DGLY - Earnings call transcript Q4 2019

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Operator

[Call Starts Abruptly]

This conference call may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The words believe, expect, anticipate, intend, estimate, may, should, could, will, plan, future, continue and other expressions that are predictions of or indicated future events and trends and that do not relate to historical matters identify forward-looking statements.

These forward-looking statements are based largely on our expectations or forecast of future events can be affected by inaccurate assumptions and are subject to various business risks and known and unknown uncertainties, a number of which are beyond our control. Therefore, actual results could differ materially from the forward-looking statements contained in this document, and readers are cautioned not to place undue reliance on such forward-looking statements.

no whether publicly new as events otherwise. undertake any or information, will or statements, forward-looking a Ally obligation update to revise future Digital result of such factors cash profitability, and capital or A impact flows could variety could adversely of contribute wide to differences needs. and revenues, cause contained or can be prove There statements accurate. no will, document that assurance this be to in forward-looking the in fact, transpire

call over I to Ross. Now, turn would to the like Stan

Stan Ross

our Heckman I numbers into Thanks concerning in Tom to we looks probably believe Company's numbers everybody we most to the still Tom press on us with recap CFO. like regards year's quickly announced Responders today. visiting do last got we First release and marketing disinfectant that be existing will for and quick now a on products that will today our well. what XXXX run rather will me as joining recent our about quarter then of and touch we also four

Tom recap get and do stuff. then a I quick will the forward-looking into you we will So let

Tom Heckman

Stan SEC current dealing know the will we hit and it a today. some have seems let what right and with versus XXXX try of with XXXX ancient and refer full certainly our you I of we joining going with know everyone, history do points any [Technical with now. you And want and Thank you, high to I I details. I like everything are on, you XX-K I Form significant Difficulty] the that's year environment the filed this that welcome morning. the appreciate us recap is XXXX and

about recently, of won't today. We'll it. in first and sit where what's spend a the time with So here quarter I happened we including lot talk

million we a million litigation into value patent I due we mind, with settlement that that gained our $X that Difficulty] were bottom-line, a increase we funding in XXXX entered through about that. liability, litigation that primarily $X.X to by in you tell the offset fair on million [Technical of in will X.X the and with So was WatchGuard, that patent

essence -- less to little about our million that in bottom-line. So, than contributed three $X

good improvement elsewhere. we had So

the sale our overall why that If two sales XX% hardware more one, sale income, people top-line, XX% more income it's other by doing mean clear product And indicative I program. trying at regard, a service and than our that. but I of increased to declined look we're factors. platform it's revenue. In and not a really, think to Number service plan you rather we're move

Our on margins service XXXX. versus gross XXXX in in hit XX% XX%

So plan from to our that are to shifting working channel service standpoint, more rather seems be sales sales. overall than we hardware the the

I middle as in we It a reason And time the the is, EVO-HD expected, introduce to it for revolutionary second took last that customers did platform year. release, And regard, that to press taken I for customers And EVOs. we got got last you adopt think do it. for we it, our for and about order did review domestic order some But very [Technical has proud a in it tell that Difficulty]. is we're we nice of. new also week pause pretty our that point test will a EVOs. look

corona with and the of in international tell a hands was hopper order is you because delayed foreign full certainly corona in and large rather their ship we the that March of countries had have outbreak. Countries virus XXXX virus. will I the that to

XXXX did I be the to hamper the platform for in EVO- mind, With in HD think new come. Customers So, as that receptive the and the it'll believe that is years sales here very I well. we are are very seeing it traction. line some good in our of hardware bellwether

per let's get things in about happy virus in a proceeds roughly million other at complete before the underwritten public talk $X.XX did recently. that capital offering gross done problematic really a corona March epidemic very $X.X million. became the markets. have So to We're more happened share; that We few of $X

So we we we're in early that. did got done and that March glad

pretty Our will similar revenues, that. situation I quarter very people last say year, would I the most think first are which to given with be happy

that. myself I disappointed very Stan, in Speaking even and we're both for think

were We The a little year was even traction. were We set orders starting of EVO that orders got double-digit to several We corona And on started prior time. delayed large year That increases January, international bit. as in as the pallets ship over the February seeing the with we had at out. revenues. of hit good them to impact one go well virus. had domestic to ready because March,

been quarter we're shipped, what than last did So, we given rather get that we're going times although to first is have not should very normal currently similar that opportunity be in to disappointed to ship that year, experiencing. orders the

as issued factors not parties. that were to submitted thing you I they also, by were tell arguments other court they that press a And did going the to and So release that were Axon upon going litigation, oral arguments rule today. order oral the because the the appellate happen supposed announced the of to we that a would the do briefs corona two virus

looking Difficulty] the but tea and know issue go don't we really going going going is, only frankly, quite appellate on, it's for know what's outcome with when I to they that hearing leaves, don't judgment so. and meet we through actually when they're [Technical our an and good we Stan over they're that's until issue believe the to news,

Stan Ross

briefs that submitted will the my Tom today. understanding be It's

that not talking the quicker. able to maybe And a that they our litigation in arguments that So the that believe through because oral taking based that's we team, to just of trouble still move are the going place. upon may they're ruling, of fact briefs actually little now be

quickly if, any that out enough we say from our the be get least through all and something, position, at of using I don't we've did it but instead just to don't by is them thoughts sitting looking position a see did to and said, believe and next so at go we "Hey, rather So, and -- want completely do and to say rule would do think days, XX and having it, parties kind table [Technical need or you of a postponing [Technical that ahead what's can you they're ahead Difficulty] Difficulty] not in come here, to to got just guys, the went what on rulings on and to around it thought actually would have in least the briefs." it? be that postpone We ones down walking filed still not as weren't know, our courtroom. somewhat people courts interested court. we and at within for the as the fact favorable. they day they We it of So we they our your reason some should could look shut upon given in They saying make they the could side us allow right that elect and did that of the hearing would that we're now it,

and forward the days. hopeful to next we're move on So XX it'll get that we'll continue that something in

Tom Heckman

just Stan. Okay. a And things I other Thank mention. I'll couple got you,

the We We've June announced presented compliance event. that requirements. releases board with XXXX and deficient filed gave our happy that Stan to several which and plan the have very plan or -- describe receptive XX, announce I think X-Ks the in were approved I with listing until NASDAQ met us we're February NASDAQ to and our we requirements NASDAQ that continued listing already was achieve plan. that and and

current I on the as think Now with of well companies environment, virus and us the of is we be expect because that dealing with the deficiency delayed that's everything as Corona that kind with. going NASDAQ with will issues,

know but that date will that and that's if that at We market get we exact to the apprise I the from it'll all. don't delayed NASDAQ certainly going So be we on gets and if delayed. delayed hope when don't the hear I

including in our virus people operating plans made from I work will from we have perspective, corona tell some a you having changes home.

expect on cars, we deal corona have years, our guys to have you the press we've and surface customer hopefully the seen was to going tables, and we products is, email seen Salmonella, virus listeria…. today new it with and our guys and product to onset from good a for you we'll C because sure corona number of It's this to whatever by we Responders of viruses response a including help and that very for release taken virus a diff, MRSA, product. well morning, hope If First distributorship an with this kind you've get an I'm disinfect that number will we're as [indiscernible], as exciting of it's any the non-toxic, EPA HIV, that want contaminants a the a blast the base of bacteria that [Technical and line hit fight other Difficulty] approved

Stan Ross

said be season we product as interest at Difficulty] those it have to put get of this itself of was virtually talking sanitation, with and have and a our could government talking clearly in need knowledgeable right If -- past the we the take and get information if on looked overwhelmed sites our if were a be -- did scrutinized, on go really preliminary. cleanliness, going I FDA and an but understanding would to even on think and to some we would with to so a our team in hour into around customers month government, marketing it year. appropriate there's they it, Then with I the important that interest go on still high they and about could us to concerned this come to the understanding little you product and touching bit links be little more The [Technical getting it, on, give been just a and the website is they're again to more for going back more the key you that level and and said Tom's and that flu or these and or it's in alert you realized pretty our the that and it's on about few vaccine a that to the us. next you and now. get bear every is get of there we EPA we've good later until have a say that,

for multiple the currently interest product. it; thousands strong that buy of that levels are with orders a told interest it go that in placing So the literally and utilize could departments surprised hours, of just there this taxi, shipments but very amount that out will the [Technical We customers we from just that of few in also launched week. amount later today really of Difficulty] just are cabs, those us and have it the and by already

we with with very let's the or had We master have that a a time. some the say distributor very closely relationship work with company relationship and good I've bottling for

are think an So press that we a release. you really could about we We form numbers. update the our that area in XXXX will of this And excited an is have it. in impact

the we say of see let's As an how update. you We'll for April. give things out play month

know. let many the you thousands let this may about whatever you magic of we gallons know excited are But will very product. be, We or or gallons how we'll number

Tom Heckman

where many fits that We really would Obviously, comments well it this really channel First for a Ally back Stan. I'm products. it our give a well of sell couple headed. us and First bring new and in glove it with had comments avenues Responders, also to recording the then ambulances, turn looking but our Responders, only channels about businesses. we have it's with to going going as you customer and Yes. sure add rest new to like exploit not our in them But, Digital hardware fits believe of so questions we're but help surrounding lesson. to a at services as to and we're I guys we're just

other as for we that is channels too. may to that So at anyway, that I try improve other and a similar mean process looking there other on we're looking ones in excited about we're well. it, take revenues we're products through

So us. questions turn back I'll Stan. more And with sure you have to it that, for guys I'm

Stan Ross

our should everybody the on a been our call in with headway we it. to have come have Breathalyser real enabled patent making quite year. to continues know, Tom, new of Yes, along regards has bit that associated also that that nicely Difficulty] out [Technical this as later that's to That

NASCAR want I have. leading at have obviously look mainly will a Difficulty]. will [Technical know say products to And products that fit we don't to actually areas, we into I existing lot in ripple to bringing that of really continue we'll that the So channels couple A different the expand that network to avenues entities in continue relationship some with And with from to then on those our football have yes, products. products. -- distribution channels to can be channels we'll and we also if our sub-distributors are in into place other own that of of too. be different regards will their able our with a easily effect

to versus business excited table the that again can ahead all like of talk some have in about we get over able from be to what hands at of normalcy, and shaking so Difficulty] phone. the So back across things [Technical point being us time we all

ahead this the and up for call. we'll side So Q&A anyways, open our go of

Operator

will The question Global go with ahead. Kinstlinger [Operator come from Partners. Alliance Brian Instructions] Please first

Brian Kinstlinger

Hey well. guys, hope you're doing

Stan Ross

Thank Brian. you,

Brian Kinstlinger

the base, which where talk With you're XX take expenses? XXXX, includes can at you in X million assume in addressing about can you I discussed. are revenue operating the overhead? litigation are current And your how about looks volumes or like down being you essential expense It million business with

So what that to right can take now? we

Tom Heckman

wise likewise. the flat say solutions I'm down areas economy pared wouldn't in virus. Overhead substantially, actually like we've I down, Yes. but that in with are now thinking corona non-existent right or really and pared event this are we've

makes in real sense. Private So up. well our doing regular we've to commercial will I security those that that employees revving both be and business. you as areas overhead of But tell made areas certain that is cutbacks, seems law as enforcement well

we those cut because until that areas dead have in the the back are up. opens there's now areas really back economy water in So right

expense cut but what versus make and right of I much we go those revenues you else kind what from on and but at overhead where obviously Difficulty] depending we we're trying down looking to tell do, [Technical how cannot else every generating we're it channels.

Stan Ross

expenses some the mean, other you reps. outside of our basically inside of can through much being keep the We expenses trade reps by means. A us to lot keep a educated But those webinars to it, everyone happened on road events. phone. is of are try new and out relationships of to amount I do to instead tremendous mean, as get even Yes. going considered all now. shows the business I and pretty right of there the imagine, non-existent

the areas did So, came the there are a down alone lot was the of areas non-existent back let we really for of while. have because are that pare have opportunities expenses Tom saying a where that to dramatically, as

Brian Kinstlinger

from? disrupted terms any you Okay. are supplies this when are having of And in the improve? then to procuring, procured there suppliers they chain, communication supply where trouble is as from And might what

Tom Heckman

Yes.

have some got delays, get we suppliers we've hurt from some South obviously really but quantities us and As affected. the that had Difficulty] been of products [Technical expect, Those our specific Korea. you it Orient We've eventually hasn't ordered bad. products. the do might camera But

have slowed down. from those been of virus products we we companies think and will and that are we yes, be an problem, that affected suppliers kind So, passes. ongoing But, and once the thing corona don't getting

Brian Kinstlinger

this for the you more question, that mean? expand Great. several might on are evaluating on acquiring detail rights last And can then press some Just distribution release comment you products? what

Tom Heckman

Yes.

to produce existing products sell capability I'm eyes [Technical Difficulty] As and there channels. being able other of we implement we could and we're our in level have look seeing really the the opened at of through to our it's with, clear potential and interest the that out current up

we're but at all, how to ahead We marketplace. current body So excited not additional generation on the we're along still the the full that. all, we not only a going we're can hitting we for ones Breathalyser camera pumped expand product, speed have our on still line, it next have mentioned, one I brakes And do at development. this as looking about again, that

over We truckers, the road that is -- box That's the or XXX right the around for product XXX the and and we fleet. the have what corner. call a too

have the wait and of get with capabilities sort additional need I on again, the are that been several medical on And clearly capability to now there even some design that a producing. we changing little there's have that and So to we others have of that environment working into. the just products we longer explain and believe but we devices

Brian Kinstlinger

Thank you. great. Okay,

Tom Heckman

Thank you.

Operator

with Lubitz go Bryan from is question Please ahead. next Aegis. The

Bryan Lubitz

healthy. [Technical and the and difficulty] is family out there safe all friends being everyone

island families we're prayers way. As and you and your you guys are the so to know, it thoughts becoming out my the that hotspot I'm on put and

Stan Ross

your Yes in way as well and Bryan.

Bryan Lubitz

right. All

first having to company a Can for how residual fees quarter the mix plans, actually segeuing want you full generating of I'll how storage much touch to thing data us obviously and you going of it guys actually back up And sales last the based a of COVID, I from if that from Difficulty]? will. from year to [Technical substantially product much as and then So the of segue you give base from of are business, for more sticky that being obviously but monthly is is off one. year guys

Stan Ross

data three to services Bryan Yes. plans you from that warranty expect, extended share as you services, lion is covered if and five they're of will. might The installation years. The over

number, cost there's it. smaller much with associated no a really it's So but

revenues on virtually is the very So plans. [Technical the revenue if cost revenue larger cost warranty extended Difficulty] sheer little you installation data there's larger, numbers, the no look -- warranty at but

a little standpoint. that from misleading it's So

Bryan Lubitz

Okay.

do little just very by now signing up? is cost in new does getting get three of number that, margins deal year guys being the off a there's or, higher preclude contracts you in and with kind that and gross number of it how you even new data, that that contracts that So we to Is regards higher?

Tom Heckman

No.

on think margin the that lines gross year's we knew difficulty] so and and which major this of numbers line last the EVO-HD new product. product older with in is on even I against EVO older dissipate inventory this some introducing effect year business. bringing We're the the we took [technical were reserves really

really what's affecting that. that's So

that got there. we're us, that much behind now know think, headed I where we've we pretty

inventory. on I our think margins the gross we've you're already from and obsolete to excess growth some the hits standpoint in going that see just taken

Bryan Lubitz

Okay.

mandate, As is far that to that as so utmost sign being your good the sales say are a data want of customers importance program it they team, -- but don't it I is up the with there? margins

Tom Heckman

Yes. EVO-HD is platform platform, This new a Bryan. connected

So by plenty definition, real based program. ahead plan Difficulty] you on cloud for full hardware a body a the selling the on program, We're you're camera, storage. is in the money EVO-HD body generally also moving cameras. the sell an [Technical connected speed and our data

phase to So which storage we're that in moving trying be and nature. headlong the older local out into requirements we're would

[ph] moving of So type we're [post-haste] that into scenario.

Bryan Lubitz

Okay, super.

want Now, and get had are being to pull go product the shut skids had that it actually to base guys international borders reason that of the even on What's back. borders Is mentioned order that out you didn't pallets to down, with you where our then, kind I shipped their on touch out? based yes, you why Stan, orders believe shut also I being down? upon the

Stan Ross

going everything hold them to the hold, because just product look, see assist over until get to because you where theirs and need sitting sitting have in our us still we and want they put the It versus all up. I virus on to they might have dock deployment that the on come on was said, Bryan. of you're mean, set we

the away. not or the back for of going matter just up timing it's us opens And the when travel orders so, a It's all. opportunity that are

Bryan, just employees Kansas Just for Colorado an had unfortunately, our from key quick and self to we to made one out there, a anyone quarantined has said and example to trip in they're days. XX was be that's out of give our traveling Governor Colorado while

the stay the keep that work home ability trying of -- it's we're come home we to those So, can can still people and into office the that at best just even we're exempt those from to someone at have is one do home to and though safe.

So a just back bit. got little pushed it

Bryan Lubitz

Okay.

no want just cancelled. They've clear, to So been be orders been I delayed. just

Stan Ross

Yes.

lot I'm is, So XX.X and been that guidance. at. of here's of their I have the things people we I one pulling the so gave mean, where guidance, know a

be law are We enforcement still seeing strong. somewhat to

add believe XX.X to We saying the mean reluctant products numbers. strength also our that new the and can coming our to and I a hitting could realize of some guidance have big to number that we're that as in capabilities that's I clearly overall with have you to at have the we as going that point, this pool our be still year-over-year we'll they still we of tell. number now. I'm

XX You XXXX. on get very down continue may I see I'm then our point XX, in little time things and pretty at still we XX, let excited a excited -- about this me road on the be another put about But days to hold, different. next call

Bryan Lubitz

Okay.

So numbers. essential. you're obviously, in are and good you And still confidence that's the guys

One can the you, actually Street just Journal by a reported of fact, it's over I things the in New being virus. it's officers that XXXX Wall have here police the as York tell

something out police as that I down, at those they're got moving XXXX there we're that camera them they're in know, don't whole, So a body the believe or disruption South full America from still they're that ordered speed home. but I something that's with a international still whereas you working, that is being seeing ahead? obviously, is guys XXXX The force well as

Stan Ross

With No. bit. slowed international, a it's little being up

Bryan Lubitz

is that okay. Okay, for that, so

Stan Ross

even wasn't We by number never regards was the the that XX.X that in had to in. to Again, our our And the way. one one regards in on radar in Q numbers. that never

Bryan Lubitz

saying guidance XX.X that what year, XXXX cameras. not body Yes. million guys last include gave When the of is does with you you're in guidance October

Stan Ross

know didn't We going Yes. that how was out. play to

Bryan Lubitz

we've are new guys you first gave to and interviews terms radio also -- you things given seen but some had guys be that really you trucking that a in of Obviously, dial-ins to the little? in you fleet big a guidance company expected Bloomberg Stan, you third quarter and mentioned can elaborate nationwide quarter a one on some, that Okay. contracts. when had with and thing, you of close nature And back on and other I've really the

Stan Ross

still looks the like we're have over Still did ingredients couple works. what coming would has in that the that a really one in to and been it's working together So the that we industry. with say and companies need is the together of road we putting last particular doing I recipe finalize the for

We very a we missing have this in and away. And much try pretty lot of they're good get would and we launch because would finalized then, so our everything a partnerships right would still quick actually significance to very we of anticipate that and what to have areas that that big have our to be look numbers year.

Bryan Lubitz

These Stan, insight mobile data? announced related guys is the to that with You partnership? specifics,

Stan Ross

Absolutely. them. of one absolutely is That

Bryan Lubitz

came that Okay. that And guidance before of that that guidance, announcement now contract.

the So you the obviously, partnership would be as XX well? them with that something with to if addition million announce in

Stan Ross

knew don't it how We this into play. just big was We know is. coming

time. on working been we've So, for this some

So guidance. being the on better streets able we then a to how me a just see of give quarter I'll to let be sense some good out have to and have of want --

Bryan Lubitz

Dynalite moving are the you've to and say of partnership again, would everyone's affected into stream I distributing with release a you either last the by -- Okay. today, new be of et press and solution. the in be crews revenue Are you as being all The and you a thing potentially the is, product you guys that just corona virus. going related your the using that work going you police your guys with customers actually well? Obviously, with to cetera. and channels Are distributor ambulances you sending and already the do taxis to to your disinfecting have to stations

Stan Ross

Right. of master we're just time, At call a distributor. I what being would this more

very and our have relationships that will the room have that others we time will well. a additional different on Difficulty] sub-distributors be and some that utilize But We as product point with have role. clearly could nice be that marketing that [Technical to in sub-distributors with that bring at channels

utilizing these of be cleaning Now, be see facilities We such. don't some end that in there, walking would that or at users this and those point. us as doing would

Bryan Lubitz

ship have around just to don't solution your suited about the up product the to Dynalite. you So the worry you and and partnership masked flying up getting with obviously workforce country, via your actually got

Stan Ross

Right.

we'll continue to the I let them lot then at than ahead those have us, do think provide product what do it actual is more that and and a applications. experience the go

Bryan Lubitz

ambulances? to Okay. corona as work is moving a do of obviously market guys and were hospitals way. it going and Island, to that Long put see getting being don't that back -- again, whole the going you being obviously scientist this be figure concerned, for market police cleaning. testing into How and here far epicenter. do to very now I two York fluid situation And as big just kind of see to it that New product? get let's rocket be all virus to mean, you out a to but it's needs We're America The of kind this of is schools or you it things have be a type

Stan Ross

And can taxicabs, that just numbers mean, on. we I some together. had do mean police, That I quarter know after put many and -- preliminary big boggling ambulances, we may but and may for you I we've guys to thousands would hot two numbers gallons you be. don't like company just the at Bryan how crazy. that fashion. end really of a schools, versus you But hate don't thousands, two are now I'd saying something and it, had play on they ships it. we've That with relationships many to you cruise do going that. see in it we -- body and this, it's on say where XXXX don't users of numbers to hundred I Right, shot and have believe because the hear us mean, I I calling through right out least that how was you to this are reinvent the our if did they cameras. how or of give say mind sell touch want that tens item guys up some and some could that

get on together that. guys to You two two

I've To-date sure that we in end very I'll press I been pleased the have orders X give that excess of do we've just that, of again, may to much when of numbers form and whatever to a give the be, will the as launch. the give you. release at something so as and visibility says with try update you everyone an make can month I in shipments that'll seen and got

Operator

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

Unidentified Analyst

to have Stan. Thanks. are time safe guys sure. had, question terrible for Okay. you and I this The at noticed I X.X warrants Hi, you all Glad healthy hear outstanding. million

people consideration and back given can, the you they reverts the price it month you have Assuming price exit it original reduce to to current it, can the terms. say do exercise don't, for and if any one the they

Stan Ross

for coming of Some and the thrown an of new anything around off been something that's table. as new doing and instead option additional dilution

on appeal. very of the events are getting and a be see just of very, think I the let's in would where postured stock we of and ruling goes that to to I would have impact that price. sort just full our how I I mean, think those right play couple enough so what strong to regards lot at favor now at out. really we're say is believe want exercised enough warrants a it in the very, have fortunate ruling fortunate a

much to So and and every cards trying a how thought right about you're have out that into day, on would just we you going now play there. so what but it the we're comment great to consideration figure that taken saying that's made

Unidentified Analyst

I understand.

You it to depending prematurely, know. turn don't And is want you but here. these how obviously, king do cash don't out

thinking I'm guys. about So, it. for you're That's glad you

Stan Ross

it. Thank you Appreciate very much.

Unidentified Analyst

All right. Stay safe.

Stan Ross

you. Thank

too. You

Stan Ross

and questions. thank all to want I great today for everybody Listen, the calling in

can and workers our Responders all people best We to the be of can't the of the many doing employees what we us are care wish on and and so have still our all. all frontlines they everyone thank our Digital safe there Ally and for First betterment out that and to health

and to Thank you. doing. informed everybody be keep you talk we safe. we're how best our effort everybody's appreciate to everyone So, we'll And do soon. on We'll

Operator

today's thank Ladies in for participating you conference and call. gentlemen,

You now disconnect. may

Digital Ally (DGLY) 6 Apr 202019 Q4 Earnings call transcript