SuperCom (NASDAQ: NASDAQ:), a global provider of electronic monitoring and identification solutions, reported a record-breaking net income of $800,000 for the first quarter of 2024. This marks a significant improvement from the previous year, with a $2.3 million increase.

The company’s financial performance was bolstered by strategic acquisitions and the expansion of its market presence in the United States and Europe. SuperCom’s proprietary technology and services, including its electronic monitoring solutions for government tenders, have been instrumental in its growth.

The company’s focus on innovation and strategic acquisitions, such as the 2016 purchase of LCA for $3 million, have paved the way for new project wins and increased profitability.

Key Takeaways

  • SuperCom achieved a record net income of $800,000 in Q1 2024, a $2.3 million year-over-year increase.
  • Gross profit margin rose by 123% to 55%, with a gross profit increase of 139% to $3.8 million.
  • The company has sustained positive EBITDA for four years, with a $400,000 year-over-year increase to $2 million.
  • Significant growth attributed to strategic acquisitions and expansion in the US and Europe.
  • SuperCom’s technology has been successful in winning government tenders and expanding its market with innovative solutions.

Company Outlook

  • SuperCom plans to enhance growth through strategic acquisitions of local electronic monitoring service providers.
  • The company is focusing on expanding its market share in the US and Europe.
  • Continued investment in technology and innovation is a priority for driving future growth.

Bearish Highlights

  • The company acknowledged the need to raise capital to support growth, which might lead to dilution of existing shareholders.
  • Payment terms are typically dictated by government contracts, offering limited flexibility for upfront payments.
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Bullish Highlights

  • SuperCom’s strategic acquisitions have generated significant value, with $35 million in new project wins in California.
  • The company has successfully launched innovative solutions like PureProtect and PureOne, expanding its addressable market.
  • SuperCom has secured new projects in California and Canada, bolstering its presence in North America.

Misses

  • No specific misses were discussed during the earnings call.

Q&A Highlights

  • CEO Ordan Trabelsi expressed satisfaction with the company’s growth and profitability.
  • Analysts were pleasantly surprised by the revenue of $6.9 million, surpassing the estimated $5.7 million.
  • SuperCom is actively bidding on projects in Europe and the US and assessing the potential to enter the migrant monitoring market.
  • The company is working on improving payment structures and terms with government customers as it becomes an industry leader.

In summary, SuperCom’s first quarter of 2024 has set a new precedent for its financial performance, driven by strategic moves and an expanding market presence. The company’s focus on government tenders, innovative technology, and strategic acquisitions has positioned it well for sustained growth and profitability.

Despite the challenges of raising capital and the constraints of government contract payment terms, SuperCom remains optimistic about its future and is committed to increasing shareholder value.

InvestingPro Insights

SuperCom’s recent financial achievements are noteworthy, but a closer look at the company’s broader financial health and market performance is essential for investors. According to InvestingPro data, SuperCom has a market capitalization of approximately $5.14 million, indicating a relatively small size within the industry.

The Price/Earnings (P/E) ratio stands at -0.38, reflecting investor sentiment about the company’s earnings potential. Despite the negative P/E ratio, SuperCom has shown a substantial revenue growth of 50.55% over the last twelve months as of Q1 2023, which may be a sign of the company’s capacity to increase sales and potentially improve its profitability in the future.

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InvestingPro Tips suggest that SuperCom operates with a significant debt burden and is quickly burning through cash, which could be a concern for its financial stability. Still, the company has seen a strong return over the last week, with a 13.68% price total return, showcasing a short-term positive performance in the market. It is also worth noting that while the stock has experienced high price volatility, analysts predict the company will be profitable this year, which could be a turning point for SuperCom.

Investors interested in a more comprehensive analysis of SuperCom’s financials and market performance can find additional tips on InvestingPro, with a total of 16 tips available for a deeper dive into the company’s outlook. Utilize coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro, and gain access to valuable insights that could inform investment decisions.

Full transcript – Supercom Ltd (SPCB) Q1 2024:

Operator: Ladies and gentlemen, good morning, and welcome to SuperCom’s First Quarter of 2024 Financial Results and Corporate Update Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Participants of this call are advised that the audio of this conference call is being broadcast live over the internet and is also recorded for playback purposes. Joining me from SuperCom’s leadership team is Ordan Trabelsi, SuperCom’s President and Chief Executive Officer. I’d like to remind you that, during this call, SuperCom’s management may be making forward-looking statements, including statements that address SuperCom’s expectations for future performance or operational results. Forward-looking statements involve risks, uncertainties and other factors that may cause SuperCom’s actual results to differ materially from those statements. For more information about these risks, uncertainties and factors, please refer to the risk factors described in SuperCom’s most recently filed periodic reports on Form 20-F and Form 6-K, and SuperCom’s press release that accompanies this call, particularly the cautionary statements in it. Today’s conference call includes EBITDA, a non-GAAP financial measure that SuperCom believes can be useful in evaluating its performance. You should not consider this additional information in isolation or as a substitute for results prepared in accordance with GAAP. For a reconciliation of this non-GAAP financial measure to net loss, a comparable GAAP financial measure, please see the reconciliation table located in SuperCom’s earnings press release that accompanies this call. Reconciliations for other non-GAAP financial measures and comparable GAAP financial measures are available there as well. The content of this call contains time-sensitive information that is accurate only as of today, May 15, 2024. Except as required by law, SuperCom disclaims any obligation to publicly update or revise any information to reflect events or circumstances that occur after this call. It is now my pleasure to turn the floor over to SuperCom’s President and CEO, Ordan Trabelsi.

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Ordan Trabelsi: Thank you, Operator. Good morning, everyone, and thank you for joining us today. Earlier this morning, we issued a press release with our financial results for the first quarter of 2024. You can find a copy of it in the Investor Relations section of our Web site at supercom.com. Today, I’ll start my comments with a brief update on our recent business highlights, strategy, and Q1 results, followed by a Q&A session. SuperCom had a great start to the year with a strong first quarter. We achieved an eight-year record quarterly net income of $800,000, representing $2.3 million improvement year-over-year. We’re thrilled with this outstanding performance, and look forward to maintaining this momentum in the coming quarters. During the quarter, we executed and advanced on various projects in our portfolio such as the $33 million national EM project in Romania. We utilized operating leverage and prior investments in our proprietary technology to achieve a significant EBITDA increase of 400% year-over-year, to a level of $2 million EBITDA this quarter. For those new to SuperCom, our mission is to revolutionize the public safety sector worldwide with our proprietary electronic monitoring technology, data intelligence, and suite of complimentary services. With over 35 years of experience since our founding in 1988, we’ve been a trusted partner to dozens of national governments worldwide, providing cutting-edge electronic and digital security solutions. Our strategic blueprint is straightforward, yet powerful, lead with innovative technology, develop superior solutions, expand our global presence and deliver outstanding service. This strategy is backed by the following. Our proprietary electronic monitoring technology, which scores highly in competitive government tenders and supports various programs such as house arrest, GPS monitoring, rehabilitation services, domestic violence prevention and more. And since 2018, SuperCom has secured over 50 new multi-year government projects. Our strong growing reputation as a premium provider of electronic monitoring solutions and services enhances our market position with each new customer win and our strategic focus on the IoT tracking business in developed markets, where the opportunity is greatest. The electronic market is projected to reach $2.3 billion by 2028. The electronic monitoring market, the U.S., and Europe constitute about 95% of these markets. Altogether, these successes and opportunities have resulted in a growing project pipeline and substantial recurring revenue. Last year, we continue to amplify our technological leadership with significant R&D investments leading to the launch of advanced solutions like PureProtect and PureOne. These offerings are already making headway in various markets, including the U.S. and are pivotal in SuperCom’s expansion. PureProtect is a life-saving domestic violence monitoring solution. This solution provides improved protection to families suffering from domestic violence. This innovative solution addresses domestic violence issues and further enhances the company’s portfolio of products and services. PureOne is an all in one GPS tracking ankle bracelet monitoring solution that integrates comprehensive monitoring capabilities into a single device. Like many of our products, it offers top notch features, placing it above competition in most metrics such as battery life, weight, comfort and more. So, these two products, PureProtect and PureOne have been significant innovations, which have helped us redefine and upheaval competitors and segments in the industry. Our cloud based software enabled peer security product line has been particularly effective monitoring domestic violence offenders and managing real time information as well. The real time advantage is a game changer to the industry because it empowers authorities with actionable insights and timely intervention to mitigate potential risks and enhance public safety. These products have also been well received and have significantly expanded the company’s addressable market. We’ve been very pleased with the reception and traction of our newest solutions and expect them to help facilitate the accelerated expansion of SuperCom into the U.S. market and further European countries. We fortified our operational infrastructure to support our growth and have revamped our sales strategy with a proactive outreach approach. Our sales team with deep industry expertise has been instrumental in achieving new wins and driving growth. Over the past months, we announced many new project wins in the U.S. and Europe. SuperCom has continued displacing incumbent vendors and achieved an over 65% win rate in Europe in competitive tenders over the recent years. Despite macroeconomic uncertainties and the ongoing Israel, Gaza war, SuperCom Solution are being increasingly relevant. Factors like high recidivism rates and the escalating cost of incarceration make our solutions not only cost effective, but also essential for governments looking to enhance public safety and reduce costs. The company’s PureSecurity technology solution have been designed to address this trend, offering an effective way for institutions to enforce home confinement, ease prison overcrowding, and lower costs significantly. For example, the total daily cost for monitoring offender on home confinement or GPS monitoring is approximately $10 to $35 compared to the much higher cost of $100 to $140 at a correctional facility. Most importantly, home confinement has been shown to reduce recidivism, highlighting its effectiveness in helping offenders improve their lives and communities. On top of these growth drivers, we have witnessed a surge in the adoption of victim protection solutions worldwide, which aligns perfectly with our strategic plan and the launch of our new product, PureProtect. In the European market, SuperCom expanded its business in over 10 countries and secured significant new contracts, which are typically awarded to a competitive tender process. Besides winning new projects, we continue to execute and receive ongoing orders from our partners. Just about three weeks ago, we announced receipt of new orders valued at over $5 million from European governments. Thanks to our optimized and efficient production processes, over 50% of these orders have already been delivered. Last year, we secured a new national program with the Finnish government to deploy our domestic violence monitoring solution. The deployment of our PureSecurity suite consisting of PureProtect, PureTrack, PureTag and PureMonitor demonstrates the versatility and effectiveness of our solutions and underscores our leadership in the electronic monitoring space. Our collaboration with Finland is a prime example of the confidence that clients have in SuperCom, as those who experience our services often choose to broaden their engagement with our diverse array of solutions. Notably, at the end of 2022, the company won the largest industry award of the year for national electronic monitoring project in Romania, valued at $33 million, including up to 15,000 monitor offenders per month for up to six years. During 2023, we announced orders valued at over $10 million from Romania’s Ministry of Interior, further extending our engagement in the country’s national EM project. This large-scale project reinforces the strength of our PureSecurity suite and cements our position as a trusted partner for governments worldwide. We also launched our domestic violence solutions in other European regions and recently launched them in the U.S. Although SuperCom already does business in multiple U.S. states, we are actively focused on further expanding our presence in the U.S. Our wholly-owned subsidiary, LCA, located in California, is actively expanding the size and scope of existing programs, winning rebids with existing customers and winning new programs with new customers. The company strategically prioritizes PureOne’s expansion into new markets and geographies. It has received high praise during its introduction into various regions of the U.S., where PureOne has been successfully deployed and is actively utilized to monitor live offenders. Moreover, sales activities for PureOne have commenced in promising new markets outside Europe and North America. Our new strategic sales team and new wins have been the first step in executing the company’s U.S. market expansion strategy and have already driven increased activity within existing customers and multiple new demos, resulting in a significant increase in the company’s pipeline. Launching our PureOne solution in late 2023 was a significant milestone in our U.S. expansion strategy. As of June ’24, we’ve already announced three new project wins in North America to provide the solution. The first, through LCA, we won a new project in California, valued at up to $2 million, to provide a comprehensive program focusing on financial services for all adult inmates. The award was a result of winning a formal competitive bid process. Moreover, LCS secured a new electronic monitoring 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-term incumbent vendor. Finally, SuperCom won a new project in Canada with a renowned Canadian industry partner in the tracking solutions sector. This project expands the existing collaboration with this longstanding partner, transitioning from providing RF-based tracking technology to embracing new GPS technologies. As I mentioned earlier, introducing our PureOne solution was a game changer in securing these contracts. It underscores our competitive edge and commitment to delivering innovative and superior technology solutions. By securing these contracts, we further reinforce our position as a market leader. We review our recent wins as indicators of our growing influence and expansion, potentially in North America and worldwide. As we mentioned in previous calls, we believe it is also an opportunity to enhance our U.S. growth through strategic acquisitions of local electronic monitoring service providers with a strong reputation and customer base in their local markets. We constantly monitor the market for potential acquisitions that could generate significant value by immediately expanding market for potential acquisition and immediately expanding market presence and providing vertical integration synergies. Our acquisitions of LCA in 2016 for $3 million is a great example. The successful acquisition has provided to be a great strategic value to the company through which we won over $35 million in new project wins and is generated in California alone. I’ll now turn to the financials. During our previous conference call, I mentioned that we anticipated contributing to our financial results in the subsequent quarters as our ongoing projects matured. I am delighted to share we have substantially improved our financial and operating results. We have seen a gross profit margin increase by 123% to 55% from 25%. Moreover, we have sustained positive EBITDA in each of the last four years, 2020 to 2023, and seen remarkable operating improvements, as evidenced by a record net income of $800,000 this quarter along with $400,000 EBITDA growth year-over-year to $2 million. This is driven by the significant growth in our company’s revenue in the past few years, targeted spending and operating leverage. This quarter’s profitability metrics demonstrate how we can seize the high margin potential of our project portfolio through successful execution and progression in different stages of these projects. The following is a comparison between the financial results of first quarter of 2024 and the first quarter of 2023. Gross profit increased by 139% to $3.8 million compared to $1.6 million, which direct the outcome of the progress we’ve made across our projects, our margins typically enhanced as projects mature. Typically, the initial project stages incur high expenses while advanced stages yield higher gross margins causing fluctuations in our gross profit, depending on project composition and deployment stages. As the project pipeline matures, we expect an upward trend in gross margin. Based on the evolving project portfolio as we deploy additional bracelets in regions where we run existing projects on our infrastructure, the contribution margins for each additional bracelet can be high even as high as 70% or more. We decreased our R&D expenses by $90,000 while we continued to develop and launch new feature and improve existing products, keeping us at the edge of innovation and technology leadership in our space. In addition, our sales and marketing expenses decreased up to $2000 while we increased our revenues year over year. Moreover, our general and administrative expenses increased by $300,000 to accommodate our management team expansion also in the U.S., which has already yielded results such as evidenced by three new contracts we have own in the past months. The company’s operating income improved by $1.8 million from $700,000 compared to an operating loss of $1.8 million before. So, we improved from $1.8 million from $700,000 compared to an operating loss of $1.1 million in the prior year, resulting for significant increase in our gross profit. EPS improved positive $0.04 compared to negative EPS of $0.32 in the prior year period. The company’s EBITDA improved by 400% $2 million compared to $400,000 reflecting benefits of operating leverage associated with high revenues, deployed new IoT projects and continued progress on the phases in our ongoing projects. This achievement underscores our focus on sustained growth and profitability. Our net income improved by $2.3 million from a net loss of $1.5 million last quarter to net profit of $800,000 this quarter. And, our non-GAAP net profit improved by $1.6 million to [$1.5] (ph) million profit compared to $250,000 loss in the former year period. Positive run rate EPS improved to positive $0.07 compared to negative non-GAAP EPS of $0.05. Our cash position is stable. We have a credit facility in place. And, we are focused on reducing our need for external cash as we continue to win and execute more new projects. Also, last month we completed successful close of $2.9 million public offering to support the company’s continued innovation and growth initiatives, a testament to the investment community’s trust in our vision and strategic trajectory. In addition, the company had onetime expense of $280,000, mainly pertaining to the legacy business and allowance of doubtful debt. We continue to invest in our sales and marketing as well as R&D to drive revenue growth and expand our global footprint and execute our business plan. In closing, I would like to thank our global team for the hard tireless work to achieve our company’s record setting performance this quarter. We have developed the right technology and products to help criminal justice system clients overcome challenges and make better use of the over $80 billion spent annually in the U.S. on operating rehabilitation centers and prisons. With research showing an approximate 75% increase in the U.S., there is a significant room for improvement when effective programs and technology are deployed. We are excited about the growth we are experiencing and about the growing demand for our products. After several years through which transitioned from a legacy business of IoT tracking fender business, we are happy to show the shift to nice growth in revenue and profit. We believe that we are well-positioned to continue the growth and continue the expansion by capitalizing on the many new opportunities before us. These are being driven by multiple factors including our strong presence reputation in the U.S. and European markets, the countercyclical nature of electronic monitoring industry, the growing public policy shift in monitoring the set of incarceration, and the growing adaption of domestic violence prevention solutions. We anticipate sustained growth by further expanding our market share in the U.S. and Europe, our commitment to preserving our technological advancement as a robust growth foundation remains steadfast as we continue to invest in this area. With that, I’ll turn the call over to operator for questions. Operator?

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Operator: Thank you. [Operator Instructions] Your first question for today is from Matthew Galinko with Maxim Group.

Matthew Galinko: Can you maybe start — I know you touched on it in the prepared remarks, but the gross margin was I think one of the stronger quarters in recent history. So, can you touch a little bit more on why this quarter in particular was able to get to that mid-50% range finance [correct] (ph), and how sustainable is that given where you are in your current growth cycle?

Ordan Trabelsi: Thanks. Great question, as you can see, there’s a general trend of increasing our gross margins as we’re reaching later stages in our current projects. There are some fluctuations because some of our projects, like the Romania project consists of it, part of our revenues. And as the mix changes between the quarters of the various parts of the projects, they drive then the gross margin which is affiliated with it. Generally speaking, at the initial stages of project you have a lot of hardware inflations, and training, a lot of hours from our teams and hardware purchases which are lower margin in nature. And later stages of projects are just kind of manufacturing more bracelets and providing maintenance and support for our software. So that the more we can be in later stages of project the higher our margins will be. So, as the new projects come upon, smaller projects won’t make much of impact, but the larger ones will, and they will also drive margins through these stages where, initially, they’re a little lower, and later they’re higher.

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Matthew Galinko: Got it, thank you. And it sounds like you’re focused now on the North American market today maybe because you have those products now available. But can you talk a little bit about North America versus Europe for 2024. I guess is there just more to be had in the U.S. market today?

Ordan Trabelsi: The U.S. is market is roughly three or four times — based on market research, three to four times the size of European market. We’ve been doing very well in Europe. We had over 65% win rate over recent years, and it’s national projects we get to bid on one by one. And even without a large sales team, we’re able to win consistently because of our high-scoring technology. The U.S. market is a little more fragmented, requires a little more boots on the ground. And we’re actually scaling up and growing our team accordingly to address that. We developed the PureOne product, which is a one-piece solution which meets a lot of their requirements and behaviors that are more [indiscernible] to the U.S. markets. And we developed in a way that has the most, let’s say, optimized features in terms of battery life, and lightweight, and remote charging, and others that helps us come in with a flash when we compete against incumbent vendors. But the U.S. market we think, for us, is a nice and interesting opportunity because we haven’t taken advantage of it yet and all the potential there. We’re just in early stages. Our pipeline is growing. We’re doing — we’re in the middle of active live demos right now. And we hope to continue growing that more and more. And at some point, that could be the size of Europe, and even larger.

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Matthew Galinko: Thanks. And one last question for me before I jump back in the queue. You seem to have — I think you mentioned a greater than 65% win rate in Europe, and you’re starting to gain some traction in the U.S., North America with the new product. What is the competitive response to your successes to date, what the strategy is there? Are there any companies that are seeing an impetus to try to catch you on the product side or do you think that you’re still kind of a uniquely focused player in the market, that you could stay and continue to have an edge?

Ordan Trabelsi: You say response on the product side, so a lot of the — a lot of our competitors, the market is roughly 10 international players, and it’s a very highly barriered market, so Google (NASDAQ:) or Apple (NASDAQ:) are not going to be coming in any day without an acquisition. You have to show that you’ve been doing this for five, 10 years to even compete. So, they know the players. A lot of them haven’t updated their technology over the last recent years. They use their relationships to try to hold on to existing contracts. The market average growth rate is anywhere between, let’s say, 7% and 13% every year. And we’ve been growing at I think a CAGR of 70%. So, we’re growing significantly faster than the average market and the average companies on the market. Some of them try to respond to improving technology, but we haven’t seen any threats there with anyone that’s competing with the level of progress and advancement that we’re showing. We’re not just showing technology, which is more advanced, it has more features, we’re also expanding our technological capabilities and adding new features at a very high rate. So, we continue every project we do and we’re doing a whole lot of projects. We add more features and more capabilities that we developed for ex-customer, we bring it to customer wide, bring it to customers that. And then, you saw like in Finland, for example, we started with one type of program that we had domestic violence and we saw the same thing in Sweden, we started with one and then we added other programs. And we expect to do the same. And what’s great about this technology that a lot of it is software on the cloud and you can apply it to the new bracelets we have as well because these bracelets are leased. Is that once we have a new capability, we can share it to customers existing and new alike.

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Matthew Galinko: Got it. That makes sense. Thanks. I’ll jump back in the queue.

Ordan Trabelsi: Thank you.

Operator: [Operator Instructions] Your next question for today is from [Dan Schatz] (ph), a Private Investor.

Unidentified Analyst: Hi, everyone. First of all, it was great to see a positive net income and some, the gross margin expansion was fantastic. My question really is concerning the repeated capital raises over the last couple of years that have diluted existing shareholders. I’m a long time shareholder. I’ve been a big fan of the company, but I’m hopeful that we’ve turned the corner now with some net profitability. And I know we recently raised some money at a price that was higher than the stock was trading at. But I guess my question is, are you planning on any additional capital raises? And I’m hoping that that we can leave that to a minimum if you are.

Ordan Trabelsi: Thank you for your continued support in SuperCom and great questions. So, I came — I was a CEO and if you remember, I was a CEO in the U.S. for the years before and into 2021, I moved to Israel for the global CEO role and we changed some of our strategy and that was focused on growth because we had declines in revenues for five years or so and we shifted to growth. So, from 2021, revenues on from $11.7 million to $12.5 million to $17 million plus and now last year we closed over $25 million and in order to achieve that growth, in a short period of time, we had to also expand our focus on growth and that cost money and it brought us into needs of cash. But what’s nice to see is while we focus on growth and we did have need cash, our cash usage had declined over the years. So, from three years ago, it was roughly $9 million in operating cash and then $4.5 million and last year was just somewhere in the mid-2 between $2 million and $3 million and as projects reach later stages like the Romania project then they become more cash flow positive and then we could use that to stabilize our cash needs. And we did this capital raise just now to give us more support and to have a cushion for fluctuation. But currently, we’re actually doing pretty good from operating cash perspective. Sometimes we’re even breakeven or cash flow positive and sometimes we’re a little bit cash flow negative and we need to manufacture things ahead of time. Like for some projects that are leased, we need to manufacture a lot of bracelets ahead of time and that brings us into temporary cash flow negativity on that project and then afterwards. But these things balance out and with the large amount of projects that we’re doing, they start to kind of stabilize one another and we hope that over the years, our cash needs will decline. That being said, when there are big projects out there that require massive expansion and units, we think it’s okay to take on those projects because they grow the company significantly. Those will require some cash upfront sometimes then we would accordingly look for capital raises. We try to keep them to a minimum and as you can see, our uses have been decreasing over time. And now in the state we’re at after these three years of growth, we’re happy to see that our cash used for operations have declined and we’re able to depend more over operating cash production rather than external cash. So, we’re cognizant of that. We’re trying to reduce the capital raises to minimum, but also aware that there’s many opportunities out there. And if there’s opportunities that could probably return to our investors, we will try to capitalize on them.

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Unidentified Analyst: Thank you. Appreciate that commentary and the feedback. I just caution you to keep in mind the existing shareholders when that capital raise happens because we’ve suffered a significant amount of dilution over the last couple of years.

Ordan Trabelsi: Yes. And we are okay, good. Yes, we’re very aware and hopefully over time, the valuation will justify all the activities that we’ve been doing to grow the company over the years.

Operator: Your next question for today is from [Mike Walters] (ph), a Private Investor.

Unidentified Analyst: Good morning, Mr. Trabelsi. Thanks for taking your time to provide us with another great quarterly. Thank you for taking your time to provide us with another one. I appreciate — always appreciate your quarterly earnings and conference calls. Congratulations to you guys on another quarter of growth, record growth. As a long-term investor, four years now, I’ve been pleased by your methodical progress over time. It’s been, I appreciate the questions also that were also asked. It’s been up and down with the growth thing. And I appreciate your answer. You also answered one of my questions was that, whenever you’re — whenever you have to dip into the capital, you’re using it on possibly projects that could be positive to us as shareholders in the future, correct?

Ordan Trabelsi: Can you repeat the last sentence? You broke up for a second.

Unidentified Analyst: Whenever your — whenever your use of capital is directed towards possible shareholder value growing in the future.

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Ordan Trabelsi: Yes, of course. And we’re also me, myself and other management, we also own shares and we’re very inclined and interested in to increase the value of the shares also our main focus. It’s just that sometimes short term, we need to raise capital to manifest our long-term goals. Our current stock price, we believe does not represent the intrinsic value of the company at all. We’re trading at fractions of multiples that we’re seeing in the industry and we’re growing at 10x faster than the average industry as I said earlier. So, we think over time the market value align with intrinsic value and then investors will be able to appreciate the valuations for the company.

Unidentified Analyst: I appreciate that answer. It seems that to me, that you guys have a good and growing pulse on your fundamentals. Would you say fundamentally speaking, would you say that’s probably correct?

Ordan Trabelsi: We have a growing pulse? Sorry.

Unidentified Analyst: Yes, a good, a great pulse on your fundamentals and that they are growing in the right direction.

Ordan Trabelsi: Yes. As you can see from some of the improvement of profitability, we try to focus on fundamentals and also the underlying technology and the health of our projects. We’re able to re-bid these projects, to win the re-bids as we said because we have a great relationship with our customers and maintaining a great reputation that helps us to win more projects in other places around the world.

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Unidentified Analyst: That kind of leads into my next question is on June 29th last year, you guys issued a press release that you incorporated advanced AI capabilities to enhance your monitoring solutions?

Ordan Trabelsi: Yes.

Unidentified Analyst: And integrated cutting edge AM models to empower your EM offerings by unlocking new real time data insights and enhanced decision making processes. So, I was wondering about that because you guys are obviously bidding on or you are announcing contracts over the course of last couple of years pretty frequently. So, my question is does the AI, the advancement in your AI capabilities, get stronger every contract? Like, is it does it — does it make it more efficient, your next onboarding? Because like I noticed that you guys like part of your business model is to onboard your customers, which I like. I like that a lot that you onboard your customers before actually coming to terms on the contracts. And I was wondering if the AI, the advance, the investment, so the AI is paying off possibly by maybe making each onboarding more efficient than the last.

Ordan Trabelsi: So, the — as you may be familiar with AI in general, the more data you have, the more helpful it is. For us, it’s still, we started designing the implementation for a lot of these constructs and modules, and we have a lot of data, not just new, but over the years with onboarding of tens of thousands of customers, different regions around the world, that could be used to help the — at first, the officer where they’re tracking all these offenders, because one officer could be tracking 50 to 100 offenders at the same time, it’s hard to keep track of everything. And when there’s behaviors that create trends, it’s easy for us to know that something’s going to happen before the officer even sees it. And those are the kind of, it’s an example of a kind of AI insight that we use the learning and to improve. But these are still, a lot of them are still in various design and implementation stages, and we think that there’s a big opportunity there for more value creation for our customers as these start to roll out in a more efficient and comprehensive fashion. Also, a lot of the labor intensive tasks of monitor where you have to do a lot of clicks, a lot of shifts from one to one that will help with that, and that will make the efficiency for the program, which will save effectively more costs and also save more officer time.

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Unidentified Analyst: That’s what I was thinking, okay, that’s what I was thinking. Your employees, you guys employ over 100 people, and you said that, in one answer, you said that you implemented a new, or any addition to a new sales team?

Ordan Trabelsi: What did you say about the employees, sorry?

Unidentified Analyst: Employees, I think you’re over 100. Is that true?

Ordan Trabelsi: Yes. Globally, we’re over 100, yes, 120 —

Unidentified Analyst: You’re probably pretty proud of 120, awesome. You’re probably pretty proud of them and the progress that they’ve made.

Ordan Trabelsi: Yes. I’m mostly proud. We’ve had a great run in the last quarter. We’re doing very well with the growth and profitability and winning new projects. There’s a lot of work. We’re a relatively small team, a lot of work, and we’re doing a lot of these things at the same time. So, yes, we’re very happy with our teams.

Unidentified Analyst: I’m happy with the progress as well. Yes, I was surprised by the 5.7 million. I actually thought that might have been a challenge a little bit, as an estimate, because I know in the past, your estimates haven’t, I felt like, reflected your actual progress. But this one, I felt like challenged you a little bit with the 5.7 million revenue, and I was happy to see that it was 6.9. So, I’m really proud of you guys’ continued growth, and I look forward to continuing to invest with you guys long-term.

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Ordan Trabelsi: Good. Thank you for your support and for your questions.

Unidentified Analyst: No data. I’ll let you go. Thanks. Thanks. We’re done.

Ordan Trabelsi: Thank you.

Operator: Your next question is a follow-up question from Matthew Galinko.

Matthew Galinko: Hey. Hello again. Two quick follow-ups for you, first, I get the balance sheet question. I noticed your receivables were up in the first quarter compared to the end of ’23. Just wanted to see I guess, is there a meaningful difference in payment terms between U.S. and European EM clients, and I guess, what moves the payment terms around?

Ordan Trabelsi: Sometimes, it’s just how it falls at the end of the quarter, because you can receive an order, just like we received 5 million orders. You can receive orders, and you start to manufacture them and deliver them. You recognize revenues, but you haven’t received the cash yet. On the other hand, you can receive the cash right before the end of the quarter, and then it brings down the AR nicely for the report, so to speak. But we’re not some of these are paid by delivery, and some of these are consistently monthly payments based on lease, so we have a whole mix of projects. The more lease-like projects, which is more what’s happening in the U.S., it’s more of a monthly base, which is a little bit more consistent than the delivery, which is sometimes the national projects in Europe, which are more they buy the units, and they manufacture them.

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Matthew Galinko: Got it. Thanks. And then, just given how strong Romania has been for you over the last few quarters, I guess, I’m curious how you look at the kind of business excluding Romania. Obviously, you have a lot of wins, but how do you balance the risk a little bit, or like, how do you kind of fill in that bucket when if Romania slows down can you kind of fill in the gap with the rest of your pipeline is the question?

Ordan Trabelsi: So, first of all, Romania is still running well, and they’re ordering more and more, and we’ll see if the customer continues to maintain its positivity and its satisfaction. As you’ve seen with other customers in the world, there’s always opportunities for growth programs and additional programs. Meanwhile, we’re not just relying on Romania, of course. We’re bidding on other projects, and in Europe and in the U.S., we have active demos, and a lot of those will come to add on to Romania and also add on to the base of other projects that we have there. So, Romania is certainly a nice win, and rather than just being a nice win, which gives us nice revenues and profitability, it’s also a good reference, because as you may remember in the past, there’s some projects we couldn’t bid on because we didn’t have references of certain size. Here, you’re looking at 15,000 units, 15,000 simultaneous units project with domestic violence. There aren’t many of these in the world, and we have, and we’ve been implementing it successfully, and when other projects of large size come out, we could bid and show that we’ve been doing this very nicely, and so that puts us in a new area where we weren’t if you look three or four years ago.

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Matthew Galinko: I guess as a follow-up to that, does your success at something Romania-scale in Europe help as a reference for doing state-level projects in the U.S. or North America?

Ordan Trabelsi: Yes. Of course, the closer you are, it’s easier to win Texas after you’ve done California. The closer you are, since it’s in the same country, then there is more similarity there, but a $33 million project of 50,000 units is substantial anywhere in the world, and it’s our biggest one, and we grew up a ladder. We started with projects in Lithuania of 100,000, 200,000, Lithuania, Latvia. We went up to Canada of $1.8 million, and we had Finland and Denmark, and some of these are $3, $4 million, and Sweden was $7 million, and that was $33 million, so it certainly does help us, and in the U.S., the more we went, we’re still doing counties in the U.S. We’re also looking at states, and we also considered maybe going on the federal level in the U.S. as well. It’s all a matter of where do we have the highest return on investment on our dollar expense, and some of these projects could have a very nice return, but the expected return is low because we don’t know the probabilities there because these are large projects that we haven’t yet worked on as much, whereas in Europe, we can bid on with more confidence as we know pretty much how things are going to fall out and how the competitors align and score in these projects. We’ve done many of them, and in the U.S., we’re trying to develop that same capability and the same knowledge, and we’re going to be able to use that more effectively, so we’re still in the early stages in the U.S., and that’s what’s exciting about this. I think there’s a big opportunity there, and we’re very well positioned for it.

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Matthew Galinko: Great. I appreciate the color.

Operator: [Operator Instructions] Your next question is from [Eric Hamilton] (ph), a Private Investor.

Unidentified Analyst: I know you’re concentrating on the prison market, but what about the migrant market? Is there any opportunities for you to solicit your products to countries that have migration problems?

Ordan Trabelsi: Can you repeat that, migration problems with — over the borders?

Unidentified Analyst: Yes, yes.

Ordan Trabelsi: In the U.S., there is — sorry, go ahead.

Unidentified Analyst: Are the countries that have these issues interested in getting the bracelets or monitors from you to monitor the migrants coming into their countries?

Ordan Trabelsi: A good question, it’s something that we’re looking into and considering further. We know that in the U.S., there’s the ICE program, and they use similar technology to track people coming over the border. They call them detainees. They come over the border from Mexico, and they’re being tracked for a period of time until they decide the status and if they’re approved to enter fully. They have big programs with, I think, over 100,000 units. Other countries are considering and have considered, not just now, but also over the recent years, various programs like that. We’ve been looking into it, but we have not yet made that our biggest focus. Our biggest focus has been on the programs in the country for the offender monitoring. That’s where the complexity is the greatest. And since we have technological prowess and we’re able to score higher, we can go straight to the largest projects with the highest complexities. But these are other ones that are complementary and that could be added. It’s something that, over time, we’ll probably look into further, even though we’ve already started looking.

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Unidentified Analyst: Well, the technology that you’ve done for the prison systems, would the same technology be used for a migrant monitoring system?

Ordan Trabelsi: The technology, I mean, the government would use technology in whichever way they would like, but the technology is the same. It’s different policies. You have different rules and different procedures, but the technological capabilities are the same. You have a bracelet. You monitor someone’s location. There’s anti-tampering. They can’t take it off. They can’t remove it. There’s all these processes on the back end, the data intelligence aspect of what people are doing and how they’re doing. And we provide so much flexibility and so much customization to our customers. We have so many customers that they each want something a little bit different. This is, let’s call it a simple adjustment, if someone wanted to change from this to that, the technology is there.

Unidentified Analyst: Well, I know you have a limited staff and workforce, but I have to think that this is an area that you should be investing in and trying to get some of these substantial contracts if the technology is the same for a migrant as it would be for an inmate. It just makes sense that you would be taking some personnel and trying to get yourself involved in this migrant problem because it’s huge and I think it would be a good way of the governments monitoring these people that come into the countries.

Ordan Trabelsi: So, first of all, you’re right. Certainly, it’s a good idea to look at complementary markets with similar technology. That’s what we’ve been doing consistently. That’s how we entered domestic violence tracking and also the inmate tracking over the years. And I appreciate the thought and the focusing on this. The question for us when it comes to new projects and new types of programs is how ready the customers are to actually deploy these programs. A lot of times, especially in other countries outside the U.S. and Europe, we see them trying to enter the normal electronic monitoring market, let’s say in South America, and they seem very excited and you spend a lot of time and effort and then at the end they’re not ready for one reason or another to actually deploy something like this. So, with migrants, like other ones, we need to understand how likely the programs are to actually be deployed before we invest a significant amount of time and adjustments for them. We do interact with local partners in any country where we work on these projects and they give us continuous updates also for stuff like this. It’s not something that we’re crossing off or not emphasizing and it’s something that we continuously look at, but we assess it versus the likelihood of other projects. Like in Romania, they did a new project for electronic monitoring, brand new project for them. They were very serious about it and you see it also by how quickly they deployed it with us and all the continued growth of the project. And if we can find customers like that, that are willing to do this on the migrant issue and they’re able to adjust their laws and regulations, then that would be great. In Israel, there is an issue with domestic violence, and they’ve been trying to pass a low for over 10 years. And just last year, they were able to pass it, and then that became a big focus now. And now they’re having the RFE processes around it, which are guided by the government. So, we’re in touch with all the different players and we’re needed, but the governments are the ones that have to push these laws and regulations for new projects to start.

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Unidentified Analyst: Okay. Well, let’s hope that you can develop more products so you can enhance the value of the company because the issue of diluting the value of the shareholders by providing you more shares or doing more outstanding shares is not a winning formula.

Ordan Trabelsi: Yes.

Unidentified Analyst: You need to bid higher on the projects to cover your overhead and to have money for R&D. It’s great to get projects, but if you are losing money on contracts, that’s no win for anybody.

Ordan Trabelsi: Of course, and we’re surely not losing money on contracts. We’re making money on these contracts, and we’re actually winning with our technology, not with a low-price approach which some companies deploy in some industries. The thing is these projects are sometimes large, and they require capital. And sometimes we need to raise capital accordingly. And of the stock price, our stock was higher in the recent past, and the valuations are not always reflective of the intrinsic value of the company. As the intrinsic value is more apparent, it also makes it much easier to raise capital with minimal dilution, that we don’t still control market, but the market has been sometimes challenging in terms of valuations over the past two or three years. But we continued to grow, and to win projects, and deploying new products, and we’re happy with the progress we’ve achieved, even though we’re aware of the dilution, and we’re trying to keep that to a minimum as much as possible.

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Unidentified Analyst: Can you get your clients that are interested in giving you an order to upfront you with some of the initial capital costs to process their order? Can do some upfront loading of giving you some money when they give you a PO?

Ordan Trabelsi: It’s a great question. The governments are usually the ones that decide the structure and the payments. Remember, these are competitive processes. So, there’s five, six, seven players competing on, and the government says, “These are the payment terms that I want,” and it’s hard to come and say, “No, with us, you need to pay upfront.” With everyone else they’re going to pay over time. So, it — sometimes you have the ability to do that, especially when it’s an existing customer that’s been working with us for many years because they already have our system and deployed, they already know us, then we have more flexibility. There are also sometimes we don’t have that flexibility, and we have to conform to the structure that the customer demands.

Unidentified Analyst: I understand. And I —

Ordan Trabelsi: We’ve been doing this for 35 years, yes —

Unidentified Analyst: I understand all your responses, I understand that completely. It’s just the way of having relationships with a client that makes them understand, “Listen, we already have the best technology, we have the best product. And you want to come onboard with us. Well, we need you to help us and assure us that — or help us to get you the product so we aren’t going into [hawk] (ph) to supply you with the product you need.”

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Ordan Trabelsi: Yes. And we have those conversations when they allow us to, and once a relationship has developed and evolved over the years. So, really it’s an ongoing sensitivity and approach with these government customers, that we even — we’ve been working with them for 35 years, because even before offender monitoring, we’ve been doing passports, and ID cards, and drivers’ licensees. And it’s always been that — it’s always escorted with the payments terms, it’s a big one — part of these government contracts. And at the beginning you have less say, over time you have more say. When your technology becomes more unique and more prevalent as an industry leader and that’s what we’re working on all the time, that’s why you keep seeing the continued investment in R&D. You have more abilities. And we expect and hope, over time, as we become larger, our expansion potential is there, and once we manifest it we’ll also be able to improve our terms with payments from the customers. But our shift from South America and Africa to the U.S. and Europe has already done a huge amount of benefit improvement for us in terms of collections, in terms of payment structures. So, that’s already been a big help for us over the five to seven years. And now, even with these visions, there is always room for improvement, as we’ve discussed.

Unidentified Analyst: Well, thank you very much for putting up with me and taking my questions. And I certainly —

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Ordan Trabelsi: Good questions.

Unidentified Analyst: [Multiple speakers] — great potential, there seems to be some disconnect with the value of the shares and your potential. And now, you have shown that you can do a net profit which is the critical thing. It can be consistent with net profits. It’s got to improve the value of the shares.

Ordan Trabelsi: Yes.

Unidentified Analyst: Thank you.

Ordan Trabelsi: Over time, that’s what we really hope to happen. And thank you very much for your questions and for supporting SuperCom.

Operator: [Operator Instructions] At this time, I will pass the call back to Ordan for closing remarks.

Ordan Trabelsi: I want to thank all of you for participating in today’s call and for your interest in SuperCom. Please contact us directly if you have any additional questions. And, we look forward to sharing our progress with you on our next conference calls, filings, and press releases. Thank you and have a good day.

Operator: This concludes today’s conference. And you may disconnect your lines at this time. Thank you for your participation.

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