Release Date: November 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Tantalus Systems Holding Inc (TNTLF, Financial) reported a solid year-over-year revenue growth of 14%, reaching $11.6 million in the third quarter of 2024.
- The company achieved a strong gross profit margin of 56% for the third quarter, driven by a favorable revenue mix.
- Tantalus Systems Holding Inc (TNTLF) successfully generated revenue from the TRUSense Gateway for the first time, marking a significant milestone.
- The company converted $40.2 million in orders in the first nine months of 2024, representing a 46% growth compared to the previous year.
- Recurring revenue became a significant part of the revenue stream, contributing 29% of total revenue in the third quarter, the highest to date for the company.
Negative Points
- Tantalus Systems Holding Inc (TNTLF) reported a net loss of $361,000 during the third quarter of 2024, which included $545,000 of non-cash expenses.
- The company's cash balance declined quarter-over-quarter, attributed to the timing of invoicing and collecting annual recurring revenue.
- Despite the positive adjusted EBITDA, the company continues to face challenges with non-cash expenses such as depreciation and foreign exchange.
- The trailing 12-month revenue was lower than the prior period due to record revenue performance in the fourth quarter of 2022.
- The company invested approximately $5.4 million in the development of the TRUSense Gateway over the last 12 months, impacting adjusted EBITDA results.
Q & A Highlights
Q: Good growth in SaaS and ARR, is this a new quarterly baseline to model from?
A: It represents the highest contribution at 29%, influenced by the annual renewal of a term-based software license with a large utility. This quarter's performance is higher than the normal run rate due to this renewal. While ARR has been growing, it will likely trend down slightly in Q4 but continue to grow year-on-year.
Q: Can you provide perspective on the pipeline for TRUSense and expectations for 2025?
A: The opportunity for the TRUSense Gateway remains robust, with a pipeline of $0.5 billion. The number of utilities beyond the advisory committee remains favorable, and we expect continued momentum into 2025.
Q: Any updates on regulatory approval for the cellular version of the Gateway?
A: We have received FCC sign-off for the cellular gateway, and PTCRB testing is complete. We are awaiting the report, but production and manufacturing have already begun.
Q: What insights have been gained from pilot programs with TRUSense?
A: Of the 21 utilities that placed orders, 18 are beyond the advisory committee. We have not encountered significant surprises, and the number of use cases is expanding. Utilities are identifying additional use cases beyond the initial scope.
Q: How might the new U.S. President affect funding sources for projects?
A: We do not anticipate disruptions to the Infrastructure and Jobs Act. There may be changes to tax credits in the IRA, but support for microgrids and distributed energy resources is expected to continue. We are monitoring potential tariff changes closely.
Q: Can you share more about the new utilities added and expectations for them?
A: The new utilities fall within our target market of public power and electric cooperatives. Our holistic approach to grid modernization is resonating, and joint action agencies are playing a role in supporting smaller utilities.
Q: What is the expected impact of TRUSense commercialization costs on future margins?
A: Of the $5.4 million spent on TRUSense commercialization, $1.5 million were external costs that will go away. Some savings will be reinvested in sales and marketing to capitalize on growth opportunities.
Q: What are the biggest insights from customer use of TRUSense?
A: The TRUSense Gateway is being used for power quality measurement and data collection at various grid locations. This expands its use beyond initial expectations, enhancing our communications networking capabilities.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
