SuperCom, Ltd.

Ladies and gentlemen, good morning and welcome to Supercom's fourth quarter and year-end 2024 financial results and corporate update conference call. At this time, all participants are in 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 being recorded for playback purposes. Joining me from Supercom's leadership team is Ordon Trabelsi, Supercom's President and Chief Executive Officer. I'd like to remind you that during this call, Supercom 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 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 and non-GAAP financial measures 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, April 28, 2025. Except as required by law, Supercom disclaims any obligation to publicly update or revise any information to reflect any of the circumstances that occur after this call. It is now my pleasure to turn the call over to Supercom's President and CEO, Orton Trebelsi.

Orton, the floor is yours.

All right, I'm here. Thank you, operator, and good morning, everyone. Thank you for joining us today. Earlier this morning, we released our financial results for the fourth quarter and full year ended December 31st, 2024. You can find a copy of the press release in the investor relations section of our website at supercom.com. We also filed a 2024 annual report on Form 20F earlier today. Today, I'll provide you a detailed overview of our 2024 performance, including financial highlights, recent business developments, strategic direction, followed by a Q&A session. I'm pleased to share Supercom's outstanding performance for 2024, a year marked by continued momentum across our financial and operating fronts. We achieved revenue of $27.6 million, a record over the past seven years, and a 134% increase from our 2020 revenue low, highlighting a four-year growth trajectory and successful execution across our markets. Growth profit increased 31% year-over-year to $13.4 million, reflecting a favorable revenue mix of more later-stage projects and continued scale efficiencies. Growth margin expanded to 48.4%, up nearly 10% points from 2023, and our strongest level since 2021. We also reported positive gap net income of $661,000, compared to $4 million net loss in 2023. representing our first full year of GAAP profitability since 2015 and a nine-year record net income. In addition, EBITDA rose to $6.3 million, up 31% year over year, supported by strong margins and operational leverage. This marks our 10th consecutive quarter of positive EBITDA, underscoring the consistency of our core business. We've also made consistent progress to improve our operating cash flows year over year, from a use of $9.4 million in 2021 to $4.7 million in 2022, $2.4 million in 2023, and now just $1.3 million of operating cash use in 2024. This 85% reduction over the three years reflects strong execution across both new and legacy projects and positive change towards financial self-sufficiency. Together, with our growth in revenue and profitability, these improvements in cash flow underscore the success of our strategic initiatives and the operational leverage in our business model, whereby we see improved margins as revenues grow, especially when we're growing in regions where we have an existing project. The U.S. market is an excellent example of that, but we will get to that a bit later. I'd like to take a moment to thank our incredible team for their tireless work and dedication, which made this success possible. We're proud of what we've accomplished together and look forward to the next chapters. 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. This year was particularly exciting as we further established our leadership position through a series of competitive wins, including the prestigious National Israeli Electronic Monitoring Project. This landmark contract not only displaced a longstanding incumbent of nearly 20 years, but also validated our technology and operational capabilities on a national scale. In the U.S., we significantly expanded our footprint with more than 20 new contracts secured since mid-2024. This included strategic entries to West Virginia, Maryland, New York, South Dakota, Alabama, Ohio, Arizona, Wisconsin, Minnesota, Michigan, and Kentucky. These contracts' wins continue to diversify our revenue base and support recurrent income streams across multiple jurisdictions. We are particularly proud of the successful integration and expansion of our Tier 1 solution across these regions. Its positive reception underscores both the technical strength and adaptation of our platform. These strategic wins, coupled with our product-led growth model, have positioned us to accelerate our momentum and deliver sustained value to our customers and stakeholders. 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 complementary services. With over 36 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. Firstly, we lead with innovative technology. Our proprietary technology, electronic and modern technology, scores highly in competitive government tenders to force various programs such as house arrest, GPS monitoring, rehabilitation services, domestic violence prevention, and more. Moreover, we have recently broadened our portfolio to include advanced AI-driven analytics, which are integration into our electronic monitoring solutions. This addition enhances our ability to provide predictive insights and improve outcomes for our clients. Develop superior solutions, the second. Since 2018, Supercom has created 50 new multi-year government projects. The third is to expand our global presence with a strong growing reputation as a premium provider of electronic monitoring solutions and services, enhance our market position with each new win. And our fourth pillar will be the delivering of outstanding service. We have a strategic focus on the IoT tracking business in developed markets where the opportunity is the greatest. With the electronic monitoring market projected to reach $2.3 billion by 2028, the U.S. and Europe constitute about 95% of these markets. We continue to amplify our technological leadership with significant R&D investments leading to the launch of advanced solutions like Prayer Protect, also branded lately as Pure Shield, and Pure One, These offerings are already making headway in various markets, including the U.S., and are pivotal in Supercom's expansion. PureProtect, or PureShield, is a life-saving domestic violence monitoring solution providing preventive measures to families suffering from domestic violence or stalking, thereby increasing their safety. PureOne is an all-in-one GPS tracking ankle brace and monitoring solution integrating comprehensive monitoring capabilities into a single device. Like many of our products, it offers top-notch features, placing it above the competition in most metrics. Our cloud-based software-enabled peer security product line has been particularly effective in monitoring offenders and managing real-time information. This real-time advantage is a game changer, empowering authorities with actionable insights and timely intervention to mitigate potential risks and enhance public safety. Our investment in product innovation have directly translated into meaningful market expansion. The launch and successful adoption of Pure Protect and Pure One have significantly increased our addressable market, enabling us to penetrate new territories and deepen our presence in existing ones. We've been very pleased with the reception and traction and expect them to help facilitate the accelerated expansion of Supercom into the U.S. market and further European countries. We've fortified our operational infrastructure to support our growth and have revamped our sales strategy with proactive outreach approach. Our sales team with deep industry expertise has been instrumental in achieving new wins and driving growth. In the fourth quarter, together with our prime partner, Electric Security, we were awarded a high-profile multi-year contract in the Israeli Prison Service, IPS, to deploy our pure security electronic monitoring suite, including PureCom, PureTrack, PureTag, and PureBeacon. The nationwide program is expected to cover all EM offender monitoring in the country, with an estimated 1,500 enrollees and potential for expansion. The five-year contract is already in effect, with hundreds of units already deployed. and includes the option for up to four one-year extensions for a total of nine potential year contract terms. This project was secured through a highly competitive bidding process involving multiple evaluation rounds, demonstrations, and technical reviews supervised by the IPS. We displaced an Israeli incumbent, as I said before, that held the contract for nearly 20 years. The win exemplifies our commitment to excellence, technology, leadership, and strong partnership. Our comprehensive set of offering positions us well to win multifaceted national projects such as the one that are set to encompass all China's monitoring programs in the country. Across Europe and the United States, we continue to gain traction in competitive tenders, often displacing incumbent vendors. A strong track record, supported by our proven technology and operational excellence, continues to be a key driver of new project awards and long-term partnership.