SuperCom Reports Record Profit and 400% YoY EBITDA Growth for the First Quarter 2024

Rhea-AI Summary

SuperCom (NASDAQ: SPCB) reported record financial results for Q1 2024. Revenue increased by 8% to $6.9 million and net income improved to $0.8 million from a loss of $1.5 million in Q1 2023. EBITDA grew by 400% to $2 million. Key highlights include new orders over $5 million from European governments and notable project wins in the USA and Canada. The company also raised $2.9 million in a direct offering. CEO Ordan Trabelsi emphasized the strong financial performance, notable improvements in gross profit margins, and successful strategic initiatives driving growth.

Operating income improved to $0.7 million from a loss of $1.1 million in Q1 2023. Gross profit increased to $3.8 million, with a margin rise to 55%. The company also launched several major projects, notably in California and Finland, leveraging its innovative PureOne and PureSecurity solutions. The company remains committed to leveraging technology and strategic initiatives for continued growth in 2024.

Positive

• Revenue increased by 8% to $6.9 million.
• Net Income improved to $0.8 million from a loss of $1.5 million.
• EBITDA grew by 400% to $2 million.
• Gross Profit increased by 139% to $3.8 million.
• Gross Profit margin increased to 55% from 25%.
• Operating Income improved to $0.7 million from a loss of $1.1 million.
• Operating Margin improved to 10.5% from negative 16.7%.
• EPS improved to $0.04 from negative $0.32.
• Non-GAAP Net Income improved to $1.35 million from a loss of $0.25 million.
• Non-GAAP EPS improved to $0.07 from negative $0.05.
• Working Capital at the end of the quarter was $23.6 million.
• Over $5 million in new orders from European governments.
• New projects in California and Canada, including a $4.25 million contract in Northern California.
• Successful displacement of a long-time competitor in California.
• Launch of a $3.6 million national EM project in Finland using PureSecurity EM Suite.

Negative

• Company raised $2.9 million in a registered direct offering, leading to potential shareholder dilution.

Insights

Financial Analyst

SuperCom's financial performance for Q1 2024 presents strong indicators of financial health and operational efficiency. The company reported a 6.9 million revenue, representing an 8% increase compared to the same period in 2023. This moderate growth in revenue is complemented by a significant improvement in profitability metrics, particularly the 139% increase in Gross Profit to 3.8 million and the gross profit margin climbing to 55%. This suggests that the company has managed to reduce its cost of goods sold significantly or has optimized its high-margin products.

The company's operating income shifted from a loss of 1.1 million to a positive 0.7 million, indicating effective cost management. The notable 400% surge in EBITDA to 2 million emphasizes substantial improvements in operational efficiency, reflecting well on the management's strategy and execution.

Net income also turned positive, reporting 0.8 million, an improvement of 2.3 million from a net loss previously. This is further solidified by a positive EPS of 0.04, compared to a negative EPS of -0.32 in Q1 2023. For a retail investor, these metrics highlight the company’s strong turnaround and potential for sustained profitability.

Furthermore, the company's working capital of 23.6 million ensures liquidity and financial stability, which could bolster investor confidence. Investors should note this substantial improvement in financial health as a strong indicator of potential future growth.

Market Research Analyst

SuperCom's business strategy appears to be gaining traction, particularly in Europe and North America. The company reported receiving over 5.0 million in new orders from European governments, which could signify trust in its technology and ability to deliver. Additionally, new projects in California and Canada, including a 4.25 million contract for adult re-entry services, underline its expanding footprint in these regions.

Particularly noteworthy is SuperCom's ability to displace long-time incumbents through its innovative PureOne solution. This indicates that their technology might be more advanced or cost-effective, giving them a competitive edge. Investors should recognize this as a positive driver for future revenue streams.

The shift to new GPS-based tracking technologies in collaboration with Canadian industry partners further underscores the company's commitment to innovation and adaptation. This will likely enhance their market position in the IoT and cybersecurity sectors, which are poised for significant growth in the coming years.

Tech Expert

SuperCom’s advancements in their PureSecurity EM Suite and PureOne solution highlight significant technological strides. The deployment of these systems in Finland and the expansion into GPS technology in Canada show the company's commitment to leveraging cutting-edge solutions to meet market demands.

The PureSecurity Suite's application across various monitoring programs, including house arrest and domestic violence offender monitoring, indicates that the technology is robust and versatile, catering to different market needs. This breadth of application can drive further adoption in other regions, paving the way for new revenue streams and reinforcing the company's reputation for innovation.

Additionally, the success in using their technology to displace established competitors in California demonstrates the efficacy and value proposition of their offerings. This could be appealing to investors looking for companies with strong technological capabilities capable of disrupting entrenched markets.

Revenue of $6.9 million; Net Income of $0.8 million; EBITDA of $2 million

TEL AVIV, Israel, May 15, 2024 /PRNewswire/ -- 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, 2024. 

First Quarter Ended March 31, 2024, Financial Highlights (Compared to the First Quarter of 2023)

• Revenue increased by 8% to $6.9 million from $6.4 million.
• Gross Profit increased by 139% to $3.8 million from $1.6 million.
• Gross Profit margin increased by 123% to 55% from 25%.
• Operating Income improved by $1.8 million to $0.7 million compared to an Operating Loss of ($1.1) million.
• Operating Margin improved by 27.2 percentage points to 10.5% from negative margin of (16.7%).
• Net Income improved by $2.3 million to $0.8 million compared to Net Loss of ($1.5) million.
• EPS improved by $0.36 to positive $0.04 compared to Negative EPS of ($0.32).
• Non-GAAP Net Income improved by $1.6 million to $1.35 million compared to Net Loss of ($0.25) million.
• Non-GAAP EPS improved by $0.12 to positive $0.07 compared to Negative ($0.05)
• EBITDA increased by 400% to $2 million from $0.4 million.
• Working Capital at the end of the quarter of $23.6 million.

Recent Business Highlights:

• The Company has received over $5.0 million in new orders from European governments.
• The company raised $2.9 million in gross proceeds in a registered direct offering in Q2 2024, providing additional capital to execute the Company's business plan.
• SuperCom, through its wholly-owned subsidiary, LCA, won new project in California valued at up to $2.0 million to provide a comprehensive program focusing on re-entry services for adult inmates, designed to support individuals transitioning back into the community. The award is a result of winning a formal competitive bid process.
• SuperCom launched a $4.25 million contract to provide adult re-entry services in Northern California through its wholly-owned subsidiary, LCA. The project expanding LCA's existing day reporting and electronic monitoring services to include jail-based and community-based sites.
• LCA secured a new EM contract in California with an established California services provider in the judicial sector. This contract is particularly notable for SuperCom's successful displacement of a long-time incumbent competitor, primarily due to SuperCom's new innovative PureOne solution.
• SuperCom won a new project in Canada with a renowned Canadian industry partner in the tracking solutions sector. This new project expands an existing collaboration with a long-standing partner, transitioning from providing RF-based tracking technology to embracing new GPS technologies. This expansion into new GPS technologies with the state-of-the-art PureOne devices underscores the company's commitment to innovation and its ability to adapt to the evolving needs of its clients.
• SuperCom launched a $3.6M national EM project in Finland with the national government in 2023. The PureSecurity EM Suite is fully deployed in Finland, covering all EM offender programs – house arrest, GPS, and inmate monitoring. SuperCom has also 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.

Management Commentary:

"We are pleased to report a strong start to 2024, marked by significant financial and operational achievements. This quarter, we've continued to see revenue growth YoY and a dramatic improvement in our profitability metrics leading to an 8-year-record profit," commented Ordan Trabelsi, President and CEO of SuperCom.

"The substantial growth in our gross profit reflects the inherent quality and high-margin potential of our key projects and our successful progression through different stages of these projects. Typically, the initial stages of these projects involve higher expenses, which subsequently give way to higher gross margins as the projects advance, as demonstrated by this quarter's results. Additionally, our EBITDA year-over-year has seen a remarkable 400% increase. This improvement is a testament to our rigorous management practices and dedication to effectively leveraging our core business infrastructure," Ordan continued.

"Net income has also shown a significant turnaround, with a $2.3 million improvement from a net loss of $1.5 million last quarter to a net profit of $0.8 million this quarter, underscoring our successful strategy and execution. Our ability to continue a positive expansion trajectory is further evidenced by the over $5 million in new orders from European governments and three new projects in the USA and Canada in the past few months. This influx of new business reflects our competitive edge and ability to displace incumbents with our superior technology and service offerings. As we continue to expand our presence in both established and new markets, these projects are expected to contribute to growth and support our reputation as a leader in the industry," Ordan added.

"Moving forward into 2024, we remain committed to leveraging our innovative technology solutions and strategic market initiatives to drive expansion, deliver value to our shareholders, and enhance the safety and efficiency of the communities we serve," Ordan concluded.

Conference Call

The Company will hold a conference call today (May 15, 2024) at 10:00 a.m. Eastern time (5:00 p.m. Israel time) to discuss these results, followed by a question and answer session.

Conference Call Dial-In Information:

Date: Wednesday, May 15, 2024
Time: 10 a.m. Eastern time (7 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
Link: https://www.webcaster4.com/Webcast/Page/2259/50596

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 security and safety, community public safety, law enforcement, electronic monitoring, and domestic violence prevention. 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, 2023, filed with the U.S. Securities and Exchange Commission (the "SEC") on April 22, 2024, 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.

Logo: https://mma.prnewswire.com/media/1717536/SuperCom_Logo.jpg

SuperCom Investor Relations:
ir@supercom.com

[Tables to follow]

 

 

 

SUPERCOM LTD. CONSOLIDATED BALANCE SHEETS (U.S. dollars in thousands)
		As of March 31,			As of December 31,
		2024				2023
		Unaudited				Audited
CURRENT ASSETS
Cash and cash equivalents		1,618				5,206
Restricted bank deposits		369				371
Trade receivable, net		17,300				13,357
Patents		5,283				5,283
Other accounts receivable and prepaid expenses		1,791				1,742
Inventories, net		2,382				2,503
Total current assets		28,743				28,462
LONG-TERM ASSETS
Deferred tax long term		919				501
Property and equipment, net		2,770				2,701
Other intangible assts, net		5,444				5,576
Operating lease right-of-use assets		378				487
Goodwill		7,026				7,026
Total long-term assets		16,537				16,291
Total Assets		45,280				44,753

 

 

 

CURRENT LIABILITIES
Trade payables and other credit		1,376		1,883
Employees and payroll accruals		1,100		1,015
Related parties		98		100
Accrued expenses and other liabilities		521		485
Short-term Operating lease liabilities		387		401
Short-term credit		812		792
Deferred revenues ST		839		726
Total current liabilities		5,133		5,403
LONG-TERM LIABILITIES
Long-term loan		34,338		33,952
Deferred revenues		49		305
Deferred tax liability LT		170		170
Long-term Operating lease liabilities		-		108
Total long-term liabilities		34,557		34,535
SHAREHOLDERS' EQUITY:
Ordinary shares		9,094		9,094
Additional paid-in capital		102,670		102,670
Accumulated deficit		(106,174)		(106,948)
Total shareholders' equity		5,590		4,816
Total liabilities and equity		45,280		44,754

 

 

 

SUPERCOM LTD. CONSOLIDATED STATEMENTS OF OPERATIONS (U.S. dollars in thousands)
		Three months ended
			March 31, 2024	March 31, 2023
		Unaudited		Unaudited
REVENUES			6,852	6,376
COST OF REVENUES			(3,065)	(4,794)
GROSS PROFIT			3,787	1,582
OPERATING EXPENSES:
Research and development			901	813
Selling and marketing			524	572
General and administrative			1,389	1,084
Other expense (income), net			255	176
Total operating expenses			3,069	2,645
OPERATING PROFIT (LOSS)			718	(1,063)
FINANCIAL EXPENSES, NET			(362)	(472)
PROFIT (LOSS) BEFORE INCOME TAX			356	(1,535)
INCOME TAX EXPENSE (BENEFIT)			(418)	-
NET INCOME (LOSS) FOR THE PERIOD			774	(1,535)
EPS			0.04	(0.32)

 

 

 

SUPERCOM LTD. Reconciliation Table of GAAP to Non-GAAP Figures and EBITDA to Net Income (U.S. dollars in thousands)
		Three months ended
			March 31, 2024	March 31, 2023
		Unaudited		Unaudited
GAAP gross profit			3,787	1,582
Amortization of intangible assets			88	88
Non-GAAP gross profit			3,875	1,670
GAAP Operating Profit (Loss)			718	(1,063)
Amortization of intangible assets			513	530
Foreign Currency Loss			200	520
Other one-time expenses			280	229
Non-GAAP operating profit			1,711	216

 

 

	GAAP net Profit (Loss)			774	(1,535)
	Amortization of intangible assets			513	530
	Income tax expenses (benefit)			(418)	-
	Foreign Currency Loss			200	520
	Other one-time expenses			280	229
	Non-GAAP net Profit (Loss)			1,349	(256)
	Non-GAAP EPS			0.07	(0.05)
	Net Profit (Loss) for the period			774	(1,535)
	Financial expenses (income), net			362	472
Income tax expenses (benefit)				(418)	-
	Depreciation and Amortization			767	697
	Foreign Currency Loss			200	520
	Other one-time expenses			280	229
	EBITDA *			1,965	383
	* EBITDA is a non-GAAP financial measure generally defined as earnings before interest, depreciation and amortization and other non-cash or one-time expenses .

 

 

 

View original content:https://www.prnewswire.com/news-releases/supercom-reports-record-profit-and-400-yoy-ebitda-growth-for-the-first-quarter-2024-302146231.html

SOURCE SuperCom

FAQ

What were SuperCom's Q1 2024 revenues?

SuperCom reported revenues of $6.9 million for Q1 2024.

How did SuperCom's net income change in Q1 2024?

Net income improved to $0.8 million in Q1 2024 from a net loss of $1.5 million in Q1 2023.

What was SuperCom's EBITDA growth in Q1 2024?

SuperCom's EBITDA grew by 400% to $2 million in Q1 2024.

What new orders did SuperCom secure in Q1 2024?

SuperCom received over $5 million in new orders from European governments in Q1 2024.

What was SuperCom's gross profit margin in Q1 2024?

SuperCom's gross profit margin increased to 55% in Q1 2024 from 25% in Q1 2023.

What new projects did SuperCom launch in Q1 2024?

SuperCom launched major projects in California, including a $4.25 million contract for re-entry services and a $3.6 million national EM project in Finland.

How did SuperCom's EPS change in Q1 2024?

SuperCom's EPS improved to $0.04 in Q1 2024 from negative $0.32 in Q1 2023.

What was SuperCom's operating income in Q1 2024?

SuperCom's operating income improved to $0.7 million in Q1 2024 from a loss of $1.1 million in Q1 2023.

What impact did SuperCom's recent direct offering have?

SuperCom raised $2.9 million in a direct offering, which could potentially cause shareholder dilution.

What is SuperCom's working capital at the end of Q1 2024?

SuperCom's working capital was $23.6 million at the end of Q1 2024.