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Financial report summary
?Risks
- Because we depend on government contracts and subcontracts, we face additional risks related to contracting with federal, state and local governments, including budgetary issues and fixed price contracts, that could adversely impact our future revenues and profitability.
- Our profitability could be adversely affected if we are not able to maintain adequate utilization of our engineering and consulting workforce.
- Our management information systems and databases have been and could in the future be disrupted by data protection breaches, system security failures, cyber threats or by the failure of, or lack of access to, our internal operations, such as our enterprise resource planning ("ERP") system, or services provided to our customers. These disruptions could negatively impact our sales, increase our expenses, significantly harm our reputation and/or adversely affect our stock price.
- If unauthorized access is obtained to our customer's personal and/or proprietary data in connection with our web-based and mobile application solutions and services, we may suffer various negative impacts, including a loss of customer and
- market confidence, loss of customer loyalty, and significant liability to our customers and to individuals or businesses whose information was being stored.
- Acquisitions of companies or technologies may require us to undertake significant capital infusions and could result in disruptions of our business and diversion of resources and management attention.
- Acquisitions, investments and divestitures could result in operating difficulties, dilution, and other consequences that may adversely affect our business and results of operations.
- We participate in the software development market, which may be subject to various technical and commercial challenges.
- If we do not keep pace with rapid technological changes and evolving industry standards, we will not be able to remain competitive, and the demand for our products will likely decline.
- If we are unable to develop and introduce new products and product enhancements in a cost-effective and timely manner, or are unable to achieve market acceptance of our new products, our operating results could be adversely affected.
- We may need to raise additional capital in the future, which may not be available on terms acceptable to us, or at all.
- The markets in which we operate are highly competitive with many companies more established than we are.
- Our failure to successfully secure new contracts and renew existing contracts could reduce our revenues and profitability.
- We may be unable to attract and retain key personnel, including senior management, which could seriously harm our business.
- COVID-19 could continue to have an adverse effect on our business.
- We may not be able to adequately protect or enforce our intellectual property rights, which could harm our competitive position.
- We may continue to be subject to traffic-related litigation.
- We may not be able to consistently achieve profitability on a quarterly or annual basis in the future.
- If we experience declining or flat revenues and we fail to manage such declines effectively, we may be unable to execute our business plan and may experience future weaknesses in our operating results.
- Our use of estimates in conjunction with the input method of measuring progress to completion of performance obligations for our engineering and consulting services revenues could result in a reduction or reversal of previously recorded revenues and profits.
- If our internal controls over financial reporting do not comply with the requirements of the Sarbanes-Oxley Act, our business and stock price could be adversely affected.
- Our quarterly operating results fluctuate as a result of many factors. Therefore, we may fail to meet or exceed the expectations of securities analysts and investors, which could cause our stock price to decline.
- Our international business operations may be threatened by many factors that are outside of our control.
- The trading price of our common stock is highly volatile.
- Provisions of our charter documents may discourage a third party from acquiring us and may adversely affect the price of our common stock.
Management Discussion
- Product revenues primarily consist of product sales, but also includes OEM products for the traffic signal markets, as well as third-party product sales for installation under certain construction-type contracts. Product revenues for Fiscal 2023 increased approximately 23.8% to $85.1 million, compared to $68.7 million in Fiscal 2022, primarily due to continued strong demand for our sensors. Our circuit board redesign efforts allowed us to ship more sensor units compared to the prior year period, despite supply chain shortages and constraints, particularly in the second half of Fiscal 2023.
- Service revenues consist of software, managed services, systems integration, and consulting services revenues. In certain instances, the lack of third-party product availability can impact the timing of systems integration projects and associated revenue recognition. Service revenues for Fiscal 2023 increased approximately 9.4% to $71.0 million, compared to $64.8 million in Fiscal 2022. This increase was primarily due to continued adoption of Iteris' ClearMobility Platform and increased software and managed services revenue. Total annual recurring revenue, which we define as revenues from software and managed services contracts, was approximately 25% of total revenue for Fiscal 2023 and approximately 25% of total revenue for Fiscal 2022.
- The Company added approximately $170.3 million of new bookings, or potential revenue under binding agreements, during Fiscal 2023. The Company's total ending backlog increased approximately 14% to approximately $114.2 million as of March 31, 2023, as compared to approximately $99.9 million as of March 31, 2022.