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SuperCom Reports Year-over-Year Revenue Growth of 102% for the Third Quarter 2022

Reports Q3 Revenue of $6.3 million and Gross Profit of $2.1 million, approximately double compared to the third quarter of last year, and swing to Positive EBITDA of $0.4 million

TEL AVIV, Israel, Oct. 26, 2022 /PRNewswire/ -- SuperCom (NASDAQ: SPCB), a global provider of secured solutions for the e-Government, IoT, and Cybersecurity sectors, today reported results for the third quarter of 2022, ended September 30, 2022.

SuperCom Ltd. Logo
SuperCom Ltd. Logo

 

Third Quarter Financial Highlights Ended September 30, 2022 (Compared to the Third Quarter of 2021)

  • Revenue increased 102% to $6.3 million from $3.1 million in the third quarter of last year and increased 97% from $3.2 million in the second quarter of 2022.

  • Gross Profit increased 96% to $2.1 million compared to $ 1.1 million last year.

  • Research and Development expenses increased 52% to $0.96 million compared to $0.63 million, reflecting increased investment to enhance existing solutions and to accelerate development of new products in the IoT and Cyber Security sectors.

  • Sales and Marketing expenses were $0.65 million compared to $0.46 million, reflecting investment in a proactive sales strategy to expand SuperCom's footprint in the European and North American markets.

  • Non-GAAP Operating Income increased by $415,000 to positive $230,000 from an Operating Loss of ($185,000) last year.

  • Positive EBITDA of $0.41 million compared to negative EBITDA of ($0.05) million last year, reflecting the benefits of deployment of new IoT projects and operating leverage.

  • Non-GAAP EPS was ($0.02) compared to ($0.03).

  • Cash and cash equivalents and restricted cash were $3.1 million on September 30, 2022, compared to $4.6 million at the end of 2021.

Recent Business Highlights:

  • Won and launched a $33 million national EM project in Romania, the largest new European EM project awarded in the industry this year. With a focus on domestic violence, the project is expected to help protect up to 15,000 families per month over a six year period and includes the deployment of SuperCom's PureSecurity Electronic Monitoring (EM) Suite for Domestic Violence monitoring, GPS Tracking of offenders, and a home detention monitoring program.

  • Won a new $1.7 million contract with an existing customer of the e-Government division.

  • Signed second and third new GPS monitoring contracts in Idaho with two County Juvenile Departments, which will use SuperCom's PureTrack GPS smartphone products to monitor their caseload for location compliance.

  • Won a contract with a new customer in Southern California to deploy SuperCom's PureSecurity Electronic Monitoring Suite. The new customer is a long-standing provider of products and services to the Criminal Justice market with operations primarily in Southern California.

  • Secured a new GPS monitoring contract in Texas to monitor juvenile probation clients.

  • Awarded a contract with the Swedish National Board of Institutional Care for a full-scale high-security Juvenile electronic monitoring project to deploy SuperCom's PureSecurity Electronic Monitoring (EM) Suite. This project marks SuperCom's third national electronic monitoring project in Sweden and its fifth national project in the Nordic countries.

  • Won and launched Croatia's first full-scale electronic monitoring project in the country, which will include deployment of SuperCom's PureSecurity Electronic Monitoring Suite. The project was formally awarded earlier this year through a formal bid process conducted by Croatia's Ministry of Justice and Administration.

  • Secured a new governmental electronic monitoring contract in Wyoming. The contracting agency is an Adult and Juvenile Probation Agency with plans to use SuperCom's PureTrack GPS smartphone products to monitor their caseload for location compliance.

Management Commentary:

"In recent years, we have worked tirelessly to build Supercom's reputation in the IoT offender tracking space while gradually climbing the value chain of the projects we've won and executed. We are proud to have won the largest European Electronic Monitoring project launched this year, valued at over $33 million. We believe that we have developed the best technology in the market and the necessary infrastructure to support EM projects of almost any complexity and magnitude, as we've repeatedly demonstrated over the past years. We also believe that the stellar reputation that we've built will serve us well as we strive for further growth and continue to participate in tenders for additional projects around the world," commented Ordan Trabelsi, President and CEO of SuperCom.

"We're gratified to start to realize the significant return we had expected from our years of investment in the IoT division, as reflected in our third quarter financial results. Revenue reached $6.3 million, a year-over-year increase of 102%, and a quarterly sequential increase of 98%. New project launches and orders from existing customers in Europe and North America also supported revenue growth.  This quarter the IoT division grew 150% year over year, which was significantly more than the decline in the legacy business, leading to strong total revenue growth."

"In the third quarter, we also returned to positive EBITDA, which reached $0.4 million compared to negative EBITDA of $0.7 million in the previous sequential quarter. The positive swing of $1.1 million reflects the benefits of operating leverage and scalability associated with deploying new IoT projects on top of a stable and robust operating structure."

"We expect our significant investments in R&D and sales and marketing to continue to yield nice returns as we work hard to maintain our leading edge in technology and expedite market expansion with our new proactive sales approach. Taken together with our high win rates in competitive RFPs and a steady recurring revenue base of over 80%, we are excited and feel confident about SuperCom's growth in the years ahead," concluded Mr. Trabelsi.

Conference Call
The Company will hold a conference call on October 26, 2022, at 10:00 a.m. Eastern time (7 a.m. Pacific time) to discuss the second quarter results, followed by a question and answer session.

Conference Call Dial-In Information:
Date: Wednesday, October 26, 2022
Time: 10:00 a.m. Eastern Time / 7:00 a.m. Pacific Time / 17:00 p.m. Israel Time
U.S. toll-free: 877-545-0320
Israel toll-free: 1-809-423-853
International: 973-528-0002
Access Code: 577031
Link: https://www.webcaster4.com/Webcast/Page/2259/46925

Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization.

SuperCom Investor Relations:
ir@supercom.com

About SuperCom
Since 1988, SuperCom has been a global provider of traditional and digital identity solutions, providing advanced safety, identification and security solutions to governments and organizations, both private and public, throughout the world. Through its proprietary e-government platforms and innovative solutions for traditional and biometrics enrollment, personalization, issuance and border control services, SuperCom has inspired governments and national agencies to design and issue secure Multi-ID documents and robust digital identity solutions to its citizens and visitors. SuperCom offers a unique all-in-one field-proven RFID & mobile technology and product suite, accompanied by advanced complementary services for various industries including healthcare and homecare, security and safety, community public safety, law enforcement, electronic monitoring, livestock monitoring, and building and access automation. For more information, visit www.supercom.com.

Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Statements preceded or followed by or that otherwise include the words "believes", "expects", "anticipates", "intends", "projects", "estimates", "plans", and similar expressions or future or conditional verbs such as "will", "should", "would", "may" and "could" are generally forward-looking in nature and not historical or current facts. These forward-looking statements are subject to risks and uncertainties that could cause our actual results to differ materially from the statements made. Examples of these statements include, but are not limited to, statements regarding business and economic trends, the anticipated effects of the COVID-19 outbreak on travel and physical locations, the levels of consumer, business and economic confidence generally, the duration of the COVID-19 outbreak and severity of such outbreak, the pace of recovery following the COVID-19 outbreak, the effect on our supply chain, our ability to implement cost containment and business recovery strategies and resulting anticipated impact of such outbreak on our business, financial condition and results of operations, the adverse effects of the COVID-19 outbreak on our business or the market price of our ordinary shares, and other risks and uncertainties described in the forward looking statements and in the section captioned "Risk Factors" in our Annual Report on Form 20-F for the year ended December 31, 2021, filed with the U.S. Securities and Exchange Commission (the "SEC") on April 4, 2022, our reports on Form 6-K filed from time to time with the SEC and our other filings with the SEC. Except as required by law, we not undertake any obligation to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this press release.

Results presented in this press release are based on management's estimated unaudited analysis of financial results for the presented periods. SuperCom's independent registered accounting firm has not audited the financial data discussed in this press release. During the course of SuperCom's quarter- and fiscal year-end closing procedures and review process, SuperCom may identify items that would require it to make adjustments, which may be material, to the information presented in this press release. As a result, the estimate financial results constitute forward-looking information and are subject to risks and uncertainties, including possible adjustments to such results.

Use of Non-GAAP Financial Information
In addition to disclosing financial results calculated in accordance with United States generally accepted accounting principles (GAAP), this release of operating results also contains non-GAAP financial measures, which SuperCom believes are the principal indicators of the operating and financial performance of its business. Management believes the non-GAAP financial measures provided are useful to investors' understanding and assessment of the Company's on-going core operations and prospects for the future, as the charges eliminated are not part of the day-to-day business or reflective of the core operational activities of the Company. Management uses these non-GAAP financial measures as a basis for strategic decisions, forecasting future results and evaluating the Company's current performance. However, such measures should not be considered in isolation or as substitutes for results prepared in accordance with GAAP. Reconciliation of the non-GAAP measures to the most comparable GAAP measures are provided in the schedules attached to this release.

 

 

SUPERCOM LTD.

CONSOLIDATED BALANCE SHEETS

(U.S. dollars in thousands)









As of

September 30,
2022


As of
December 31,
2021



Unaudited


Audited






CURRENT ASSETS





   Cash and cash equivalents


2,114


3,537

Restricted bank deposits


1,017


1,067

Trade receivable, net


13,704


11,061

Patents


5,283


5,283

Other accounts receivable and prepaid expenses


1,865


1,599

Inventories, net


3,592


3,561






Total current assets


27,575


26,108






LONG-TERM ASSETS





Severance pay funds


465


487

Deferred tax long term


202


202

Customer Contracts


699


936

Software and other IP


2,211


2,495

Operating lease right-of-use assets


584


882

Other Assets, net


2,443


2,179

Goodwill


7,026


7,026

Property and equipment, net


1,640


1,804

Total long-term assets


15,270


16,011






Total Assets


42,845


42,119


CURRENT LIABILITIES





Short-term loans and other


-


207

Trade payables


1,188


1,395

Employees and payroll accruals


1,682


2,119

Related parties


159


172

Accrued expenses and other liabilities


1,374


1,559

Deferred revenues ST


685


151






Total current liabilities


5,088


5,603






LONG-TERM LIABILITIES










Long-term loan


33,332


30,451

Accrued severance pay


505


529

Deferred tax liability


170


170

Deferred revenues


49


49

Operating lease liabilities


600


925






Total long-term liabilities


34,656


32,124






SHAREHOLDERS' EQUITY:





Ordinary shares


3,057


2,028

Additional paid-in capital


102,862


97,833

Accumulated deficit


(102,818)


(95,469)






Total shareholders' equity


3,101


4,392






Total liabilities and equity

42,845


42,119

 

 

 

SUPERCOM LTD.

CONSOLIDATED STATEMENTS OF OPERATIONS

(U.S. dollars in thousands)






Three months ended



September
30, 2022

September
30, 2021



 Unaudited

 Unaudited






REVENUES



6,263

3,108

COST OF REVENUES



(4,132)

(2,022)






GROSS PROFIT



2,131

1,086






OPERATING EXPENSES:





   Research and development



958

625

   Selling and marketing



652

457

   General and administrative



1,370

1,107

   Other expenses



-

689











Total operating expenses



2,980

2,878






OPERATING LOSS



(849)

(1,792)

FINANCIAL EXPENSES, NET



(1,253)

(647)






LOSS BEFORE INCOME TAX



(2,102)

(2,439)

INCOME TAX EXPENSE



-

-






NET LOSS FOR THE PERIOD



(2,102)

(2,439)









 

 

 

SUPERCOM LTD.

Reconciliation Table of GAAP to Non-GAAP Figures and EBITDA to Net Income

(U.S. dollars in thousands)







 

Three months ended



September
30, 2022

 September 
30, 2021



Unaudited

Unaudited






GAAP gross profit



2,131

1,086

Amortization of intangible assets



88

88

Non-GAAP gross profit



2,219

1,174






GAAP Operating Loss



(849)

(1,792)

  Amortization of intangible assets



484

380

  Foreign Currency Loss



595

538

  One-time expense related to settlement



-

689

Non-GAAP operating profit



230

(185)

GAAP net Loss



(2,102)

(2,439)

  Amortization of intangible assets



484

380

  One-time expense related to settlement



-

689

  Foreign Currency Loss



595

538

Non-GAAP net Loss



(1,023)

(832)

Non-GAAP EPS



(0.02)

(0.03)






Net loss for the period



(2,102)

(2,439)

    Financial expenses (income), net



1,253

647

    Depreciation and Amortization



665

512

   One-time expense related to settlement



-

689

    Foreign Currency Loss



595

538

EBITDA *



411

(53)

* EBITDA is a non-GAAP financial measure generally defined as earnings before interest, taxes, depreciation and amortization and
other non-cash or one-time expenses.

 

 

 

 

SUPERCOM LTD.

CONSOLIDATED STATEMENTS OF OPERATIONS

(U.S. dollars in thousands)







 

Nine months ended



September
30, 2022

September
30, 2021



Unaudited

Unaudited






REVENUES



12,527

9,233

COST OF REVENUES



(7,780)

(4,691)






GROSS PROFIT



4,747

4,542






OPERATING EXPENSES:





   Research and development



2,750

1,871

   Selling and marketing



2,115

1,204

   General and administrative



3,858

2,913

   Other expenses, net



-

689






Total operating expenses



8,723

6,677






OPERATING LOSS



(3,976)

(2,135)

FINANCIAL EXPENSES, NET



(3,285)

(2,566)






LOSS BEFORE INCOME TAX



(7,261)

(4,701)

INCOME TAX EXPENSE



-

(5)






NET LOSS FOR THE PERIOD



(7,261)

(4,706)









 

 

SUPERCOM LTD.

Reconciliation Table of GAAP to Non-GAAP Figures and EBITDA to Net Income

(U.S. dollars in thousands)







 

Nine months ended


September
30, 2022

September
30, 2021


Unaudited

Unaudited




GAAP gross profit

4,747

4,542

Amortization of intangible assets

265

264

Non-GAAP gross profit

5,012

4,806




GAAP Operating Loss

(3,976)

(2,135)

  Amortization of intangible assets

1,411

1,135

  One-time expenses

-

723

  Foreign Currency Loss

1,479

1,195

Non-GAAP operating profit

(1,086)

918


GAAP net Loss

(7,261)

(4,706)

  Amortization of intangible assets

1,411

1,135

  One-time expenses

-

723

  Foreign Currency Loss

1,479

1,195




Non-GAAP net Loss

(4,371)

(1,648)

Non-GAAP EPS

(0.01)

(0.01)




Net loss for the period

(7,261)

(4,706)

    Income tax expense (benefit)

-

5

    Financial expenses (income), net

3,285

2,566

    Depreciation and Amortization

1,928

1,501

    One-time expense

-

723

    Foreign Currency Loss

1,479

1,195

EBITDA *

(569)

1,284

* EBITDA is a non-GAAP financial measure generally defined as earnings before interest, taxes, depreciation and amortization and other non-cash or one-time expenses.

 

 

 

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SOURCE SuperCom Ltd.