Omniq Corp

And welcome to the Omnicue Corporation's third quarter 2022 earnings conference call. My name is Ali and I will be coordinating your call today. With us on the call are Mr. Shai Lustgarten, Chief Executive Officer, who will provide an operational overview, and Niamh Nissinson, Chief Financial Officer, who will discuss financial results. Today's call is being recorded and you should have access to the company's third quarter earnings press release issued after the market closed yesterday. This information is available on the Investor Relations section of OmniQ's website at www.omniq.com. I will now take a brief moment to read the Safe Harbor Statement. During the course of this conference call, we will make certain forward-looking statements. All statements that address expectations, opinions, or predictions about the future are forward-looking statements. Although they reflect our current expectations and are based on our best view of the industry and our current expectations and our business as we see them today, they are not a guarantee of future performance. These statements involve a number of risks and uncertainties, and since these elements can change and in certain cases are not within our control, we would ask that you consider that and interpret them in that light. We urge you to review the company's Form 10-K and other SEC filings for a discussion of the principal risks and uncertainties that affect the company's business and performance. and the factors that could cause actual results to differ materially. OmniQ undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, unless required by law. Following the prepared remarks, the company will be taking questions as time permits. And now, I will turn the call over to Shai Lusgarten, CEO. Mr. Luskerten, please go ahead.

Thank you, operator, and good morning, everyone. Thank you for joining us today to discuss our Q3 and nine-month 2022 financial results. I will begin today's call with a brief discussion of the Q3 results and then give you an update on the key achievements we recognized during the quarter. I will then turn the call over to Niamh Nissen, our financial our chief financial officer, and he will provide details of both the Q3 and nine months ended 2022. We will finish by giving you a clear understanding of our future focus and potential opportunities across the globe. It is my hope that after today's call, you will have an even better idea of why we are so excited about our business fundamentals going forward. To start, I'd like to thank each one of our employees across our entire company for their continued hard work and dedication to our vision and strategic plan. I'm proud to report that Q3 revenue came in at $27 million, a record high sales number for the company, bolstered by organic growth of 32%. Our gross profit saw a 28% increase compared to the third quarter of 2021. Importantly, our AI revenue saw an increase of 50% compared to the third quarter of 2021. This led to a $1.5 million improvement of adjusted EBITDA for the quarter. This growth was driven by strong customer demand across all our segments, which resulted in improved bottom line in the path to profitability. During the quarter, we also announced several positive achievements, including OmniQ named Total Solution Partner for one of the largest global leaders in enterprise asset intelligence for robotic supply chain management. We announced the follow-on order for our AI-based machine vision system for a major U.S. fast food chain with more than 800 locations and for an automotive-related retailer with over 1,000 stores in the U.S. We announced the receipt of an approximately $10 million purchase agreement for intelligent healthcare cards from Israel's Ministry of Health. We further announced the receipt of a purchase order to deploy our AI machine vision solution in what is now the 50th North American major airport using Omnicuse AI products. Omnicuse healthcare product penetration success continues with having our self-service patient management kiosk featured in Israel's newest state-of-the-art emergency medical hospital. I would like now to focus on this breakthrough into the QSR and retail sector as we consider it as a potential game changer. Our proprietary patented AI-based machine vision technology provides accurate human-less object identification, in this case, identifying cards, including the color, make, and license plate. This information is vital for security, law enforcement, automation of parking and traffic management. However, we identified that the QSR and retail sector, which have thousands of locations lacking information about their customers and their consuming habits, is a significant potential market opportunity for us. By installing our AI products in drive-thrus or the entrance of a business, the system immediately identifies and presents invaluable information about the customer. Once the customer profile is built, the business owner will know things such as when the customer last visited, what they usually order, how many times they visited in the past, are they eligible for any discounts or rewards, and so on. For the first time, we enabled the largest companies to collect and use information about customer habits that have never been able to be effectively collected until now. Thus, trade automation as we replace manual processes with machine-to-machine ones, which result in significant efficiencies. According to a study conducted by Quantum Advisors, there are approximately 200,000 quick service restaurants in the US alone. Most are blind in knowing their customers. You can imagine now what type of potential impact this could have in the retail and restaurant sector as well as on Omnicube. In addition to the QSR, other orders came from automotive retailer with over 1,000 sites. Similar to the QSR, any car that drives into the retailer's premises is identified and immediately alerts the service provider, allowing them to know essential information on each individual customer ahead of time. This instantly shortens the turnaround and increased throughput. There are thousands of additional automotive service providers locations in the US that we have targeted. OmniQ continues to enjoy significant growth with our longstanding Fortune 500 customers, many of whom have relied on the company for 20 plus years to handle their logistic and supply chain challenges. These longstanding relationships with a solid, stable, stability of our legacy products is the basis for one of our most significant growth engines, upgrading our Fortune 500 customer base to our AI products. Q3 was characterized by the addition of new customers within the traffic management, public safety, retail, and restaurant sectors. Our Safe City product QShield announced only nine months ago is continuing to show success. QShield is becoming a law enforcement platform as a crime investigation tool and real-time crime prevention tool. As we aim to do, it helps municipalities keep the residents safe, reduce time, and through our creative business model QShield is offered, it increases the town's income that is now invested back into the communities. This new initiative already has 12 cities in the US, and we continue to see growing pipeline of cities interested in deploying QShield. While we do not provide guidance, demand is stronger than we had anticipated, and our team is busy executing. As noted, QShield's business model is based on recurring revenue sharing with significantly higher margins than the current corporate average. we expect this strength to result in a positive impact to both the top and bottom lines. Before I go further, let me now turn this over to Niv to take a deeper look into our financial results. Niv.

Yes. Hello, everybody. As Shai highlighted, in Q3, Omnicare recorded revenue of $27 million for the quarter ended September 30, 2022, an increase of 32% from $20.5 million in the third quarter of 21. The revenue growth is organic, as we already consolidated our financial statements with Dangot Computers for Q3 of 2021, as we acquired Dangot in the beginning of July. Total operating expenses for the quarter rolled down 3% to $8.6 million, compared with $8.9 million in the third quarter of 2021. That loss for the quarter was $3.8 million, or a loss of $0.52 per basic share, compared with a loss of $5.1 million, or a loss of $0.73 per basic share for the third quarter of last year, an improvement of $1.3 million in our profitability. Adjusted EBITDA, which means adjusted earnings before interest, taxes, depreciation, and amortization, for the third quarter of 2022 amounted to a loss of $516,000 compared with an adjusted EBITDA loss of $2 million in the third quarter of 2021. That amounted to $4.5 billion in our adjusted EBITDA profitability. Our nine-month results are impressive as well. OmniQ reported revenue of $77.5 million for the nine months ended September 30, 2022, an increase of 45% from $53.4 million in the first nine months of 2021. The revenue increase reflects the consolidation of our financial statements with Dango computers, which we acquired in July of 2021, as well as organic work. Total operating expenses for the nine months ended September 30, 2022 were $24.2 million, compared with $19.5 million in the same period of 2021. The increase is largely stemming from the consolidation with Dangot. The loss for the nine months ended September 30, 2022, $9.6 million, or a loss of $1.29 per basic share, compared with a loss of $10.8 million, or a loss of $1.86 per basic share for the first nine months of last year. Add to the EBITDA, for the nine months ended September 30th, 2022 amounted to a loss of 1.5 million compared with a loss of 3.6 million in the same period of 2021. Cash balance at September 30th, 2022 was $3.8 million compared with $7 million at December 31st, 2021. I would like to note that the cash improved from 2.9 million at the end of the second quarter to $3.8 million that we have for September 30, 2022. Now back to Shai for further highlights on the strengths of their business and the opportunities ahead. Shai?