserves stood at $2.98 million as of March 31, 2024.
- Received a $2.7 million contract for a new Railcar Inspection Portal system.
- Acquired an additional patent, bringing the total to 10 for RIP technology.
- Performed over 2.4 million comprehensive railcar scans in Q1 2024.
- Formed a new subsidiary, Duos Edge AI, focusing on Edge Data Centers.
- Cash and cash equivalents increased to $2.98 million as of March 31, 2024.
- Backlog contracts and near-term extensions total over $10 million, with $7 million expected in 2024.
- Q1 2024 revenues decreased by 60% to $1.07 million compared to Q1 2023.
- Gross margin for Q1 2024 decreased 82% to $94,000.
- Operating expenses increased by 6% to $2.86 million.
- Net loss for Q1 2024 increased by 28% to $2.75 million.
- Recurring revenue services and consulting revenue declined by 2%.
Insights
The latest financial results from Duos Technologies Group showed a significant 60% decrease in total revenues for Q1 2024 compared to the same period in 2023. This drastic drop was primarily attributed to the timing of revenue recognition for a major customer, with anticipated recovery in Q4 2024. Such a dramatic decline in revenue can be concerning to investors, despite the management’s explanation. Investors should note that the company has a
Gross margin also saw a sharp decline of
Investors should keep an eye on the company's ability to convert their backlog into revenue and monitor any updates on the postponed project expected in Q4. The management’s optimistic outlook for the latter half of the year should be cautiously evaluated against the backdrop of their current financial health and market conditions. Understanding these nuances can provide a more comprehensive view of Duos Technologies’ potential recovery and long-term growth.
Duos Technologies’ continued innovation in machine vision and AI for analyzing fast-moving vehicles, along with their expanding patent portfolio, reinforces their technical leadership in the industry. The announcement of a new Railcar Inspection Portal (RIP®) system contract valued at approximately
The formation of Duos Edge AI, Inc., aimed at building Edge Data Centers (EDCs), aligns with the growing demand for AI, Edge computing and 5G infrastructure. This initiative places Duos in a strategic position to capitalize on the rapidly evolving AI and Edge computing sectors. The ongoing negotiations with large telecommunications companies could pave the way for significant future growth opportunities.
While these technological strides are noteworthy, retail investors should consider the balance between technological innovation and the company’s current financial performance. The success of these initiatives and their ability to generate substantial revenue will be important in determining Duos Technologies’ future market position.
From a market perspective, Duos Technologies’ strategic initiatives and the expansion of their patented technologies into new markets could potentially open up new revenue streams. The acquisition of a contract for the Railcar Inspection Portal (RIP®) system in a new industrial application environment signifies a shift in their market strategy, aiming to capture a larger share of the non-traditional rail market.
The article featuring Duos Technologies in Forbes and the customer profile by Dell Technologies underscores the company’s growing presence and credibility in the industry. Such endorsements can enhance their market reputation, potentially attracting new clients and partnerships.
However, the timing of revenue recognition remains a important factor. Investors should be vigilant about how the projected revenues materialize in the latter half of 2024, particularly in light of the significant revenue shortfall in Q1. The company’s ability to convert its technological advancements and strategic initiatives into consistent and predictable revenue will be key to its long-term success and market valuation.
Key progress on strategic initiatives and intellectual property sets the foundation for an expected improvement in results for the balance of the year.
JACKSONVILLE, Fla., May 13, 2024 (GLOBE NEWSWIRE) -- Duos Technologies Group, Inc. (“Duos” or the “Company”) (Nasdaq: DUOT), a provider of machine vision and artificial intelligence that analyzes fast moving vehicles, reported financial results for the first quarter (“Q1 2024”) ended March 31, 2024.
First Quarter 2024 and Recent Operational Highlights
- Notified of an award for an additional Railcar Inspection Portal (“rip®” or “RIP®”) system in a new industrial application environment. The contract is expected to be valued at approximately
$2.7 million and installed in 2024. This addition to the Duos portfolio of RIPs currently deployed in North America expands the potential addressable market outside of the traditional passenger and freight rail operators. - Granted further, wide ranging, Patent for "Device to Capture High Resolution images of a Train as it passes through an Inspection Portal" bringing the total number of patents for the RIP technology to 10, covering all aspects of the automated visual inspection of railcars. The Company has a further 6 patents pending for visualization of moving objects.
- Over 2.4 million comprehensive railcar scans performed in the first quarter across 13 portals, of which more than 386,000 were unique railcars. This metric encompasses all railcars scanned at locations across the U.S., Canada, and Mexico, representing approximately
24% of the total freight car population in North America. - Released an article sponsored by Dell Technologies in Forbes magazine (“AI at the Edge; The New Vanguard of Railway Innovation”). Duos was also featured in a Dell Technologies customer profile, highlighting how the Company is performing Artificial Intelligence (“AI”) based railcar inspections at the Edge, enhancing railroad safety.
- Formed a new business, “Duos Edge AI, Inc.”, as a subsidiary of Duos Technologies Group, that plans to build and operate Edge Data Centers (“EDCs”) that provide Edge colocation data services. Duos is currently in negotiations with several large telecommunications companies to support the rollout of AI Information Technology (“IT”) infrastructure at the Edge, using our existing in-house expertise to support the massive demand for AI, Edge computing, and 5G rollout. This is aligned with our strategy to be an important part of the overall AI value chain.
- As of the end of the first quarter, the Company had
$10 million of revenue in backlog and near-term extensions and renewals, and expects$7 million to be recognized during the remainder of 2024.
First Quarter 2024 Financial Results
It should be noted that the following Financial Results represent the consolidation of the Company with its subsidiary Duos Technologies, Inc.
Total revenues for Q1 2024 decreased
Cost of revenues for Q1 2024 decreased
Gross margin for Q1 2024 decreased
Operating expenses for Q1 2024 increased
Net operating loss for Q1 2024 totaled
Net loss for Q1 2024 totaled
Cash and cash equivalents at March 31, 2024 totaled
Financial Outlook
At the end of the first quarter, the Company’s contracts in backlog and near-term renewals and extensions is now more than
Duos anticipates an improvement in operating results to be reflected over the course of the full year in 2024. As a result of timing and other factors, the Company expects revenues in the second quarter of 2024 to be in-line with the first quarter of 2024 before ramping up in the latter half of the year.
Management Commentary
"The Company made solid progress in Q1 particularly in the area of new business development, patent awards and building the foundation for our subscription data offering." said Chuck Ferry, Duos CEO. “While our Q1 results were anticipated, my expectation is that we will deliver growth, particularly in the second half as the results of all our initiatives become booked revenues as indicated by the increase in backlog.”
Conference Call
The Company’s management will host a conference call today, May 13, 2024, at 4:30 p.m. Eastern time (1:30 p.m. Pacific time) to discuss these results, followed by a question-and-answer period.
Date: Monday, May 13, 2024
Time: 4:30 p.m. Eastern time (1:30 p.m. Pacific time)
U.S. dial-in: 877-407-3088
International dial-in: 201-389-0927
Confirmation: 13746314
Please call the conference telephone number 5-10 minutes prior to the start time of the conference call. An operator will register your name and organization.
If you have any difficulty connecting with the conference call, please contact DUOT@duostech.com.
The conference call will be broadcast live via telephone and available for online replay via the investor section of the Company's website here.
About Duos Technologies Group, Inc.
Duos Technologies Group, Inc. (Nasdaq: DUOT), based in Jacksonville, Florida, through its wholly owned subsidiary, Duos Technologies, Inc., designs, develops, deploys and operates intelligent vision-based technology solutions using Machine Vision and Artificial Intelligence (“AI”) to analyze fast moving freight, passenger and transit trains and trucks streamlining operations, improving safety and reducing costs. The Company provides cutting edge solutions that automate the mechanical and security inspection of fast-moving trains, trucks and automobiles through a broad range of proprietary hardware, software, information technology and artificial intelligence. For more information, visit www.duostech.com.
Forward- Looking Statements
This news release includes forward-looking statements regarding the Company's financial results and estimates and business prospects that involve substantial risks and uncertainties that could cause actual results to differ materially. Forward-looking statements relate to future events and typically address the Company's expected future business and financial performance. The forward-looking statements in this news release relate to, among other things, information regarding anticipated timing for the installation, development and delivery dates of our systems; anticipated entry into additional contracts; anticipated effects of macro-economic factors (including effects relating to supply chain disruptions and inflation); timing with respect to revenue recognition; trends in the rate at which our costs increase relative to increases in our revenue; anticipated reductions in costs due to changes in the Company's organizational structure; potential increases in revenue, including increases in recurring revenue; potential changes in gross margin (including the timing thereof); statements regarding our backlog and potential revenues deriving therefrom; and statements about future profitability and potential growth of the Company. Words such as "believe," "expect," "anticipate," "should," "plan," "aim," "will," "may," "should," "could," "intend," "estimate," "project," "forecast," "target," "potential" and other words and terms of similar meaning, typically identify such forward-looking statements. Forward-looking statements involve risks and uncertainties and there are important factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements. These factors include, but are not limited to, the Company's ability to continue as a going concern, the Company's ability to generate sufficient cash to continue and expand operations, the competitive environment generally and in the Company's specific market areas, changes in technology, the availability of and the terms of financing, changes in costs and availability of goods and services, economic conditions in general and in the Company's specific market areas, changes in federal, state and/or local government laws and regulations potentially affecting the use of the Company's technology, changes in operating strategy or development plans and the ability to attract and retain qualified personnel. The Company cautions that the foregoing list of risks, uncertainties and factors is not exclusive. Additional information concerning these and other risk factors is contained in the Company's most recently filed Annual Reports on Form 10-K, subsequent Quarterly Reports on Form 10-Q, recent Current Reports on Form 8-K, and other filings filed by the Company with the U.S. Securities and Exchange Commission (the "SEC"), which are available at the SEC's website, http://www.sec.gov. The Company believes its plans, intentions and expectations reflected in or suggested by these forward-looking statements are based on reasonable assumptions. No assurance, however, can be given that the Company will achieve or realize these plans, intentions or expectations. Indeed, it is likely that some of the Company's assumptions may prove to be incorrect. The Company's actual results and financial position may vary from those projected or implied in the forward-looking statements and the variances may be material. Each forward-looking statement speaks only as of the date of the particular statement. We do not undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any change in our expectations or any change in events, conditions or circumstances on which any forward-looking statement is based, except as required by law. All subsequent written and oral forward-looking statements concerning the Company or other matters attributable to the Company or any person acting on its behalf are expressly qualified in their entirety by the cautionary statements above.
| DUOS TECHNOLOGIES GROUP, INC. AND SUBSIDIARIES | |||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||
| (Unaudited) | |||||||||
| For the Three Months Ended | |||||||||
| March 31, | |||||||||
| 2024 | 2023 | ||||||||
| REVENUES: | |||||||||
| Technology systems | $ | 269,855 | $ | 1,827,764 | |||||
| Services and consulting | 800,825 | 816,524 | |||||||
| Total Revenues | 1,070,680 | 2,644,288 | |||||||
| COST OF REVENUES: | |||||||||
| Technology systems | 583,437 | 1,767,209 | |||||||
| Services and consulting | 392,611 | 339,907 | |||||||
| Total Cost of Revenues | 976,048 | 2,107,116 | |||||||
| GROSS MARGIN | 94,632 | 537,172 | |||||||
| OPERATING EXPENSES: | |||||||||
| Sales and marketing | 553,486 | 307,577 | |||||||
| Research and development | 382,142 | 404,885 | |||||||
| General and Administration | 1,920,050 | 1,971,508 | |||||||
| Total Operating Expenses | 2,855,678 | 2,683,970 | |||||||
| LOSS FROM OPERATIONS | (2,761,046 | ) | (2,146,798 | ) | |||||
| OTHER INCOME (EXPENSES): | |||||||||
| Interest expense | (445 | ) | (1,180 | ) | |||||
| Other income, net | 9,182 | 4,295 | |||||||
| Total Other Income (Expenses) | 8,737 | 3,115 | |||||||
| NET LOSS | $ | (2,752,309 | ) | $ | (2,143,683 | ) | |||
| Basic and Diluted Net Loss Per Share | $ | (0.38 | ) | $ | (0.30 | ) | |||
| Weighted Average Shares-Basic and Diluted | 7,306,949 | 7,156,876 | |||||||
| DUOS TECHNOLOGIES GROUP, INC. AND SUBSIDIARIES | ||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||
| March 31, | December 31, | |||||||
| 2024 | 2023 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash | $ | 2,977,592 | $ | 2,441,842 | ||||
| Accounts receivable, net | 596,090 | 1,462,463 | ||||||
| Contract assets | 912,046 | 641,947 | ||||||
| Inventory | 1,502,337 | 1,526,165 | ||||||
| Prepaid expenses and other current assets | 398,856 | 184,478 | ||||||
| Total Current Assets | 6,386,921 | 6,256,895 | ||||||
| Property and equipment, net | 645,342 | 726,507 | ||||||
| Operating lease right of use asset | 4,289,807 | 4,373,155 | ||||||
| Security deposit | 550,000 | 550,000 | ||||||
| OTHER ASSETS: | ||||||||
| Note Receivable, net | 155,625 | 153,750 | ||||||
| Patents and trademarks, net | 127,357 | 129,140 | ||||||
| Software development costs, net | 587,388 | 652,838 | ||||||
| Total Other Assets | 870,370 | 935,728 | ||||||
| TOTAL ASSETS | $ | 12,742,440 | $ | 12,842,285 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Accounts payable | $ | 179,916 | $ | 595,634 | ||||
| Notes payable - financing agreements | 183,763 | 41,976 | ||||||
| Accrued expenses | 240,483 | 164,113 | ||||||
| Operating lease obligations-current portion | 783,944 | 779,087 | ||||||
| Contract liabilities | 1,692,940 | 1,666,243 | ||||||
| Total Current Liabilities | 3,081,046 | 3,247,053 | ||||||
| Operating lease obligations, less current portion | 4,141,555 | 4,228,718 | ||||||
| Total Liabilities | 7,222,601 | 7,475,771 | ||||||
| Commitments and Contingencies (Note 4) | ||||||||
| STOCKHOLDERS' EQUITY: | ||||||||
| Preferred stock: | ||||||||
| Series A redeemable convertible preferred stock, | - | - | ||||||
| 500,000 shares designated; 0 issued and outstanding at March 31, 2024 and December 31, 2023, respectively, | ||||||||
| convertible into common stock at | ||||||||
| Series B convertible preferred stock, | - | - | ||||||
| 15,000 shares designated; 0 and 0 issued and outstanding at March 31, 2024 | ||||||||
| and December 31, 2023, respectively, convertible into common stock at | ||||||||
| Series C convertible preferred stock, | - | - | ||||||
| 5,000 shares designated; 0 and 0 issued | ||||||||
| and outstanding at March 31, 2024 and December 31, 2023, respectively, | ||||||||
| convertible into common stock at | ||||||||
| Series D convertible preferred stock, | 2 | 1 | ||||||
| 4,000 shares designated; 1,919 and 1,299 issued | ||||||||
| and outstanding at March 31, 2024 and December 31, 2023, respectively, | ||||||||
| convertible into common stock at | ||||||||
| Series E convertible preferred stock, | ||||||||
| 30,000 shares designated; 13,625 and 11,500 issued | ||||||||
| and outstanding at March 31, 2024 and December 31, 2023, respectively, | 14 | 12 | ||||||
| convertible into common stock at | ||||||||
| Series F convertible preferred stock, | ||||||||
| 5,000 shares designated; 0 and 0 issued | ||||||||
| and outstanding at March 31, 2024 and December 31, 2023, respectively, | - | - | ||||||
| convertible into common stock at | ||||||||
| Common stock: | ||||||||
| 7,315,318 and 7,306,663 shares issued, 7,313,994 and 7,305,339 | 7,315 | 7,306 | ||||||
| shares outstanding at March 31, 2024 and December 31, 2023, respectively | ||||||||
| Additional paid-in-capital | 72,025,821 | 69,120,199 | ||||||
| Accumulated deficit | (66,355,861 | ) | (63,603,552 | ) | ||||
| Sub-total | 5,677,291 | 5,523,966 | ||||||
| Less: Treasury stock (1,324 shares of common stock | ||||||||
| at March 31, 2024 and December 31, 2023) | (157,452 | ) | (157,452 | ) | ||||
| Total Stockholders' Equity | 5,519,839 | 5,366,514 | ||||||
| Total Liabilities and Stockholders' Equity | $ | 12,742,440 | $ | 12,842,285 | ||||
| DUOS TECHNOLOGIES GROUP, INC. AND SUBSIDIARIES | |||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
| (Unaudited) | |||||||
| For the Three Months Ended | |||||||
| March 31, | |||||||
| 2024 | 2023 | ||||||
| Cash from operating activities: | |||||||
| Net loss | $ | (2,752,309 | ) | $ | (2,143,683 | ) | |
| Adjustments to reconcile net loss to net cash used in operating activities: | |||||||
| Depreciation and amortization | 158,208 | 116,588 | |||||
| Stock based compensation | 159,320 | 75,128 | |||||
| Stock issued for services | 37,500 | 32,500 | |||||
| Amortization of operating lease right of use asset | 83,348 | 77,101 | |||||
| Changes in assets and liabilities: | |||||||
| Accounts receivable | 866,373 | 2,700,917 | |||||
| Note receivable | (1,875 | ) | - | ||||
| Contract assets | (270,099 | ) | (1,000,590 | ) | |||
| Inventory | 23,828 | (101,167 | ) | ||||
| Prepaid expenses and other current assets | 57,944 | 228,941 | |||||
| Accounts payable | (415,718 | ) | (1,008,207 | ) | |||
| Accrued expenses | 76,370 | (85,371 | ) | ||||
| Operating lease obligation | (82,306 | ) | (8,107 | ) | |||
| Contract liabilities | 26,697 | 1,108,864 | |||||
| Net cash used in operating activities | (2,032,719 | ) | (7,086 | ) | |||
| Cash flows from investing activities: | |||||||
| Purchase of patents/trademarks | (980 | ) | (7,339 | ) | |||
| Purchase of software development | - | (212,067 | ) | ||||
| Purchase of fixed assets | (8,830 | ) | (41,738 | ) | |||
| Net cash used in investing activities | (9,810 | ) | (261,144 | ) | |||
| Cash flows from financing activities: | |||||||
| Repayments on financing agreements | (130,535 | ) | (201,485 | ) | |||
| Repayment of finance lease | - | (11,285 | ) | ||||
| Stock issuance cost | (36,188 | ) | (299,145 | ) | |||
| Proceeds from preferred stock issued | 2,745,002 | 4,000,000 | |||||
| Net cash provided by financing activities | 2,578,279 | 3,488,085 | |||||
| Net increase in cash | 535,750 | 3,219,855 | |||||
| Cash, beginning of period | 2,441,842 | 1,121,092 | |||||
| Cash, end of period | $ | 2,977,592 | $ | 4,340,947 | |||
| Supplemental Disclosure of Cash Flow Information: | |||||||
| Interest paid | $ | - | $ | 1,180 | |||
| Taxes paid | $ | - | $ | - | |||
| Supplemental Non-Cash Investing and Financing Activities: | |||||||
| Notes issued for financing of insurance premiums | $ | 272,322 | $ | 320,004 | |||
FAQ
What were the Q1 2024 revenues for Duos Technologies Group (DUOT)?
What caused the revenue decline for Duos Technologies Group (DUOT) in Q1 2024?
How much is the new Railcar Inspection Portal contract valued for Duos Technologies Group (DUOT)?
How many patents does Duos Technologies Group (DUOT) hold for its RIP technology?
What are the expected revenues from backlog contracts for Duos Technologies Group (DUOT) in 2024?
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