SuperCom Reports 51% Annual Revenue Growth, Non-GAAP EPS of $0.47 and 5-Year-Record EBITDA of $4.8 million for Full Year 2023

Rhea-AI Summary

SuperCom reports impressive financial results for the full year 2023, including a 51% annual revenue growth, Non-GAAP EPS of $0.47, and a 5-year-record EBITDA of $4.8 million. The company achieved significant milestones in revenue, EBITDA, and gross profit, showcasing strong performance across its segments and regions. SuperCom also secured several high-value contracts and projects in California, Canada, Romania, and Finland, highlighting its global expansion and technological advancements. Management expressed confidence in sustaining growth momentum and enhancing shareholder value in the upcoming year.

Positive

• Annual revenue increased by 51% to $26.6 million, with revenue from European countries growing by 85% and IoT segment revenue increasing by 52%
• Gross profit increased by 60% to $10.2 million
• Net loss improved to ($4.0) million from a ($7.5) million net loss
• Non-GAAP net profit in 2023 improved to $3.2 million compared to a ($2.3) million net loss
• EBITDA surged by 2350% to $4.8 million
• SuperCom secured multiple new projects and contracts in California, Canada, Romania, and Finland, with values ranging from $2.0 million to $4.25 million
• Technological advancements include the launch of PureProtect for domestic violence monitoring and PureOne for the North American market, with plans for advanced AI integration into the PureSecurity platform

Negative

• None.

Insights

Financial Analyst

SuperCom's report of a 51% annual revenue increase to $26.6 million with an EBITDA growth of 2350% is a substantial indicator of the company's financial turnaround, especially considering the context of a previous net loss of $7.5 million improving to a net loss of $4.0 million. What's particularly of interest is the non-GAAP EPS improvement from $(0.61) to $0.47, which may suggest a positive adjustment in the company's profitability measures. For investors, this could indicate a strengthening balance sheet and a potentially enhanced shareholder value. The growth in European revenues and IoT segment also illustrates market penetration and diversification. Long-term, the expansion in recurring contracts and new technological advancements hint at a sustainable growth model, but investors should also be cognizant of the underlying net losses, which still reflect some financial vulnerability.

Tech Industry Analyst

The technological developments and contract wins noted by SuperCom, such as the advanced AI integration and rollouts of new solutions like PureProtect for domestic violence monitoring, are indicative of the company's commitment to innovation and expansion in the electronic monitoring industry. The impact of these developments on the stock could potentially be significant as they not only help maintain a competitive edge but also open new revenue streams. The multi-year contracts for alcohol monitoring technologies and national programs in Finland and other regions show a strategic move towards creating a stable long-term income source. Investors should watch for the effective implementation and market adoption of these technologies as they are critical to the company's future growth.

Market Research Analyst

The impressive revenue growth and strategic wins in competitive markets underscore SuperCom's ability to not just survive but thrive amidst industry rivals. The reported 85% revenue jump in European operations signifies a strong foothold in international markets, which diversifies risk and potentially mitigates the impact of geopolitical or regional economic downturns. For an investor, the combination of SuperCom's multi-year contracts and new market entries present potential upsides. However, considering the industry's fast-paced and ever-evolving nature, vigilance on the company's ability to continue innovating and adapting to new tech trends will be critical in determining long-term success.

FY 2023: 5-year-record Revenues $26.6 million; EBITDA Growth of 2350%
Q4 2023: Revenues $5.7 million; EBITDA $1.1 million; Non-GAAP EPS of $0.15

TEL AVIV, Israel , April 22, 2024 /PRNewswire/ -- SuperCom (NASDAQ: SPCB), a global provider of secured solutions for the e-Government, IoT, and Cybersecurity sectors, today reported results for the twelve months and fourth quarter, ended December 31, 2023.

Financial Highlights for Twelve-Months Ended December 31, 2023 (Compared to the Prior Year Period)

• Annual Revenue increased by 51% to $26.6 million from $17.6 million, marking a third consecutive year of revenue growth
• Revenue from European countries increased by 85% to $17.7 million from $9.6 million
• IoT Segment Revenue increased by 52% to $23.8 million from $15.6 million
• Gross profit increased by 60% to $10.2 million from $6.4 million
• Net Loss in 2023 improved to a ($4.0) million loss from a ($7.5) million Net Loss
• Non-GAAP Net Profit in 2023 improved to a $3.2 million profit compared to a ($2.3) million Net Loss
• EBITDA increased 2350% to $4.8 million from $0.2 million
• Non-GAAP EPS improved to $0.47 compared to $(0.61)
• Cash, and cash equivalents and restricted cash, at end of 2023 increased to $5.6 million from $4.5 million

Financial Highlights for Fourth Quarter 2023 Ended December 31, 2023 (Compared to the Fourth Quarter of 2022)

• Revenue increased 11% to $5.7 million from $5.1 million
• Gross profit increased 44% to $2.3 million from $1.6 million
• Gross margin increased to 41.4% from 32%.
• Net Loss of ($1.6) million loss from ($0.1) million Loss
• EBITDA increased 43% to $1.1 million from $0.8 million
• Working Capital at end of 2023 increased to $23.1 million from $21.1 million

Business Highlights:

• SuperCom, through its wholly owned subsidiary, LCA, won new project in California valued at up to $2.0 million to provide a comprehensive jail-based program focusing on re-entry services for adult inmates.
• LCA secured new EM contract in California with an established California services provider in the judicial sector, displacing an incumbent competitor.
• SuperCom won new project in Canada with a renowned Canadian industry partner in the tracking solutions sector.
• SuperCom received a third order of $3.4 million from Romania's Ministry of Interior, which was delivered in the fourth quarter of 2023.
• SuperCom won and launched a $3 million contract to deliver Alcohol Monitoring technologies in California through its wholly-owned subsidiary, LCA. This contract is expected to extend till 2026.
• SuperCom has expanded its footprint in Finland by securing and launching a national program for the Electronic Monitoring of Domestic Violence offenders. This program leverages SuperCom's cutting-edge PureSecurity Suite to empower Finnish authorities to enhance citizen safety.
• SuperCom launched a $3.6M national EM project in Finland with the national government in Q1 2023. By May 2023, the PureSecurity EM Suite was fully deployed in Finland, covering all EM offender programs – house arrest, GPS, and inmate monitoring.
• SuperCom launched a $4.25 million contract to provide adult re-entry services in Northern California through its wholly-owned subsidiary, LCA. The project began in 2023, expanding LCA's existing day reporting and electronic monitoring services to include jail-based and community-based sites.
• SuperCom launched a new project in Iceland, upgrading the company's deployed system to support secured issuance of National ID cards and passports.
• SuperCom has significantly upgraded its technological suite, rolling out PureProtect for domestic violence monitoring alongside the comprehensive PureOne GPS tracking solution. The company has completed designs for advanced AI integration into the PureSecurity platform, and implementation is underway.

Management Commentary:

"We are immensely proud of our performance in 2023, surpassing expectations and delivering record-breaking growth and profitability. Our relentless pursuit of excellence and strategic initiatives propelled us to new heights, cementing our position as a frontrunner in the electronic monitoring industry," commented Ordan Trabelsi, President and CEO of SuperCom.

"Our expansion efforts globally yielded remarkable results, with annual revenue growth of 51% to a 5-year-record $26.6 million in annual revenues. We have not only sustained our growth trajectory but also accelerated it compared to the prior year, and in both years, outpaced the average industry growth by several multiples. We also achieved astonishing growth in EBITDA to a 5-year-record level of $4.8 million, reflecting operating leverage and cost optimizations. This growth is a testament to our competitive edge and ability to secure significant contracts, such as the $33 million national domestic violence project and other multiple high-value projects in Europe and California, reflecting our commitment to excellence and our ability to meet the diverse needs of our international clientele," continued Ordan.

"2023 also marked a year of pivotal technological evolution and innovation at SuperCom. We have designed advanced AI capabilities that are set to be integrated into our PureSecurity platform. Moreover, we significantly upgraded our technological suite and rolled out new solutions like PureProtect for domestic violence monitoring and PureOne for the North American market. These enhancements have allowed us to stay at the forefront of the electronic monitoring of offenders industry, consistently delivering solutions that meet and exceed the high standards our clients expect from us," continued Ordan.

"Looking ahead to 2024, we are focused on sustaining our momentum and leveraging our technological advancements to further penetrate existing markets and enter new ones. With a robust pipeline of projects and opportunities, coupled with our strong track record and recurring customer base, we are poised for continued expansion in the years to come. We remain committed to delivering superior value to our shareholders and enhancing the safety and security of the communities we serve," Ordan concluded.

Conference Call

The Company will hold a conference call on April 22, 2024, at 8:30 a.m. Eastern Time (3:30 p.m. Israel time) to discuss the fourth quarter and year end 2023 results, followed by a question and answer session.

Conference Call Dial-In Information:
Date:	Monday, April 22, 2024
Time:	8:30 a.m. Eastern Time / 5:30 a.m. Pacific Time
U.S. toll-free:	888-506-0062
Israel toll-free:	1-809-423-853
International:	973-528-0011
Access Code:	SuperCom

Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization.

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 levels of consumer, business and economic confidence generally, the adverse effects of these risks 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, 2022, filed with the U.S. Securities and Exchange Commission (the "SEC") on April 20, 2023, 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 the generally accepted accounting principles in the United States ("GAAP"), this release 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 SuperCom's ongoing 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. The presentation of these non-GAAP financial measures is not intended to be considered in isolation from, or as a substitute for, or superior to, operating loss and or net income (loss) or any other performance measures derived in accordance with GAAP or as an alternative to net cash provided by operating activities or any other measures of our cash flows or liquidity.

Non-GAAP EPS is defined as earnings before amortization and other non-cash or one-time expenses divided by weighted average outstanding shares.

EBITDA is defined as earnings before interest, taxes, depreciation, amortization, and other non-cash or one-time expenses.

SuperCom Investor Relations:
ir@supercom.com

-Tables Follow-

SUPERCOM LTD. CONSOLIDATED BALANCE SHEETS (U.S. dollars in thousands)
		As of December 31,
		2023			2022
		Unaudited			Audited
CURRENT ASSETS
Cash and cash equivalents		5,206			4,042
Restricted bank deposits		371			463
Trade receivable, net		13,357			10,852
Patents		5,283			5,283
Other accounts receivable and prepaid expenses		1,742			2,239
Inventories, net		2,503			3,411
Total current assets		28,462			26,290
LONG-TERM ASSETS
Severance pay funds		-			482
Deferred tax long term		501			501
Property and equipment, net		2,701			1,640
Other intangible assts, net		5,576			5,617
Operating lease right-of-use assets		487			484
Goodwill		7,026			7,026
Total long-term assets		16,291			15,750
Total Assets		44,753			42,040

 

CURRENT LIABILITIES
Short-term credit		792		900
Trade payables		1,883		1,267
Employees and payroll accruals		1,015		1,339
Related parties		100		168
Accrued expenses and other liabilities		485		469
Short-term Operating lease liabilities		401		381
Deferred revenues ST		726		715
Total current liabilities		5,403		5,239
LONG-TERM LIABILITIES
Long-term loan		33,952		32,600
Deferred revenues		305		269
Deferred tax liability LT		170		170
Accrued severance pay		-		523
Long-term Operating lease liabilities		108		108
Total long-term liabilities		34,535		33,670
SHAREHOLDERS' EQUITY:
Ordinary shares		9,094		3,057
Additional paid-in capital		102,670		103,000
Accumulated deficit		(106,948)		(102,926)
Total shareholders' equity		4,816		3,131
Total liabilities and equity		44,754		42,040

 

SUPERCOM LTD. CONSOLIDATED STATEMENTS OF OPERATIONS (U.S. dollars in thousands)
		Year ended December 31,
			2023		2022
		Unaudited			Audited
REVENUES			26,570		17,649
COST OF REVENUES			(16,347)		(11,261)
GROSS PROFIT			10,223		6,388
OPERATING EXPENSES:
Research and development			3,110		3,412
Selling and marketing			2,200		2,657
General and administrative			5,460		5,186
Other expense (income), net			2,812		1,138
Total operating expenses			13,582		12,393
OPERATING LOSS			(3,359)		(6,005)
FINANCIAL EXPENSES, NET			(663)		(1,751)
LOSS BEFORE INCOME TAX			(4,022)		(7,756)
INCOME TAX EXPENSE			-		299
NET LOSS FOR THE PERIOD			(4,022)		(7,457)

 

SUPERCOM LTD. Reconciliation Table of GAAP to Non-GAAP Figures and EBITDA to Net Income (U.S. dollars in thousands)
		Year ended December 31,
			2023	2022
		Unaudited		Unaudited
GAAP gross profit			10,223	6,388
Amortization of intangible assets			354	354
One-time inventory write-off			180	138
Stock-based compensation expenses			13	17
Non-GAAP gross profit			10,770	6,897
GAAP Operating Loss			(3,359)	(6,005)
Amortization of intangible assets			2,144	1,960
Stock-based compensation expenses			243	138
One-time inventory write-off			180	138
Foreign Currency Loss			1,247	2,086
One-time reorganization expenses			1,967	180
Allowance for doubtful debt in legacy business			1,457	1,000
Non-GAAP operating profit			3,849	(503)

GAAP net Loss			(4,022)	(7,457)
Amortization of intangible assets			2,114	1,960
Stock-based compensation expenses			243	138
One-time inventory write-off			180	138
Foreign Currency Loss			1,247	2,086
Income tax expense			-	(299)
One-time reorganization expenses			1,967	180
Allowance for doubtful debt in legacy business			1,457	1,000
Non-GAAP net Profit (Loss)			3,186	(2,254)
Non-GAAP E.P.S			0.47	(0.61)
Net loss for the period			(4,022)	(7,457)
Income tax expense			-	(299)
Financial expenses (income), net			663	1,751
Depreciation and Amortization			3,104	2,660
One-time inventory write-off			180	138
Stock-based compensation expenses			243	138
Foreign Currency Loss			1,247	2,086
Allowance for doubtful debt in legacy business			1,457	1,000
One-time reorganization expenses			1,967	180
EBITDA *			4,839	197
* 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.

 

SUPERCOM LTD. CONSOLIDATED STATEMENTS OF OPERATIONS (U.S. dollars in thousands)
		Three months ended
			December 31, 2023	December 31, 2022
		Unaudited		Unaudited
REVENUES			5,668	5,122
COST OF REVENUES			(3,320)	(3,481)
GROSS PROFIT			2,348	1,641
OPERATING EXPENSES:
Research and development			651	662
Selling and marketing			541	542
General and administrative			1,993	1,328
Other expense, net			1,614	1,138
Total operating expenses			4,799	3,670
OPERATING LOSS			(2,451)	(2,029)
FINANCIAL EXPENSES, NET			896	1,627
LOSS BEFORE INCOME TAX			(1,555)	(402)
INCOME TAX EXPENSE			-	299
NET LOSS FOR THE PERIOD			(1,555)	(103)

 

SUPERCOM LTD.
Reconciliation Table of GAAP to Non-GAAP Figures and EBITDA to net Income
(U.S. dollars in thousands)
			Three  months ended
			December 31,
			2023		2022
			Unaudited		Unaudited
GAAP gross profit			2,348		1,641
Amortization of intangible assets			89		89
One-time inventory write-off			180		138
Stock-based compensation expenses			13		17
Non-GAAP gross profit			2,630		1,885
GAAP Operating Loss			(2,451)		(2,029)
Amortization of intangible assets			685		549
Stock-based compensation expenses			243		138
One-time inventory write-off			180		138
Foreign Currency Loss			238		607
One-time reorganization expenses			451		180
Allowance for doubtful debt in legacy business			1,457		1,000
Non-GAAP operating profit			803		583
GAAP net Loss				(1,555)	(103)
Amortization of intangible assets				685	549
Stock-based compensation expenses				243	138
One-time inventory write-off				180	138
Foreign Currency Loss				238	607
Income tax expense				-	(299)
One-time reorganization expenses				451	180
Allowance for doubtful debt				1,457	1,000
Non-GAAP net Profit				1,699	2,210
Non-GAAP E.P.S				0.15	0.53
Net loss for the period				(1,555)	(103)
Income tax expense				-	(299)
Financial expenses (income), net				(896)	(1,627)
Depreciation and Amortization				975	732
One-time inventory write-off				180	138
Stock-based compensation expenses				243	138
Foreign Currency Loss				238	607
Allowance for doubtful debt in legacy business				1,457	1,000
One-time reorganization expenses				451	180
EBITDA *				1,093	766
* 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

FAQ

What was SuperCom's annual revenue growth rate in 2023?

SuperCom reported an impressive 51% annual revenue growth in 2023, reaching $26.6 million.

What was the EBITDA growth percentage for SuperCom in 2023?

SuperCom's EBITDA increased by a significant 2350% to $4.8 million in 2023.

Which segment saw a 52% revenue increase for SuperCom in 2023?

The IoT segment of SuperCom experienced a substantial 52% revenue increase, reaching $23.8 million in 2023.

What new projects did SuperCom win in California in 2023?

SuperCom won a new project valued at up to $2.0 million in California to provide re-entry services for adult inmates and secured an EM contract with a California services provider in the judicial sector.

What technological advancements did SuperCom introduce in 2023?

SuperCom launched new solutions like PureProtect for domestic violence monitoring and PureOne for the North American market, with plans for advanced AI integration into the PureSecurity platform.