SuperCom, Ltd.

Ladies and gentlemen, good morning and welcome to Supercom's third quarter of 2023 Financial Results and Corporate Update conference call. At this time, all participants are on a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad. To withdraw your question, please press star, then two. 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. With me on the call today is Ordone 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 the risks, uncertainties, and factors, please refer to the risk factors described in Supercom's most recently filed periodic reports on Form 20F and Form 6K 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 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, November 14, 2023. 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 call over to Supercom's President and CEO, Ordon Trabelsi.

Thank you, Operator. Good morning, everyone, and thanks for joining us today. Earlier this morning, we issued a press release with our financial results for the third quarter of 2023, which you can find in the investor relations section of our website at supercom.com. On this call, we'll briefly discuss our business highlights, our growth strategy, and the results for the quarter before moving into a Q&A session. Today, I'm excited to share with you that Supercom's outstanding performance for Q3. which reflects the tremendous strides we've made in our operations and financial position. The third quarter of 2023 was a landmark period for us, where we achieved an incredible 550% growth in EBITDA, reaching $2.7 million for the quarter and a five-year record net profit. We're proud to report non-GAAP EPS of positive 24 cents for the third quarter of 2023 as well. I want to take a moment to remind everyone that not too long ago, In the year of 2020, after years of continuous declines in the business, we reached a low of annual revenues of less than $12 million and net losses of nearly $8 million. Since then, we've worked very hard to turn things around. And annualizing our Q3 2023 numbers, you'll reach a current annualized run rate of $27 million in revenues and EBITDA of $10.8 million. Our annualized EBITDA today is close to our annual revenues for 2020. These, of course, are meaningful achievements that we're proud of. And I'd like to thank our wonderful global team at Supercom for their hard work and dedication for making this all possible. These financial metrics not only underline our strong execution, but also the increasing efficiency and scalability of our operations. During the past year, we won several important contracts in the U.S. and Europe. And we're excited about the opportunities we see ahead. I'll go into more details in a few moments. But for those who are new to Supercom, our mission is to revolutionize public safety sector across the globe with a proprietary electronic monitoring technology, data intelligence, and suite of complementary 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, leading with innovative technology, developing superior solutions, expanding our global presence, and delivering outstanding service. The strategy is backed by our proprietary electronic monitor technology, which scores highly in competitive government tenders and support various programs such as house arrest, GPS monitoring, rehabilitation services, domestic violence prevention, and more. And since 2018, Supercomma secured over 50 new multi-year government projects with project wins valued at over $40 million in 2022 alone. Our strong growing reputation as a premium provider of electronic monitoring solutions and services with each new customer win enhancing our market position. And lastly, our strategic focus on the IoT tracking business in developed markets where the opportunity is the greatest. With the electronic monitoring market projected to reach $2.1 billion in 2026, The U.S. and Europe constitute about 95% of these markets. These successes and opportunities have resulted in growing business pipeline with strong recurring revenues at a level of over 70% of total revenues in 2022, for example. In Q3 of 23, we continue to amplify our technological leadership with significant R&D investments, leading to a launch of advanced solutions like PeerProtect and PeerOne. These offerings are already making headway into various markets, including the U.S., and are pivotal in Supercom's market expansion. PeerProtect is a life-saving domestic violence monitoring solution. This solution strongly offers strong 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. PeerProtect has undergone rigorous testing and has been successfully implemented in multiple projects, including Romania's $33 million EM project, the first electronic monitoring project in the nation. In Romania, the police place our bracelets on those who hit the family members, and if they come in close proximity of them, an alert is sent to the police immediately and to the victim's phone. This offers a new layer of protection that has not existed before. Another product we launched recently recently is the Tier 1. It's an all-in-one GPS tracking ankle monitoring solution that integrates comprehensive monitoring capabilities into a single device. Like many of our products, it offers top-notch features, placing it above the competition on most metrics. This product also expands the company's addressable market. We've been very pleased with the early reception and traction of the newest solutions and expect them to help facilitate our rapid expansion of Supercom into the U.S. market. 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 experience has been instrumental in achieving these new wins and driving growth. Throughout the past month, we announced many new project wins in the US and Europe. Supercom has continuously displaced income of vendors and achieved an over 65% win rate in European competitive tenders. Despite macroeconomic uncertainty, Supercom solutions are becoming 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 fear security technology solution has 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 an offender on home confinement or GPS monitoring is approximately $10 to $35, compared to the much higher cost of $100 to $140 per day 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. We align perfectly with our strategic plan and the launch of our new product, PureProtect. In the European market, Supercom expanded its business into over 10 countries and secured significant new contracts, which are typically awarded through a competitive tender process. Supercom launched a $3.6 million national EM project in Finland. the national government in Q1 of 2023, and by May 2023, the Peer Security EM Suite was fully deployed in Finland, covering all EM offender programs, house arrest, GPS, and inmate monitoring for the country. In Q3 2023, we have secured a new national program with the Finnish government to deploy our domestic violence monitoring solution. The deployment of our Peer Security Suite consisting of Peer Protect, Peer Tracks, PureTag and PureMonitor demonstrates the versatility and effectiveness of our solution and underscores our leadership in the electronic monitoring space. Our collaboration with Finland is a prime example to the confidence that clients have in SuperCom. And those who experience our services often choose to broaden their engagement with our diverse array of solutions. Notably, the company won the largest industry award of the year for national electronic monitoring projects in Romania, valued at $33 million, which includes to 15 000 monitored offenders per month from the six years and that's just one project in one country so imagine the breadth and spread of our solutions around the world listen beyond q3 recently announced a third order valued at over 3.4 million dollars for the romania's ministry of interior further extending our engagement in the country's national project this subsequent ORDA reinforces the strength of our peer security suite and cements our position as a trusted partner for governments worldwide. We've also launched our domestic violence solutions in other European regions and are planning to launch them in the USA very soon. In Israel, there is a high potential for new domestic violence projects as the government has passed a law requiring domestic violence offenders to be monitored with technology such as ours. Although Supercom already does business in multiple U.S. states, We are actively focused on further expanding our presence in the U.S. The company strategically prioritizes the expansion of Tier 1 into new markets and geographies. Hold on for a second. Apologies, there's an alarm here. We're out of Tel Aviv, Israel. Just going to continue this from the shelter. I'll give you a minute. Apologies for that, everyone.

Okay, continuing from the shelter.