OTIVF - Earnings call transcript Q3 2020 | on Track Innovations LTD

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the OTI's Third Quarter 2020 Results Conference Call. All participants present are in listen-only mode.

Following management’s full presentation, instructions will be given for the question-and-answer session.

As a reminder, this conference is being recoded.

received the all press have should by company's now release. You

or please have GK & Helft, Investor X-XXX-XXX-XXXX www.otiglobal.com. the I not hand Web you of like the the contact section Public it begin. of News please received at would Investor If Helft site, GK conference Mr. it, OTI's to Investor company's Ehud in Relations. at Relations Relations to now view over team Mr.

Ehud Helft

release discussed XXXX going the expect, Ticketing third extend profitability; ability successful; Poland; in and call be and needs terms to optimism takes XXXX. it COVID-XX this measures advised to bring regarding in of Assaf Transit On and business OTI to and I OTI’s strategy forward-looking OTI's their the while Please sales; as post Track on Thank discuss belief funds in taken OTI’s will the use and Cohen, be other conference quarter shareholders; certain for that of OTI intend, earlier be They using company’s financial OTI’s to will, example, gradually will growth be forum comparable terms; beliefs press in may, that the cutting loan you, XXXX; company’s in quarter thank to its to hosting OTI’s identified Assaf payments. Mass OTI growth will use midterm; of business call. growth the on OTI Holtzman, like with third provide addition will U.S.; and for thereof; forward-looking growth the operator. the review expenses call. also in today. mentioned discuss, when CFO. OTI’s expectation UK its among to value respect impact to COVID-XX; and Japan, in other its CEO; company’s Welcome is maturity forward-looking for the of OTI’s Yehuda beliefs results Yehuda such in OTI’s and sales any raising from contain increase of statements in recover OTI’s by statements reach of the that its expectation this believe, will OTI’s of the revenue would outlook expectation belief concern; and potential statements. is the Innovations can the breakeven this plan, expectation information those highlights from the OTI’s cash for its will us the pandemic; profitable to that for the call from OTI’s things, date some management the mid-term performance company's the strategy, key today With continue as a cashless able satisfaction to its virus the recent

the now which forward-looking SEC. And which and with forward-looking statements the detailed Web factors, based of judgment Yehuda the call information, not in issued to I information, to update known press forth hand Holtzman. release company’s dates. their are no provisions OTI’s subject OTI the The go today set earlier unknown risk at While reflect good investors.otiglobal.com. as full the CEO, current statements from site over Safe future faith, speaks company’s please including filings Harbor performance. in of upon best and are are belief we with and time-to-time or those to available and They Yehuda, respective that, uncertainties guarantees ahead. any is obligation would assumes on they

Yehuda Holtzman

for you Welcome Ehud. you, joining Thank thank today. all and us

by last XXXX to our during in XX, out XX% same compared pleased the nine increased measures quarter ended various impacted of X% The revenue the by operate, decrease revenues specifically to Mass our in in QX result period revenue partially in geographies by I'm compared Ticketing months be Poland. revenues. decrease taken year-over-year, retail-related in mild growth we offset of total the a September that which a pandemic continued lockdown and Transit which XXXX, by the almost with XX% year, to COVID had we the XX Although our

expressed results, makes term. While key in us to not the long yet optimistic of our is our fruit, presence strategy new sales our incrementally which beginning regions for in financial strengthening bear

solid increasing During we present pandemic Through with Ticketing term, employees’ crisis, continue in will in our reality. short resilience of transitioning safety our in activity we subject sales are which believe XXXX. recovery a and as with alongside COVID-XX top conditions going impressive unusual our to to to our growth our our ensuring worsening lead while around The and this cash have a needed current under current and ability crisis priority employees of to our retail globe working continue as the the remains we successfully and continuity. Transit sales, the results to concern that should believe health of and been this proud our serving customers during new the flexibility business Mass

to believe the situation component will cases Further, stop some gradually. the to maintain continues an mitigate almost a COVID-XX we time to Poland, led pandemic to recent our product COVID-XX network become negatively this sales our of this shortage procurement immediate some suppliers. Mass activity flow. Nevertheless, of Ticketing needs. has in address where to longer, complete cash leading pandemic in To has a comprehensive an difficulties effect, impacting post delivery, business, recover have distributed we Transit impact and globally delivery on some lead Specifically

acceptance only products. the months as our cards not we major believe for behind vectors generated summary financial the This from our We that. midterm is phone provide current as More continuously. is reflection is We time products attractive to new and means of our once for credit advanced, positioning like all solutions to the September contact market are in year-over-year. of platform. environment or steps purchase providers current than successfully over certification has as of virus Hard the this people that physical his already Japanese of leadership customers the year transmission our are course up in and is forefront pandemic as more the are outlook our generally, ended is payment sales adding between positive of the the would existing cashless advantage broadly, a To with FeliCa pleased already key this completed. and also certification this Japanese major only take and we And pre-certified technology the and payment were state-of-the-art significantly visibility market. for XXX% nine very requirements the our payment with term. shortened market technically are of has where many it of the CFO, increased interest EMV of near new for the all installation significantly, to and the market over cards cashless orders up the payment the our put process together standard an not to solve and Asia But already see remain own results. standard pandemic a which in well good can cashless hand has with in abated in cash problem. future. or the call and us our of TRIO-IQ as a our simple months to more at short-term needs consumer looks is a credit our limited are the I between to I the revenue XX This the and cash were Pacific for solution one card On third summarize, quarter solution by complete Cohen, our we us Assaf our well placed short to to side,

go please ahead. Assaf,

Assaf Cohen

Thank you, Yehuda.

from covering usual, for our including non-GAAP a details operations. believe understanding will As see site release performance. provides Web earnings ongoing this EBITDA on our about Please be our better I further including $X.X of We continuing metrics, year. X% some million, the adjusted $X.X compared EBITDA in amounted the non-GAAP reconciliation when a of the a decrease quarter to million adjusted GAAP last of results. quarter this metric, third Revenues third to in comparable to

revenues of quarter XXXX, $X.X XX% revenues and the derived of of or retail mass ticketing total breakdown of where revenues. total were revenues third million were XX% or petroleum were and terms In in million the transit $X.X from revenues

XX%. the in at the million the the versus third million. This third $X or or The geographic XX% year. the were net in quarter Net compared the quarter quarter was attributed was in the Mass and of COVID-XX. were changing quarter decrease million revenue accounted $X.X of result was XX% due mix million in was to third impact our in $X.X Looking the the X%. million Licensing in transaction quarter million. decrease million loss $X.X APAC I’m was million year. $X of for in $X.X In Ticketing of to sorry, mainly of the year. XX% or $X.X in last And is Gross third quarantine last XX% compared $X.X the to in of $X.X the revenue in reported and breakdown of Europe the as Transit a is fees to – expenses $X.X of loss year. to third or sharp Polish drop Poland the or This the XX%. third in revenues Africa Americas operating XXXX, is or quarter quarter million third compared million the market into sales quarter, last of year to margin last XX%.

year. quarter results. the the an our loss to $X.X XXXX in compared non-GAAP EBITDA Now last third quarter $X.X to was in EBITDA of of million turning million of Adjusted loss adjusted third

Looking at our balance sheet.

on have cash XXXX, and September totaled $X.X Short September further months. us a is cash continue a XX, $X.X XX the our balances, to cash for as projected XXXX, management not of that of company's loans million. at raising our cash, without in the equivalents investments the next or long-term other As we our and position will enable short-term XX, of their and million. based resources least were of fund cash, From operation cash flow opinion to period sufficient increase

As as is a concern. substantial a continue doubt to our going there ability result, a regarding

increase our steps, we cost will we live employees, reduction respond in material as of in, your sent questions. cash the including funds. as following working by the well which taken including which to reduction the members the now our please questions And management will needed, open Ehud, and to salaries for review were raising call as have We Q&A.

Ehud Helft

from continued call interest questions and in a many we number ahead for business. of much investors very thank received investors have our of We their this our

to questions. endeavor your answer now will We

to include anonymous, will wish unless quarter specifically remain this you of we us from some ask not As names the you to.

and many we have questions XX possible. where over them of the received questions we As overlap, combined

to why Our question earning question earnings The is first the report regarding delay. delayed? is was the

Yehuda Holtzman

QX required discussion a with other of before personnel also COVID the prove our which ongoing indentified our due Among were results, reasons, to of to either financial just at the it financial or to loans. same data time few one positive QX key respect and finalizing as provide

Ehud Helft

Another And are the what what would time for confidence is the extended loan be further extension? to modifications one-month the no question; open in or this the further loss issue time? paid that with on level

Yehuda Holtzman

told on by this the has believe as extended able were to exact before Based with provide us back bank revenues the assess to in matter. Poland, to due same what the data whereby extension impact of December until our respond we enhance lender mobility the an terms will Since XXXX, on they general we on in loan to ability under get Poland they COVID we were our since loan they to people which be the did. asked to us to slowed then our COVID,

Ehud Helft

in is question the the did XXXX you to quarter third decrease for and next estimate the the as regarding a corona Our for What due September corona. whole? sales

Yehuda Holtzman

was September, of We more COVID QX on we than estimate nine than more to believe of the the million. sales reduction effect impact the be in $X.X our months COVID revenues to on In $X million.

Ehud Helft

update product to the on relate provide questions strategy. TRIO-IQ? Please next The sales an of

Yehuda Holtzman

and so and interest feedback TRIO-IQ. targeting the good. all we So, with far share can very geographic so from far of happy are been I areas that received has are deals we sales we

Ehud Helft

What in new the do pipeline? have products other you

Yehuda Holtzman

more be on product we position. do information depending year during competitive the We provide half a to new of Yet plan this have obvious stage. next our for reasons, cash second at can't launched

Ehud Helft

XX for PetroSmart years. contribution OTI OTI? has PetroSmart had making a sales contracts and can When you do over more start profit believe at to significant

Yehuda Holtzman

in year important this PetroSmart. So investment we made some

force sales by increased of strategy, sales part the managers recruiting in As and manager added Africa. target Europe we the We East our market. PetroSmart in sales

new just In products. introduced two addition, we

that we sales looking we the start XXXX. made top we believe next this So two in will year, year seeing at increase during an changes

Ehud Helft

geographies. further inquiries in set next success Europe? Warsaw Moscow. concerns of great in They performance Deutsche Bank. OTI and questions against Prague, you seen competition in ASEC won The from its various major cities Have had

Yehuda Holtzman

So activities. here. some I managing clarification need to is different ASEC provide two

The are includes OTI activity And also working validators, is only sales, validators. selling first which retail on is the are which we across mass large ticketing in second integrators projects which are the transit mass mass In reference EMEA. to multiple transit Poland. core those via transit sold

Ehud Helft

millions. vehicles OTI charging up stations take electric alone, Can the there stations And in market? for XXX,XXX Germany to share needed. should In are market be worldwide, charging

Yehuda Holtzman

customers the charging We electrical of offering. their of the in process already part potential in as solution have active is OTI vehicle So our integrating stations.

Ehud Helft

AVI of in costs installations, fruit? the capitals return later. few to a equipment Europe, for for major invest transit hardware training will When Easy and In in bear area and of Fuel OTI mass significant income higher significant and in you Western the order generate software has Plus, initial

Yehuda Holtzman

transit mass ticket into taking sold is only Its in Poland. explained just of the as consideration are cost initial part I sales pricing.

any other AVI for or basically As products selling solutions. are project, retail we and

Ehud Helft

on an in update provide the Please Japan? business

Yehuda Holtzman

a the year has and the this have been With partner working key a for we our to OEM we good in global which now. we business years year Billing our continue both, Systems XXXX in next Japan growth with will demonstrate grew been partners, believe So distribution our OTI two and year. few with

Ehud Helft

Do Japan Olympics business from further take you expect eventually to win when the place?

Yehuda Holtzman

so. hope We

this we indicated, years. in the I continue believe and our As just coming Japan business growing in is will

Ehud Helft

What expectations the are growth for What XXXX? sales have this you seen UK region from in your in XXXX?

Yehuda Holtzman

UK that our have next revenue we grow this specify in during retail region. by added in year Yet they recent customers the I and don't Europe. say months believe we new that sales the So country revenue can in will

Ehud Helft

How are sales proceeding? in North market American

Yehuda Holtzman

North which nine to reports than in XXXX, in year reflects America, include in the months our presented accounted We the million $X.X ago Americas for also more the growth compared XX%. XX, $X period, same which Americas, ended million September the of

Ehud Helft

for with also income, your EVO else the Can approach to you EVO business has U.S.? is that or be does have everywhere U.S. or there offer products with another like the model market in recurring it the converted

Yehuda Holtzman

EVO to generate enables us revenue. recurring

our acquirer. EVO with We for market, as are and shorten U.S. to new using go customers the can so time the satisfied the live system when EVO using

Ehud Helft

market terms What are for U.S. profitability your expectations the of and XXXX? sales in in

Yehuda Holtzman

growth So a EVO sales we the in the with step we U.S. the experience, and will TRIO-IQ, launch that payment following of the U.S. took new that revenue believe year. manager is demonstrate next different partnership

Ehud Helft

relate questions company and to competitive next The the environment strategy.

current U.S. the one who segments? First is our are competitors various in

Yehuda Holtzman

to competitive Overall, pressure our winning hardware develop specific new one company is say support. those well a takes we can't customers is conversion to and time systems. can competitors as bandwidth be certain working I that as very cycle It's unintended are rate of more cross consider now paying into which I We customers’ there to leads good. about payment integrated identify. that

Ehud Helft

is What general or for long-term strategy OTI? endgame the

Yehuda Holtzman

on What our a reaching this, we Once are we This long-term we infrastructure the achieve or far us we where path is breakeven. is this endgame. see will have that so to year setting we to define focus. done support strategy

Ehud Helft

better enormous or patents. can OTI turn sales? How your wealth IP into has an of you monetize

Yehuda Holtzman

shorten the shorten products, market to go time new in OTI enables which already core to to is IP its to specification our the order competitors. compared actually leveraging to of us

Ehud Helft

reach be sales able in to to three Cohen, stated million $XXX contributing with that that Shlomi CEO, years five in you believe OTI possibility? Do a PetroSmart half. this still should Former is

Yehuda Holtzman

both and reestablished to As growth a enable the its in solid this starting this strategic beginning focusing achieve made call on few before mentioned to in development this and We in retail investments first us year has year-over-year. people OTI previously, product at a activity strategy new of activity.

be Our breakeven fully are positive. on immediate focused to target which and cash achieving is we

Ehud Helft

products might the to or explored? as be larger, Has been company's the further increase to feel company's seem better favorable with combination a merger this you sales? and able this strategy we a a company environment, do more have Since pandemic avenue capitalized

Yehuda Holtzman

So immediate is merger part any OTI’s of plans. it transaction not come or other the a potential Board transaction Should will I'm consideration. sure give along, appropriate

Ehud Helft

an to there Is return NASDAQ strategy active listing? to

Yehuda Holtzman

and breakeven, cash to our value focused be Our to to positive the bring bring shareholders. be actions are to company

Ehud Helft

The financials. next to questions relate the company's

breakeven? you one first target The when to reach do is

Yehuda Holtzman

is to Our during XXXX. reach goal breakeven

Ehud Helft

terms is of year? in next P&L What expectation XXXX for the

Yehuda Holtzman

guidance, continue solid the give retail can’t will far did we demonstrate this we in so we business but So growth as believe we to year.

Ehud Helft

the to year capital raise to sheet? need you Will strengthen balance coming in the

Yehuda Holtzman

to to Yes. our working constantly cash we're We and raise need position. funds improve

Ehud Helft

be any costs higher year this there Will investment next? or

Yehuda Holtzman

we the in both have year will sales XXXX, in done be We for that next investment not believe new believe we we our are the appropriate developing product higher. restructuring investment our and

next goal shareholders. Our and to ultimately profitable year is for become value our creating

Ehud Helft

you. concludes have received. we questions Thank That the

call will live live if call now questions a the We for question-and-answer questions remain. for open the please any open session. Operator,

Operator

[Operator Instructions]. you. Thank

Your go Molinsky is first Ventures. Richard Please ahead. from Max of question

Richard Molinsky

How guys? you doing,

Yehuda Holtzman

All right. you. Thank

Richard Molinsky

right, major together the your year, do a financing. level. there you of like The was in I'm Look, nice position tough I This about $X.XX biggest for I have will last the being in know is, I be a and financing your at dilution year concerned it $X.XX, know that we receivable terms year. All act good. next mention you’re would think down looks concern turnaround. – year getting

to there -- be, would interest on what offer And don't out the equity the off want based there out. at turnaround, or pay curious you up, stock to know that the prices. are raise the would it debt, I'm shareholder, large you are at be as point, higher I rate opportunity maybe that I think you at but – like can side? you find the moves looking to and if in the as companies that you this more money some looks you will just it think

Assaf Cohen

is Hi. This Assaf.

information moment, tasks our So, mentioned can’t term. we raise funds. on increase short to at but Obviously, we the multiple script, we focusing working this on provide as in are we cash are our basically to

Richard Molinsky

could look preferred do hopefully I non-dilutive, work And at And I forward a to very Okay. I which guys for looking But that more I'm you're seeing the higher prices. in at see. I just hot execution, least appreciate I’m progress. Thank and dilution you. industry. – it. was you're going wondering without major out sure or are you financings to we're think

Yehuda Holtzman

you. Thank

Assaf Cohen

you. Thank

Operator

is ahead. The [indiscernible]. next Please question go from

Unidentified Analyst

Middle the With making about gone products? Thank to in more talked you. peace company the Israel, East of with Arab has your interested to countries or being some your

Yehuda Holtzman

some with that actually discussions now have the having to share in of are this treaty, direct part discussions we the have. world. EMEA, to of can Middle the in are actually following through of countries we East. solutions selling we So I And peace also some can we’ve partners started the our which

Unidentified Analyst

Thank you.

Yehuda Holtzman

You’re welcome.

Operator

[Operator Instructions]. Holtzman, Mr. at time. this no like your you statement? to questions make concluding further There are would

Yehuda Holtzman

and you good of it next all quarter today your would call you for you and on our support and look more continued like So behalf of business. questions Thank updating to on you that you OTI, asked We and make to especially submitted a our progress. of would those like thank have speaking for interest to to long-term of forward also day. on our I us. I with interesting thank

Operator

conference XXXX participation. Thank Thank OTI’s quarter you third you. concludes your This results for call.

and ahead go disconnect. may You

on Track Innovations (OTIVF) 23 Nov 202020 Q3 Earnings call transcript