OTIV - Earnings call transcript Q3 2018 | on Track Innovations LTD

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Operator

Greetings, and welcome to the On Track Innovations Third Quarter 2018 Corporate Update Call. [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. Thank you, you now -- may now begin.

Greg Falesnik

Operator. you, Thank OTI ended morning, results the for Earlier XX, released XXXX. quarter September third this financial The available website at release the www.otiglobal.com. of is on the section investor company's may discussed Please the within and the Reform this certain other advised Litigation of or information Securities of be conference forward-looking that meaning call Act contain, Private statements federal express implied laws. in XXXX security will, the expect, be can terms of statements comparable use terms. identified other by plan, believe, as Such potential and may, such

such statements include future in sales markets, our EBITDA statements, increases For revenues, growth, to continue as and our ramp growing forward-looking example, and growth deliveries segments, expectations Canadian initiatives, into and outlook ATM and revenue base continue to regarding our regarding our future expectations and U.S. deployment, and to adjusted and expectation existing opportunities. margins in certain expected our expected to momentum profitability, expected regarding sales up the install in and markets, new and

While good faith, of best there results. current that, and the and forward-looking known over Shlomi introduce call. team unknown statements on he They on uncertainties the are guarantees turn are forth will dates. or of performance and Investors future risk reflect harbor subject Cohen judgment to information, earnings to rest not based not the are belief in periodic call detailed today the With set update the release undue full press is statements. those including Shlomi. or their issued reliance any company's they're joining registration OTI's reports and obligation filings, you, time-to-time To morning. with in cautioned respective statements statements provision, filed on factors, CEO, of speak SEC. and their place to no as host the we your I'll this state which assumes forward-looking information, OTI from to forward-looking

Shlomi Cohen

operational execution, thank call. to revenue year-over-year another highlighted today's continued growth. And I everyone by joining you announce Greg. quarter you, pleased am of our Thank to us on

both make our and existing key United progress and Alongside to sales newer States. efforts in Japan on expand through successful continue footprint. our other our to continue several markets the international to in We broaden notable markets, we fronts, primarily success

the exciting the advanced evidenced readers third sales Russia, team quarter in operating market. these certifications where to almost As well focus certification their Both very successfully allowing countries, and of efforts certification payment delivered in new granting we on in of allow in contactless as a through the important Interac are X,XXX these Canada. the to our new

front, EBITDA achieved third quarter our financial experienced highest revenues million, positive which X.X the quarter consecutive we fourth of year-over-year represents adjusted since XXXX. by revenue the to On while XX% increasing USD

base We the $X.X compared XX% and to period year on results for for also at expanded CFO, second over quarter. ago third the of compared I through to our to by Assaf a the our million recurring basis the quarter. quarter further, now million to by going absolute quarter, call our $X.X reduced third debt million. Cohen, to revenue during walk before dollar same financial But total the turn debt With like to $X.X standing would us our just XX%

Assaf?

Assaf Cohen

Shlomi. you, Thank

website. XXXX. Investor of to million Relations we to Before the September derived the the provide XXXX X% growth the XXXX, the increased of petroleum in or dollar of Revenue revenues financial to And $X.X revenues compared basis in were second million $X.X quarter $X.X million, an ended XXXX. of XXXX. of results were today, available period. the $X.X compared absolute with quarter third revenue of of quarter to were when ticketing million, A of a $X.X in sales. or million where XX% is retail $X.X mass grew compared third the third $X.X or million overview X% over for release press in release quarter XX% of quarter sales, issued in markets opened To of third the of XX% revenues XX, section for recurring our copy quarter revenues by and to were the revenues third million $XXX,XXX, year MediSmart an revenues the of In the of and XX% on our transit XXXX, ago of same sales,

$XXX,XXX, revenue. at Europe X Americas continuing the compared or third $X.X same APAC Africa share to revenue accounted $X million breakdown a XX% or accounted totaled from period. XXXX, million in revenue $X.X third to third million of the operating or a to XX% the of $X.X for $X.X million or or was loss profit quarter XX% of XXXX geographic or increased net in the per the the In Net $XXX,XXX, third for $X.X of year for of loss quarter, gross $X.XX in XX%. of the quarter compared accounted $X.X of ago quarter accounted when million operations in and same profit operation compared third or XXXX expenses loss ago from in year per million Looking continuing period. for Gross quarter million share $X.X XX%. to or of for million the of of XX% total XXXX.

and was operating provide our We an would of loss to adjusted believe XXXX $XXX,XXX continuing year period. from use with adjusted indication same EBITDA third as quarter useful Positive EBITDA the $XX,XXX results. in in operation of a the metric EBITDA we of results. non-GAAP compared non-GAAP Now adjusted turning our ago

and units. GAAP further on revenues this results. adjusted positive our consecutive strength for for earnings the Please company's time quarter comparable this first in XXXX our of achievement marks recurring the EBITDA focus website margin, XX-year higher metric, view ending EBITDA We as positive a business consideration on history. after significant The about see as with XXXX our as adjusted today's of EBITDA third fourth to our positive continued to of quarter release including indication across our our details all non-GAAP well

Now was a at and compares third quarter in which the due million September pay of XXXX by June balance September short-term end $X.X second decrease to cash million The XXXX $X.X to of XXXX, at Cash, the the of million This debt, XX% to turning equivalents $X.X of were in cash compared quarter $X.X the million. summary. on XX, in mainly decreased down during with XXXX. XX, financial XXXX, investments sheet. third our million and XX, quarter XXXX. completes my This to $X.X

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

Shlomi Cohen

Assaf. you, Thank

of third adjusted As quarter year-over-year XXXX. to basis. I opening into company's healthy, now EBITDA, revenues, laser focused the particular of our on the and has recurring business through certainly and dollar first years absolute in represents we our increase recurring and carried $X.X noted are X revenues, while of announce remarks, our positive both remain growing million in revenues proud has growing operationally achieving on revenue, in that our We XX% a my an history, aggressively quarterly debt momentum our track and remained After XX revenues consecutive total quarters reducing financially. on

around to This company predictable offers key A to will a company software stable XXXX, value us Our XX,XXX utilizes world. strategy being superior company very over designed to XXXX, base product the a with opportunity a touch that revenues strategy items we with solution provide deployment our in offering This where systems. and area I turnkey systems. to period. of was on XX,XXX to sales OTI. moving year customer few In delivered complete here. paying we margins. is increase will a automated from same to off. and space's In mass is compared in it retail growth we segment alone, with testament we a several and proposition over the and customers. ago XXXX much Japan higher made retail categories, noteworthy have continues of this the In a attractive trend continue the the over XX% to tremendous be ATMs, product segment, our quarter in transit collectively, the for and progress deliver grew now for our provides third

payment delivered more advance we Japan. quarter, to total of the than X,XXX During systems

our continue geographics. key Finally, to footprint in expand we

Canada Interac business other the unattended Canada. Network, and payment XX First, October, the an accessible certification, and Canada, making brands Canadian average the business Interac and allowing kiosks secure in to throughout merchant received over times doing Canada's to it's OTI's integrate cashless machines, Canadian in to we money. has one this exchange ATMs XX,XXX Canada. devices over market. daily In of vending into certification is locations the and significant essential in through solutions of XXX,XXX pay payment million Interac chosen leading

and the region. in X,XXX almost delivered self-service we Russia, continued expect to to In growth see Russian in contactless Russia. quarter retail new market exciting the in Second, advanced readers third this

efforts, for much of this a these we greater As move as of we approval applied certification, we of the Russian now for payment expect established penetration Russian certification, Russia. Bank the by part Having Central system the MIR market forward. and also obtained received

there we X potential with Over long us, OTI. will is term, the trusted payment believe growth top for significant cashless strategic like Russia provider market for a as be

revenues -- a growth a arena, we cashless to as result, managing we're our and the while maintain solution status long-term. the our diligently continue and shareholders in positioned believe, as value to over payment and well pioneer We will continue a leader expenses creation I

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

Operator

[Operator Instructions].

with Lake Our from first Capital Jaeson comes Markets. question Schmidt Street

Jaeson Schmidt

seen months comment the decrease I on, over first if macro if backdrop visibility could or X last you've the was wondering significantly you increase here. given

Shlomi Cohen

that sure repeat Jaeson. the not you it please? I I'm Can question, understand

Jaeson Schmidt

macro backdrop, past just X seen curious of months? the visibility Yes. given I over am your decreased the significantly you've

Shlomi Cohen

Okay.

see in quarter-over-quarter. growth the think we regarding this of If comments challenges, linear the QX to that I is lot that but that are lumpiness since we speak bit to I momentum by trend a we we think needless expecting the are about presenting to early speak of from year lot the it's a it's having this this year, we continue a positive having QX year think having, you're were of say, having. I trend. the quarter, on a So QX But can current too first working year, expecting to quarter continue previous the but this side the that we're a think are beginning are to are that little for are investor with actually a about to first that that There's positive and QX. is fact to we early growth in with we way business, the the the next if there definitely, I

when you're year, and are on I quarter we most that the having. quarter actually the is think of that busiest previous looking we're in the even middle not this this

Jaeson Schmidt

Okay, at forward that's helpful. XXXX? we market should highlighted And that and key QX. rollout in had look know traction you you going as How Russia, throughout at good continued that look strategic a I

Shlomi Cohen

we relevant are be with came Yes, positive that leaders We the begin very market. one the to Russian regarding of the certification.

to reason I'm X,XXX speaking other about transit The Russia. is that vertical the that XXXX first quite Russian that's we the to parallel working for regarding with positive the course, of bill on doing that most the deliveries decided and I'm the vertical. market as related In well tackle over last verticals mass we systems that, is far, we and to the contactless were delivered this actually focus to are of that we so

Jaeson Schmidt

any into we think anything as some related Okay. ordinary of in When about as certifications me of opportunities? XXXX, far for Or OpEx operating additional of should And spend the OpEx any back of should to I'll queue. sort and expect expenses jump these out be of? or aware the last we growing one we kind

Shlomi Cohen

our that front topic, Meaning place and there, to think business. sales, budget that to will and side development, invest to part it needless continue this we marketing the will about see growth say related we that will this a to of increase. if I speak business of will the the continue over that we be main

level, momentum You fueling other same that we almost 'XX. we having, are the in parts the in think know budgets, positive in same all we like our I that the level will are the but keep

Operator

[Operator Mike The Latimore question Northland from from Securities. next Instructions]. comes

Paul Penney

I couple for on Mike of had Paul Latimore. questions. a is This

be question over next I a First will the year? application the or like, have biggest which please. is And driver follow-up, verticals

Shlomi Cohen

of relevance our the net let's all, of first so of Yes, unattended markets. verticals the payment

active in vending, major are active OTI So and verticals charges, laundromat, EV kiosks, is OTI that in. is the ATMs actually those

bid the for chargers. one need will be definitely, Now chargers, exciting together with most to vehicle on EV ATM the if electric us, I look we it the

let's than presenting year-over-year. are during we way, achieved less will XX,XXX. systems of XX% installation verticals and that, we same a chargers. some level of by we having markets, continue we the what you was London like I With see 'XX, of quantum city I kind with we're the Xx X,XXX the ATM selling the the were fifth if electric it vehicles one chargers, the believe think to to verticals, to ATM in business more, in going ATM most bid, year, in that EV ATM. fast-growing already And should have EV this of related in a reach chargers, in growth that to 'XX, we not so the and our did analyze we say, it's 'XX, the

chargers that a vertical. will be very long EV for choose the between the say to kept to I be run, the will Now X, significant

believe next the be the of X still Those will next a most to will that on about by on reminder, vertical I having. as let's that the also X biggest again, basis. believe basis, increase annual annual I the two But, I'm double-digit in we're exciting ATM a high vending. years, verticals years For are say, saying double-digit the level the continue

Michael Latimore

Okay. And this. year? the The over question regions like, will growth show is, like the my thing next same which most second

Shlomi Cohen

Yes.

fast I I our if probably, U.S. about be verticals be XXXX. the think major to the only disregard absolute will in need to growing from region, one -- that that speak Japan I see will us. are to major But Japan. numbers, say, continue during and to the market for the expectation the we that going in we needless to role, need But

Operator

comes from Taglich John Brothers. question next from The Nobile

John Nobile

what's I was were was know, you year this I there just product do or far want quarter. slow was see this this a this if typically the quarter, anything from highest and even growing a to your so Or anomalous they to curious this sustainable quarter? that level? sales

Shlomi Cohen

amazing I mentioned song, X actually, holiday QX are No, about one of but average, would quarter say, I an us. in was the few words despite that quarter lot quarter the look, season -- since our this this in XXXX, quarter fact having maybe in we QX, a best years. for before, are And it's is the as weakest having, last QX. the that of we

that game, the this of the can the a I this and see recurring it's is, the revenue. related that by achievement recurring linear And we think our and that of fact the X years, to the think new big be analyze and as of to about the that more to trend speaking our now to the and fact to be in we continue. the and focus mentioned will that the way, attention between that we saw is switched this to that growth and that significant mainly is less that mainly now X are the a continue I selling this solution increase one have believe if last able pay our actually least, okay? you year-over-year, one expectation it that portion We're this revenue, quarter, is are ago, product, we all-in-all, that are a continue later expecting it also reduce need became that X the the sales, that trend, in Because to to we we the this revenue doing, in out will last that I fact were dramatically debt and continue we are despite previous I third you investor profitability now to see be well. X. and if with of And few will at that our this that I we to sales the other beginning that -- strengths it the X since with restructuring to lumpiness -- that fact but be then and facing thing the the I we will the year year to average, three the because strategy speaking trend will established more to fact years is, stable. X, expectation you the actually increased our think only and think is became Now, less X is the sales improvement is we are were on, to having. our I'm X.X not we

John Nobile

That's in Thank will relation how in And little those the for areas Canada sales of a you about Russia, do know. that. in certifications areas large talk to benefit in recent good perceive Americas? could and market you a how you to those the for your

Shlomi Cohen

Yes.

Discover, nutshell, all are going entire So entire about region, Express, of first it, at Pay will in just -- MIR Russia, call FeliCa also, to relevant it, certification, you Apple in Canada, I in Master but we explain such top the and the regional that in it's of Visa, on -- have Pay, Google Card, American have in Japan. certification I'm as speaking for Interac

possible are the then relevant considered you in fact previous growth we as in are consider that other our to and the also transaction cases, In of business investing and able cover and was those in we sales and in but markets. every budget, the Canada front a mentioning we I certifications will doing of are also we one thing are it team see our crucial to believe that successful those as local the that side we're parallel in Visa not terrific that important we'll to order most soon, members, to Japan in moment have it's In to giving marketing they to well. markets one like in actually continue same that, the to I over popular, that the team question, are most regional, At in Master as because it accelerate ingredients already Card in need enough members say, the regional also order Needless them to you those win, recruited you when and recruiting Definitely, the be see means that you're Russia the those the well. Now in are relevant that job. markets have you're the having combination you markets. in that the actually also right they be and there.

John Nobile

Okay. And in and are was licensing transaction know break or as numbers And is fees? able either the you're from on to coming to you don't what call, regard down in what revenue, financial item, be you fees? licensing hoping line fee statements, looking but it down percentage, I break it as far transaction your we actually might absolute this I at

Shlomi Cohen

we its business. probably machine, imagine, would that vending the actually you business having to it kiosk. I I if of last is and Yes, I'm this revenue is that item, it recurring will XX are least on in EV by to the not it, are that increase and are charger doesn't say The going or per months, matter portion into we per or biggest think way, solution this month, model that selling of top as we charging continue the but at icon, the dig in

the of elements majority we in mix on is will doing. revenue. a XXX% sales will recurring that Now that's of probably this can year, assume we're next were it less believe that part relevant. that based in having then on the in it question And based actually be recurring agree the I be but section, that past, of almost you solution I revenue the

John Nobile

Okay.

out, line these licensing -- I also recurring, greater reoccurring, recurring revenue of find to item? fees the that was is Now, X which hoping the generator of actually one transaction for

Shlomi Cohen

at this the guidance moment, give prefer, not regarding to kind We such of element.

John Nobile

Okay, fair enough.

hoping future question. this Or Licensing? product reasons final that years, one you was give sales? in the growth could if coming most quarter some is perceive answer. And do it would transaction support Where Just I fees? you from

Shlomi Cohen

saying to is selling expectation are more Yes, our more we that solutions. continue and

your category, solutions in but strategy more we're at that the to put our selling this hardware, and our software or of for last solution we services like generating more in X.X day, and trying know that, sale that in only revenue, the you're strategy, I us is are So changed the something actually years. recurring actually the end since change

years Now like for were that we didn't X ago, recurring revenue. doing generate set to

now, was you're by revenue results reaching, to revenue it's If that it's recurring see you XX% almost our is somewhere today, business. between XX% our the our analyzing, the way, X of part and ago of years small recurring And based on revenue. can

we -- our percentage-wise, continue number direction So also in this and I strategy, this absolute not believe you that continue will see will in only growth, as is well. absolute to but

Operator

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

Shlomi Cohen

would activities. Thank to you, I like awareness in add that throughout operator. active Thank we expect our you, investor everyone. months, few remain to the next

If field group. you're contact interested our NZ up please in setting meeting, a IR

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

Operator

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

disconnect. You may now

on Track Innovations (OTIVF) 7 Nov 182018 Q3 Earnings call transcript