Omniq Corp

Hello and welcome to the OmniQ Corp's first quarter 2024 earnings conference call. My name is Holly and I will be coordinating your call today. With us on the call are Mr. Shai Lustgarten, Chief Executive Officer and Acting Chief Financial Officer. Today's call is being recorded and you should have access to the company's first quarter 2024 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. 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 guarantees 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 forms 8-K, 10-Q, 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. Now, I will turn the call over to Shai Lustgarten, CEO. Mr. Lustgarten, please go ahead.

Thank you so much, operator. Good morning, and thank you for joining us today. On behalf of the entire team at Omnicube, I extend a warm welcome to all our investors, analysts, and guests. We appreciate the time you've taken to be with us as we discuss our recent performance, the progress of our strategic initiatives, and our vision for the future. Your continued support and interest in OmniQ are invaluable to us as we strive to enhance shareholder value and achieve new milestones together. We look forward to sharing our updates and insights with you today. First, I'll discuss some key developments over the first quarter. We're excited to announce the continued enhancement of our AI machine vision business with the upgrade of DFW Airport, which is using our technology for access control and also a new homeland security project integrating our advanced AI machine vision solutions for public safety in a highly sensitive area. The next development in this area is enhancing our capabilities to win new areas of business from existing customers and also enhance our suite of capabilities to attract new customers. We did this by developing our new SAS product we call CQ. We developed this to remotely manage the operation, performance, and health of our systems deployed in the field. We intend to continue to develop this product so that it can be hardware agnostic. Essentially, consumers or customers will have one place to track and manage all their devices and receive analytics on the device performance and functionality. Now let's move to FinTech. In the first quarter, OmniQ's self-service consumer management kiosks were successfully deployed by Israel's largest energy company. Additionally, we have secured a contract with two major US-based restaurant chains to implement our self-ordering platform along with a new FinTech solution deployed at the Ben Gurion Airport, enhancing traveler experience with self-ordering convenience, further expanding our footprint in the global markets. We are also happy to announce the acquisition of CodeBlocks Limited, a leader in fintech software development, marking a significant milestone in our expansion strategy into the fintech sector. will discuss our IoT and mobile computing business. We have won significant contracts in this area. Some recent notable business was the $5 million in a purchase order from one of the largest US food and drug chains, a contract to supply the new Nestle International Logistics Center and a device upgrade in 450 sporting goods stores for a major US retailer. These purchase orders help us to drive our business forward and reinforce our market leadership. Next, I have few updates to share with you. First, we have submitted an application to list the trading of our common stock to the OTCQX and QB marketplace. The listing of the company's common shares on OTCQX remains subject to the approval as of now. OTCQX is the top tier of three markets organized by OTC Markets Group, Inc., for trading over-the-counter securities and is designed to establish investor-focused U.S. and international companies. We view the current situation as a temporary phase in our ongoing strategy focused on profitability and operational efficiency. We are actively executing our strategic plan and exploring every avenue to ensure a swift return to a national exchange listing. In the interim, OmniQ will continue trading on the OTC market, and we have taken steps to be listed on the OTCQX, the premier tier of the OTC markets, reflecting our commitment to high standards and transparency. Please be assured that OmniQ remains diligent in fulfilling the all SEC requirements and filings. Our commitment is unwavering, as evidenced by our consistent acquisition of new customers and the expansion of our business with existing Fortune 100 customers. We're confident in the strength of our partnerships and our proven business model, which we believe will drive our return to profitability and sustain our long-term success. Next. we will discuss our strategic plan for operational efficiency. Our management team is deeply committed to enhancing operational efficiency. We have implemented strategic measures aimed at reducing costs and increasing revenues. These initiatives are designed to streamline our operations and optimize our resource allocation, setting a robust path towards sustained profitability. This includes measures such as concentrating our sales efforts toward higher-profit products, reducing operational costs without reducing operational efficiency, expanding product lines in large growing markets, utilizing existing partnerships, and coming out with products that add value to those customers on subscription basis, and more. This plan is showing results when looking at the Q1 results, financial results numbers. And we're expecting to see further improvements in Q2 and beyond until we regain profitability. Now we'll talk about fintech. The fintech market is experiencing rapid growth, driven by increasing demand for technology-driven financial solutions. This expansion presents significant opportunities for Omni. as our innovative solutions are well aligned with the current market needs, and we believe that we are in a good position to provide these solutions to both new and existing customers. Across the industries we operate in, trends such as digital transformation, AI integration, and automated solutions are influencing market dynamics, where we are actively leveraging these trends to enhance our product offerings and add value to our customers so that we can stay ahead in the competitive market. OmniQ continues to distinguish itself from competitors through advanced technology solutions and strategic partnerships. We believe that our focus on customer-centric innovations and operational excellence positions us strongly against competitors in all our markets. Let's talk about financials. In the first quarter of 2024, we experienced strong financial improvements. Revenues rose by 14% from the previous quarter, reaching $18.3 million. Our gross margin hit a record high of 28%, up significantly from 21% in the same quarter last year, and up 13% from the last quarter of 2023. gross profit soared by 142%, reaching $5 million. We also successfully reduced our expenses, with SG&A expenses decreasing by 18%, leading to an overall 18% reduction in total operating expenses compared to the first quarter of last year. Our operating loss decreased by 37% from $2 million in the first quarter of 2023 to $1.3 million in 2024. Similarly, our net loss saw a drastic reduction of 40%. Additionally, the basic loss per share from continuing operations improved to 20 cents from 45 cents loss per share in the same period last year. The total comprehensive loss for the quarter was $1.9 million, a reduction of 39%. the remaining loss was partly due to the effects from foreign currency exchange. These financial achievements reflect our effective cost management strategy. These efforts not only demonstrate our commitment to operational excellence, but also reflect our focus on enhancing shareholder value, which has shown 37% reduction in operational losses year over year. This quarter, Omnicube has made significant strides towards financial stability. We've successfully streamlined operations and managed costs effectively, leading to a noticeable decrease in losses. Our focused efforts are not only improving our bottom line, but also driving sales. This progress is a clear indicator of our commitment to operational excellence and value creation for our shareholders. Operator, now I'll turn the time back over for Q&A. Thank you.

Thank you. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions. Your first question for today is from Moran Pober with acquisition.com.