OTIVF - Earnings call transcript Q1 2018 | on Track Innovations LTD

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Operator

Greetings, and welcome to the On Track Innovations First Quarter 2018 Corporate Update Call. At this time all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator instructions] As a reminder, this conference is being recorded. I’d now like to turn the conference over to Greg Falesnik, Managing Director for MZ North America, OTI’s Investor Relations firm. you. Thank

begin. may You

Greg Falesnik

website Earlier may can quarter the or OTI forward-looking The ended the on statements the available operator. Federal that be Private for information of certain Act release Reform Litigation and financial as imply the on discussed expect, Company’s of within section first March other conference Investors the www.otiglobal.com. may, by terms. this you, express believe, and Please of released Laws. Securities be advised call terms such morning, this results is statements at intend, contain, Thank XX, Such Securities use other the meaning identified XXXX will, of XXXX. comparable plan

expectation growth, to and will revenues, EBITDA and adjusted new to continue expected segments, forward-looking certain installed expected example, and future and growth expectations features deliver and For our opportunities. deliveries growing product smoother, continue base, ATM markets, increases outlook sales ramp revenue and and expectations into our regarding our profitability, up and margins deployment, in to and adoption easier regarding that cryptocurrency in future our launches and statements momentum include make regarding to sales initiatives, expected our statements

the any SEC. reflect filings, including and obligation information, in filed periodic time forth is the are statements call on subject The we uncertainties, known assumes turn of you, from Cohen as I faith, host forward-looking of CEO they forward-looking to With Company’s future Harbor the and good are Shlomi. today the statements morning. judgment or update he detailed press registration release current will dates. best factors team which They earnings provisions results. reports, While unknown the the time statements joining your are belief the to of no based introduce on respective rest and call. or with full Shlomi that in OTI’s information, Safe performance not guarantees and those over will issued and to and to this their speak OTI risks set him

Shlomi Cohen

thank you today’s on us and to everyone Greg call. you, Thank joining

The first OTI. execution quarter continued quarter for another marked of XXXX of yet

for only all to now quarter we of we the continue first show the which first revenue but XX% Our the of XX% the portion about our growth, future which to demonstrate. focus compared total is continue for recurring revenue revenue. that we quarter grow growth of Not to XXXX, accounts in

walk cash to cash We Cohen to But us growth. also turn financials for first our through further, a ended in and the invest in position sufficient providing the Assaf would I to equivalent going before while nicely resources million to which remain the flexibility CFO, first sales $XX.X self over our some with quarter with and to quarter. call like us us

Assaf?

Assaf Cohen

Thank you, Shlomi, and good morning, everyone.

mass sales $XXX,XXX quarter petroleum of of Before an copy of today, the of available section increase in were revenues $XXX,XXX million to increased of million compared Revenues Investor our $X.X the to in first first retail $X.X retail the transit a the we or release. or of and the United or quarter the in revenues to by mass The X%. were XX%, first XXXX revenues In mainly million in Japan. issued increase ticketing the transit attributed Relations ticketing website. XX%, and release XXXX of in XXXX. MediSmart is and March ended A quarter States segment our XXXX, is press revenues market first XX, for and were results opened the $X quarter XX%

Gross XX%. accounted for $X.X XXXX, of $X.X first increased revenues, or million of XX% or or total Europe the first compared of quarter quarter quarter quarter million of compared XX%, first $X.X XXXX, first quarter expenses Africa the and the in at accounted million million to XX% or $XXX,XXX of of for share negative $XXX,XXX of or to totaled XX% from operating negative Looking Americas quarter XX% in $X.X XXXX. accounted or XX% $X.X profit or for of revenue $X.XX by million revenues compared accounted Net XXXX for continuing continuing or the $XXX,XXX totaled a $X.X of $X.XX the to the the APAC XXXX million loss million in QX $X.X first of per from net In loss share XXXX. first per operations to operations XXXX. for for

use provides a We $XXX,XXX Positive non-GAAP a of EBITDA totaled our the XXXX. we first results. indication operating of operations, non-GAAP continuing to quarter the of adjusted metric compared turning in as Now, XXXX EBITDA adjusted useful loss an adjusted EBITDA with quarter from for first it $XXX,XXX our of believe results.

GAAP our to for business well about these adjusted adjusted our XXXX details view of ending of consecutive revenues our XXXX positive including strength higher further XX-year EBITDA The EBITDA as marks recurring second quarter Company’s as the remarkable units. focus efforts release Please a EBITDA website in all the first margin reconciliation first the history. achievements of on for quarter of time see across to with our positive a full year as We these results. on today’s non-GAAP earnings adjusted after comparable metrics or

March investments Cash sheet. on with and short-term short-term on investments balance and of $XX.X compared cash equivalents the million and cash XXXX. towards cash XX, equivalents XXXX were XX, this and $XX.X turning December Now, million,

financial as completes balance million compared summary. was XXXX. debt March $X.X XXXX to XX, of as total Our million This $X XX, of my December

analysis of to a call With now the plan May by detailed that, let me report Shlomi. we to For turn file which quarterly XX-Q, XX, our on our Form XXXX. reference back please financial results, more

Shlomi Cohen

Thank you.

enabled recurring well have year XX% positioning ‘XX, in I’m while history mentioned, ‘XX positive proven of noted in revenue leverage growth, a XXXX strong full balance of a for and forward. continuing the is years Contributing focus three has revenue. in began during grow I more and like the year of XX%. Assaf I As as our as major to dig little quarter the grow been position our been a we Today, and quarter for and the my EBITDA that first opening in by to as Revenue which the area successfully what reduce very as successful, adjusted focus growth efforts would was the bit this and to debt in XXXX last core having for growth our posted the revenue a was announce first a revenue to Company’s year-over-year. well to of OTI specifically also into beyond. strong revenue proud quarter and years focus moving has EBITDA for drove year XX positive the strategic which areas first adjusted of deeper as remarks,

now of We prior are in revenues up XXXX, in for and pleased quarter. the XX% to streamed QX from that revenue accounted our recurring announce XX%

the more and higher solution stable us moving now valuable. strategy complete much at Our from This is paying the of base was turnkey a strategy designed off. being utilizes predictable revenues a Company a margins significantly with making to with software provide company customer offers company product to

to bring categories, I In in a marketing of part also made and on automated few. catch some teams. to tremendous division, our will on have our we several retail have As sales this worked top talent we focus, progress

a be OTI. to continues Japan attractive very opportunity for First,

we enter difficult In technology, delivered market of a an than can the FeliCa tremendous first While intent. be the additional system announced certified three-year under we Japanese In progress. cashless new Japan. system to more purchase XXXX, made from X,XXX quarter, X,XXX payment with have order payment letter we

follow. to order additional expect We

area where in deployments Another key and we to for the automated growth space around is retail increase the Company world. continue sales the ATM,

order XXXX more an ATM specific than increase times. happy ATM X,XXX XX,XXX our systems we the systems for the dramatically announced product developed. over an X,XXX Smart for market. that additional in In reader we sales March, customers During to of are ‘XX, systems XXXX, up have a ATM our received we very with Clearly, X from went in purchase

sales a deployment. up over XXXX, expect and the forward, see of Moving to ramp in course continued ATM we

fit pleased to issues fee secured today and easy of micropayment. provides, company, simple, I’m across high-speed, we which which end, in and micropayment capabilities the innovative solutions our have efforts always solution to solvency crypto As cryptocurrency and experience well. introduction solution best retail to using a transaction and our To believe allowing have in enhanced for automated our of the cryptocurrency and machines method also that first is market, from resources of the are market. automated some invest payment customers to automated This solution low the only arise automated and use, ultimately network this the looking vertical knowledge, exchange capabilities, we add as we challenge may a that significant our for as for and the currency while the payment. machines the end made global announce completed for for groundbreaking of both that payment of across cryptocurrency To is an we our other form machines market also cryptocurrency payment for full our users. the currency micropayment but launched tackles on

may for over offering term. contribute we sales, OTI’s solution this growth time our adoption add value believe and take this Although a shareholders customer long product cryptocurrency meaningful great generation for of new will to and the

this we driver segment pleased XXXX. a with expect division, Moving to have revenues in and fueling it to we our of being experienced the as growth move through continue been

compared high continued to grew revenues segment this this division’s year quarter, to and XX% quarter. Our provided OTI ago in the same fueling we has In margins grow.

remarks, the would to turn the Operator, and before please? back I closing providing for like open will Now, it Q&A my operator. to lines

Operator

[Operator Partners. comes Kinstlinger first Brian from Instructions] Alliance question Global from Our

Brian Kinstlinger

do priority and investment Which you near-term? top-line the versus look you is reaching a grow increasing as as to your then drive your higher So, accelerated desire growth in turn forward how you’re profitability, your weigh to profitability?

Shlomi Cohen

marketing we’re but we’re utilize here almost is in cent to trying indeed that a today, generating and our This challenge, order in sales to invest activities. every

line. say enabling available is accelerating these again, to our our to as resources by today as that we’re step We’re topline. we’re continue to the step. available much utilizing possible. in promote that idea doing almost today, any activities order in injecting But cent we’re Needless every top And

Brian Kinstlinger

Yes.

have next even profitable ability the characterize be the so, that over months you that going you the just right, is to marginally to grow, be more you’re more to expectation be profitable, as though as road XX Is just or profitable. revenues so that So, right? your down even

Shlomi Cohen

Correct.

Brian Kinstlinger

question priority the right, kind and as products where sales you which you’re other can dollar which in of go? my then, prioritize And solutions, solutions should as are money maybe your that weighing teams secondary, of where you’re top the are goes, or is, investing and investment ones incremental your percentages

Shlomi Cohen

Okay.

also but in. that segments have only we are geographies investing We segments major few and not

I think continue that is in revenue XXXX vertical level. of be And to our one the will generators. this ATM on

it’s the for geographic OTI, certify the in needless our major that -- part the Japan, is of ‘XX. the And [ph] the we Russia, interesting to but and now mill us, I actually this say doors entire level, the our for say a that Again, to are Russian we considering according way by become major also of see certification. those it’s to one our a globally. that market being there’s more fuelling, product something activities opening huge can to today market. On mention are can there verticals, needless that and lot over still And also

Brian Kinstlinger

you’re you talking you and geographically, Japan investments? is going solutions, increase the in. And are then about increasing ‘XX, and resources right? or investing So, to, and sales improving are force just investing you’re clear, Russia your where to revenue ATM solutions, you’re in If resources where be that is is growth

Shlomi Cohen

we’re investment all the end, it’s The we’re in different; activities We needless already of to sales needed infrastructure. from accelerate is to little certification. having evaluate to that the investing related the entire are and that the for [ph] mill more for to the [indiscernible] In is we the in example, activities bit a we recruited, other now starting regarding that say ATMs, are order amount investing Russia.

So, the this ‘XX. the of part is our day, different investment investment of it’s we’re doing annual but that end in in

Brian Kinstlinger

Great. solid at Company a a much footing is more Thank you. than year-ago.

Shlomi Cohen

Thanks.

Operator

question next with Latimore Capital Markets. Our go Mike ahead. [Operator Instructions] Northland Please from comes

Mike Latimore

And what’s I bit? I have, geography a you past, even least that’s getting the just can many the traction? on do the doubling at you’re year ATM How thought? ATM still that you elaborate there guess, market, just about volume a customers talked end this where in little maybe you the on think, most

Shlomi Cohen

-- see focus is verticals. the don’t almost we’ll ATM in I This growth I obvious according think, that the to is plan vertical, clear, to according in our to continue that we’re the ‘XX, and and ATM want in the direction. having to say but this

order, systems. we ‘XX good I think globally. I as And before started that actually our we’re purchase mentioned quite with working of X,XXX

ATM not channelizing know with manufacturer. working always able actually the where systems, through it’s I they’re mention this manufacturer company. to because multimillion dollar We’re its a ATM but we activities an installing way that don’t our by entire am we’re the name, And

Mike Latimore

And the that how then, many quarterly you you here? me a sale? sense of the in on there, quarter just you units basis first give did are volumes Can selling a

Shlomi Cohen

referring to the are You vertical? ATM

Mike Latimore

line units the total through kind just No, there. hardware that of go

Shlomi Cohen

or it have moment, don’t not. keep I to First But, of we in as will to public me. the is. At make want we consider of ay it data if all, we have the front

Mike Latimore

sort And here? EBITDA positive of then, thought you’ll quarterly going that remain on is a forward the basis

Shlomi Cohen

following. I’d the say

that think will say previously say present the four meetings quarterly we that careful in our -- second adjusted during EBITDA. bumpiness -- I to EBITDA. I’m as seasonality I’ll of that a trying that is in and with adjusted present to there I is mentioned that it present other year our positive that quarters are entire believe our be on annual that having activity. ‘XX, a because positive this is is kind some I with goal be will To But, we in This goal. will there we level,

Mike Latimore

quarter, first of meaning throughout linearity did or the overall the quarter the last month a a linearity How sales quarterly on is basis? have you the how trending last in just -- of the lot is then, And your on quarter.

Shlomi Cohen

sure I’m not the that I understand question.

again, please? can, you try If

Mike Latimore

Yes.

distributed throughout backend of quarter sales February, a the equally or just quarter? and January, by it heavily sales relatively was loaded months In monthly March, terms on the basis, or

Shlomi Cohen

analyzing stream difficult monthly order the to basis. say we of is are not It because purchase that are a the on we having

the basis. quarterly doing this to a it I’ll we are in guess, purchase on our half the We of second say order, majority But, is need that the a If quarter. receiving I guess. of are

share we later, I want, can and out it check with you you. it If can

Mike Latimore

been think down, which the I you DSOs good. just last. range trending The normalized guess, a have Company? for is is What DSO do

Shlomi Cohen

What you DSO? by do mean

Mike Latimore

outstanding? sales Day

Shlomi Cohen

don’t data. I that we think have of such kind

as I according this it structure, We are not as to doing far know.

that. doing not We’re

analyzing to We are according not it this.

Operator

Kevin Please comes ahead. from Dede The Wainwright. next question with H.C. go

Kevin Dede

Japan wondering was business yearend? about to bit you talked give backlog trends. could backlog, if some since little I working speak has a us So, How the changed in Poland you and

Shlomi Cohen

So, performed to the significant in -- And when in have over growth even last of progress there. And the a we Poland activities analyzed very Poland, to of over that end we plans having growth year. to the are a our year. I it -- positive and there, saw previous say we that think over compared I nice compared

say countries And actually are part So, Eastern expanding to activities than the all other the positive subsidiary. in more in Europe. a of the would now I in all, is progress Polish there they that,

regarding is Poland. this So,

I that doing the we will after to we continue and there ‘XX, going years previous to last two see more in investment a And results the think lot activities. more over before that year, of we’re year. previous were to better compared see

activities. our the Polish is forecast this So, regarding

systems. more Regarding this we Japan, and aspect one XXX had delivered QX, than we positive

market. this the continue billing from And more positive to way still partners market. by the with a coming continue we’re We purchase we’re It’s system see market. working to but orders our challenging inside with regarding this Japanese expecting

Kevin Dede

help now, Can revenue? sales the recurring how generate to equipment will you speak there

Shlomi Cohen

having as to we’re it’s one generating is hardware, for kiosk solution it’s generating machine full of transit And mass needless actually It’s infrastructure based continue of vending most payments, strategy we’re -- after gallon. as In contact a our XX fueling, It’s previously, revenue. we’re bringing were for mass for revenue. that includes to this we we having month. the to and mentioned operators, per improving that revenue. the the recurring And per recurring our investment recurring that that for the ticketing the on part that is to This believe relevant the by be of the activities year, I our and that transit, for XXXX ticketing that in fueling. compensation changes divisions having due I and became and increasing our and XXXX. Look, will last we’re other and in the for sales recurring we’re last increase a generating fact ticketing the of is shop per months. payment, we something also stop part today, actually we’re services, relevant until that revenue in all the we’re software, In telemetry is say,

Kevin Dede

Okay.

Poland the connected that and contracts Europe just payment are the and sales the to Japanese to and sales upgrades Eastern all tied to clear? So, be in in are processing, to software

Shlomi Cohen

Japan, in there also generating it place today we in and we’re having generating but purchaser is Japan revenue. a we’re day in delivered the something that recurring from and first fact payment recurring with revenue Also we’re that Yes. the

Kevin Dede

you’re or if able last it’s it through I it plan that me aspect, how be walk cryptocurrency the I how it’s kind understand could you me and as solution. going about So, help. a the whether not of to that is cryptocurrency licensed see idea marketing well? to solution, or ended the an partially confusing to And Can question -- that to guess, of your lastly, talk integrated able you’re terminals So, me you to those just selling on in in would example given for it? is how behind open processing or it separately process in selling you for implemented, And on maybe transaction mean, how -- kind sold as you aside being maybe separately in from costs? minimize just participate then,

Shlomi Cohen

try. I would

fees. to a we machines were all, doing challenges lot during ‘XX most the and actually cryptocurrency the is first investment micropayment things having beginning two of the and Basically, and there The solution to other have a that presenting So, the automated -- tackle able for machine. we related cryptocurrency, we’re automated that of relatively slow is biggest were is transaction the related to year of this market. we time we were that over to for the the fact to challenging related thing that

of speaking and pay assuming that and the try Bitcoin of can transaction about will in one order vending XX you’re XX something. to to the in This the If it, to Bitcoin vending Bitcoin you’ll second is is no And take going a to fee machine, something the with around machine bucks. in one. XX expect in thing, one front spend time it minutes get is up minutes average

it’s card to irrelevant. kind the tackled able card, that familiar able less credit a present some thing we the say we’ve than And you’re stripe. fee system were that to two do, needless is really And of algorithm So, existing were second credit to a major even minimum, similar to we to making with. transaction issues developing that magnetic and by reduced those that

development less that That’s So, than three we’re saying the about are we seconds. making.

able this is actually to are are -- other to the question that we you having. Now,

further we idea we be meaning well. as next able is a of telemetry that we also are today, cryptocurrency and development. and also are that present all are will are probably something integration new will And it as The the system other in integrate our that we on it it the OTI -- and year, solution well. basically existing But not technology integrated. integrate we’ll it’s It’s on can We technology. that to adding system system, not can to and able implement it other system with not system we implement the having, to readers the be question

all it hope your questions. I So, answered

Kevin Dede

It Yes. helps. certainly

you sales I see we getting it on might offer you on the timeline, a guess, to and software? plan So, market of how can when

Shlomi Cohen

I complete we QX because telemetry is believe wallet solution. we full be are XXXX -- This to integrated. we to all and reader to will are as during QX entire and well, for with idea be -- we looking be market, it commercialize to and new digital need to our the that present QX The will a And about to that is able solution. now the And during plan. going

Operator

questions. call Cohen further turn Shlomi no over the are now back for There to closing I’ll remarks.

Shlomi Cohen

remain example active Thank like few Technology in Ladenburg One to awareness Expo you. New Thalmann months, will on forthcoming attend May XXst in to add throughout our investor York. that that next I’d we is we activities. the expect

Group. are breakout MZ the XXXX have in our year we contact execution operational in If interested to closing, Track quarter Innovations. setting up be meeting, you and In firm On a seen strong please a for IR first expect

cashless As you our and conclusion, solution you, our to value will value of industry Company thanks the and high-margin great attention. Thank continue fully for your for In believe in a we predictable, you, shareholders. support. your thank the pioneer we tremendous arena, in leader bringing continued our for revenue for payment technology amount and recurring while resulting

Operator

conference has Thank attending you for concluded. now presentation. today’s The

You may now disconnect.

on Track Innovations (OTIVF) 11 May 182018 Q1 Earnings call transcript