Intermap Technologies Corporation

All right, good afternoon, and thank you for joining us for Intermaps conference call to discuss its financial results for the third quarter of 2024, ending September 30th, 2024. I'm Sean Peasgood from Safa Capital, and we handle Intermaps investor relations. On the call today, we have Intermaps CEO Patrick Blott, CFO Jennifer Bakken, and COO Jack Schneider. During the call, all participants are in a listen-only mode. Following the presentation, we will conduct a question and answer session. We encourage you to submit questions through the Q&A tab below at any time and management will answer them following the prepared remarks. Before management discusses the results, I'd like to remind everyone that certain statements in this call may be forward-looking in nature. These include statements involving known and unknown risks, uncertainties, and other factors that could cause actual results to differ materially from those expressed or implied in our forward-looking statements. For caveats about forward-looking statements and risk factors, please see our MD&A for the quarter ended September 30th, 2024, which can be found on our company profile at CDAR+. I'll now pass the call over to Intermap's CEO, Patrick Plott. Patrick?

Ladies and gentlemen, thank you and welcome to Intermap's Cordular Results Conference call for the third quarter of 2024. I'm Patrick Plott, Chairman and CEO of Intermap. Today as we review the quarterly results, I will provide highlights along with a business update and outlook. Then I'll turn the call over to Jen Bakken to walk through some recent financial performance, and we will leave time at the end for Q&A. This is our first conference call, and we plan to have regular conference calls going forward. For those of you new to InterMAP, we're a premier global provider of geospatial data and analytic solutions. The company creates 3D high-resolution elevation models using proprietary multi-frequency radar, patented processing, fusion, and data production methods, and a massive proprietary 3D archive called NextMap that is global in scale and the largest of its kind in the world. We're constantly adding to our data sets using our own sensors, which are mounted on Learjets and drones. and government or third party from space-borne satellites. Our products empower customers to solve 3D problems with global scale. A great example is flood underwriting because water of course flows downhill, that's a 3D problem. Intermap has a strong barrier to entry. Our technology was developed in conjunction with the US Defense Advanced Research Projects Agency, DARPA, and various other defense research laboratories, which we constantly work with currently. We operate our dual use technology under exclusive permits to provide mil-spec data for commercial applications. So you cannot get InterMAP quality data at this scale from alternative sources. And in return, InterMAP complies with military regulations and permitting that include using the technology only for the benefit of friendly allied countries. When I became chairman of Intermap, the board adopted a policy to not provide commentary nor forward guidance until the company had paid down its senior notes and was profitable. Today, we have resolved our balance sheet challenges that constrained our prospects and concerned some of our customers. We've retooled our organization and leadership and continue to invest in talent. We've innovated new technology and new products and now offer elevation data solutions that provide market with unprecedented simplicity, accuracy, speed, and scale. And we've launched these new data solutions into customer segments and vertical markets that are experiencing rapid growth, where we're gaining incredible customer support across the board. for these unique and targeted solutions from both longstanding and new accounts. I'm pleased to announce Intermap has eliminated its senior debt and delivered over 1.5 million of EBITDA this past quarter, growing revenue to 5 million, up 241% from the same period last year. Our third quarter of fiscal 2024 saw a 28% EBITDA margin compared with a loss in the year-ago quarter. Structural advantages allow us to convert a high percentage of revenue in EBITDA to net income, where the company reported $1.1 million and two cents per share fully diluted, a 22% net income margin, which is a significant improvement compared with last year and our prior history. We've improved our liquidity profile as well. raising over $3 million in a private placement during the quarter, attracting over $300,000 of low interest rate, unsecured working capital financing, which has already been repaid, reducing our working capital debt, and monetizing over a million from our outstanding warrants. Our net liquidity now exceeds $3.6 million. In addition, We invested in our technology and fixed assets, including software, processing, sensors and platform, growing total assets to more than $8 million. We've realized over $10 million of revenue year to date, with less than half of what we still expect to book from Indonesia before the end of the year. And I'll speak more about Indonesia in a moment. To further highlight our earnings power, we improved our operating margins by more than 13 points during the quarter compared to the beginning of the year. We're on track to meet our top line guidance for year end revenue of 16 to 18 million and likely to exceed our 25% EBITDA margin objective and will continue to generate a high rate of profitable growth into 2025 and beyond taking advantage of our AI ML-driven automated systems and extensive operating leverage. Intermap is a valuable brand for our customers. Importantly, we've succeeded in selling our Nextmap data as value-added solutions delivered through the cloud with software with undeniable and quantifiable economic benefit for our customers and their customers. This allows accounts to grow. better utilize their geospatial investment to drive profitability, and most importantly, expand accessibility of geospatial data for their users, many of whom are not geospatial experts, but they can nonetheless benefit from world-class military quality 3D geospatial data. This dynamic extends the universe of youth cases deeper into our carefully targeted vertical markets. Perhaps no better example exists for this achievement of growing in scale and scope than our insurance vertical market. Intermap can count over 60 global insurance companies that subscribe to our proprietary Nextmap elevation data, which has grown from nothing when we repositioned the company's vertical go-to-market strategy prior to COVID. Many of these customers are now on multi-year subscriptions, providing strong visibility for the future. Healthy combined ratios for catastrophe risk and better underwriting are allowing our accounts to see strong ROI using our platform, regardless of short-term climate effects. They're using our data around the world, throughout their value chain, from risk assessment to underwriting, to claims and expected loss estimation, portfolio monitoring, and regulatory compliance, to financing, property valuation, and reinsurance trading. Our churn is de minimis around 1% a year. In addition, we enjoy the confidence of over 60 governments and agencies from around the world that have been using our data and solutions since we revitalized Intermaps core capabilities and focus, including some of the most sophisticated geospatial data users in the world, like the U.S. Air Force, the US National Geospatial Intelligence Agency, and the Pentagon, all of whom established new contracts during the quarter. Working with these agencies is important for InterMAP because they have the world's largest geospatial data wallet, and it allows us to fund advanced research and development, apply our technology to address some of the world's most difficult geospatial challenges, partner with and understand the full range of technologies available in this industry globally, including those that remain classified and maintain our strong dual use technology mode, which we can then leverage as an unmatched competitive advantage in the commercial market. We've recently added space-based communications as a new vertical where our commercial customer works closely with governments and agencies The view from space is 2D, not 3D, and we're working with one of the largest dual-use space launch and satellite communications providers to get them the quality of 3D data they need to establish a world-class network and support civilian and military requirements. This is a new relationship and they are growing quickly and already relying on our proven best-in-class digital twin elevation data to deploy and monitor their network in different areas throughout the world. Another example of the success of Intermap's government comeback is the recent contract we won through a global competitive process in Indonesia. This is one of the most important, wealthiest, high growth, and geostrategically located nations in the world. Because of its climate and history, it's also one of the world's most sophisticated geospatial users. Indonesia has over 17,500 islands, jungles that include volcanoes, glaciers, and dense population centers near sea level at risk of severe climate effects. They selected Intermap after a multi-year competitive process for a $20 million first phase award to remap their entire country at unprecedented 1 to 5,000 map scale 3D elevation map sheet. They chose us because they knew we had superior technology that we could map through persistent cloud cover, jungle canopy, day or night, with unprecedented timeframes, accuracy, and quality standards. And they knew they could rely on our proven past performance to help them better utilize and commercialize their data once they made this significant national investment in their strategic data infrastructure. We're helping them extend the economic benefits and grow their future commercial markets. Given we have now been deployed in Indonesia for a few months, I wanted to update everyone on how that is going. I'm pleased to announce that we are executing on the contract extremely well. We just hosted an 18-member multi-departmental senior executive team from the Indonesian government in our offices in Denver last week. And this week in our Jakarta offices, we completed a week-long in-person training session for over 180 future government users of our geospatial data. We're fully deployed in the country with several hundred people working. We just ramped up our third sortie team this week, which will accelerate production by approximately a third. We've deployed some of the world's most modern sensors, which Intermap developed and owns. We've incorporated advanced AI ML algorithms automation to process data, automatically extract and deliver data products at unprecedented speeds. We've delivered our first fully attributed map sheets and 3D feature vectors ahead of schedule. We anticipate completing approximately 60% of the first phase of this initial award by the end of the year, which has been incorporated in our guidance. We are currently working to develop follow-on awards anticipated mid next year. With all of this activity combined with our new AI ML capabilities, we are operating at less than 30% of our effective installed capacity and can easily ramp up production to accommodate additional and larger contracts. Much of our upfront deployment and innovation costs have been absorbed. So we anticipate operating leverage to continue to provide expanding margins going forward. Our focus for the remainder of 2024 and 2025 will be to build from our strong base of organic growth. We're going to hit the ball out of the park in Indonesia and upsize that workload. We're going to expand in the neighborhood where we're already on contract next door in Malaysia. We're going to expand across the pond in South America where we are also already on contract. We're working on our first task order competition that has recently dropped under our recent U.S. National Geospatial Intelligence Agency contract. We've expanded our Air Force and Pentagon work to include drones, and we'll continue working to get additional airborne platforms engaged with the U.S. Defense Department under these high-impact classified programs. We're transferring lessons learned in Indonesia to reduce latencies and expand product offerings and capabilities for our commercial segments, including what is expected to become exciting global opportunities and commercial space-based communications. Major peril events like we've seen recently in Florida, North Carolina, Slovenia, Czech Republic, Germany, Croatia, Hungary, Italy, Poland, and Romania. These typically lead to a surge in subscriptions and data usage as industries reposition their portfolio. We expect that repositioning to benefit Intermap, and we will continue to upgrade and cross-sell our software solutions in Europe, America, and in Asia. We further plan to open new markets in Southeast Asia as we deliver new underwriting quality data that allows our customers to expand their programs and new domestic providers to build new ones. At this point, I would like to turn the call over to Jen Bakken, who can walk you through some of the Q3 financial results. Jennifer.

Thank you, Patrick. Good afternoon, everyone. It's good to have the opportunity to present our financial results for the third quarter of 2024. As mentioned earlier, we report in U.S. dollars. Q3 2024 revenue was $5 million, up 241% year-over-year and 39% sequentially. Revenue growth was driven by the expansion of the U.S. Air Force contract and the initial revenue from the Indonesia contract. Acquisition services revenue grew to $2.9 million from nil in the third quarter of 2023 as the company accelerated data collection for the Indonesia mapping program. Value-added data revenue increased to $1.1 million compared with $400,000 in the third quarter of 2023. The year-over-year increase was due to the expansion of the U.S. Air Force contract. EBITDA was $1.5 million with a margin of 28% versus a loss in the same quarter of last year. Net income was $1.1 million, a $1.9 million improvement from the same period last year, and a 75% increase from Q2 of this year. We ended the quarter with $3.7 million of cash, unbilled, and receivables compared to $1.1 million in the second quarter of this year. Total assets increased by 4.4 million to 8.9 million following a successful capital upgrade and certification of the sensor and airborne platform to meet geospatial data specifications in Indonesia. We are affirming our 2024 guidance. Revenue is expected to be in the range of 16 to 18 million with an adjusted EBITDA margin of approximately 25%. Risks to our outlook include timing related to the Indonesia follow-on awards, which include approved World Bank funding. We're exposed to currency fluctuations around the world, which we partially hedge to mitigate exposure concentrations. There's a potential risk of delayed short-term commercial product adoptions because of the distractions created by the recent hurricanes in the insurance industry. I will now pass the call back to Patrick for final comments.