Release Date: November 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Year-to-date revenue increased by over 26% compared to the prior year.
- Bookings within the MilGov sector are gaining momentum, with numerous field product evaluations underway.
- Deployment of systems with the U.S. Department of Homeland Security and an order from the D.C. Metro Police Department highlight strong demand.
- A new ERP system was launched to optimize operations, expected to deliver annualized savings of over $6 million starting in Q4.
- International market growth is strong, with significant projects secured in Brazil, Mexico, Georgia, and Malaysia.
Negative Points
- Third-quarter revenue showed a temporary decline due to seasonal softness in the Live Production sector.
- Net loss for the quarter increased to $3 million, compared to $2 million in the prior year period.
- Gross margin decreased to 51% from 54% in the prior year period.
- Delays in procurement activities in the Middle East due to geopolitical tensions impacted revenue.
- Higher fixed costs and increased expenses for ERP implementation and R&D investments affected profitability.
Q & A Highlights
Q: Did you share the total pipeline, and has it been impacted by short-term challenges?
A: The pipeline is currently around $50 million, up from $48 million previously. Half of this is MilGov opportunities, which is positive as it traditionally accounted for less than 30% of revenue. The Live Production side also continues to see opportunities, despite some softness this quarter due to the Olympics.
Q: Regarding the MilGov business, you mentioned a delayed order in the Middle East. How significant was this order, and what are your expectations given the ongoing tensions?
A: The delayed order involves a customer with over 200 rotary helicopters and fixed-wing aircraft. We expect to resume the demonstration and trial early next year, with an anticipated six-month delay.
Q: Can you elaborate on the diversification of the MilGov pipeline?
A: The pipeline is robust, with recent deployments in Baltimore City, Baltimore County, New Jersey State Police, and D.C. Metro. We also secured an order from the Danish MOD, indicating growth in the U.S., Middle East, Europe, and Asia.
Q: Can you quantify the percentage of revenue from MilGov in the third quarter?
A: Out of the $7 million in revenue, Live Production accounted for $4.4 million, MilGov for $1.8 million, and service revenue for $700,000.
Q: Are you seeing a pickup in live entertainment post-Olympics, and what are the expectations for the fourth quarter?
A: We are seeing increased quoting and purchasing activity, with a good start to the current quarter. However, we expect a sluggish fourth quarter, with much of the activity being back-end loaded for deliverables next year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
