- Earnings call transcript Q3 2022

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Operator

Hello and welcome to the OMNIQ Corporation’s Third Quarter 2022 Earnings Conference Call. My name is Ali, and I will be coordinating your call today. With us on the call are Mr. Shai Lustgarten, Chief Executive Officer, who will provide an operational overview; and Neev Nissenson, Chief Financial Officer, who will discuss financial results. Today's call is being recorded and you should have access to the company's third quarter earnings press release issued after the market closed yesterday. on Relations available website of is www.omniq.com. at information the section Investor OMNIQ's This take moment a Safe now will I brief Harbor to statement. the read

make statements During forward-looking future or are course of conference the we the statements. this predictions about statements. address that will All forward-looking expectations, opinions call, certain

you a future and not are our to performance review other see or involve and undertakes and our whether our would performance. factors and our as as based we statements and best guarantee risks principal our view they reflect results are risks materially. and law. expectations Form statements, XX-K These number urge Although, and of for of information, new actual discussion the We affect and OMNIQ result uncertainties and consider we that since unless of change interpret Company's to can forward-looking today, to Company's current of events in control, that and are them a required future no the business publicly they ask the and you these not the or by filings any them SEC of elements that current could light. a expectations that differ on cause otherwise, uncertainties certain the update revise obligation in industry business cases within

questions And as Following Lustgarten, the I permits. go Mr. taking Shai turn the time over please be remarks, to the CEO. Lustgarten, prepared will company will now call ahead.

Shai Lustgarten

provide results. and and the of the on will Neev over to Officer, a today good of nine turn and nine Thank XXXX. the today's our call key call discussion to during both QX update with ended our then joining I months QX and and for QX begin everyone. an Chief achievements he Financial us details the operator, quarter. you, results give morning, will Thank months then XXXX financial Nissenson, recognized brief discuss you I'll the we you

of potential globe. to a today's you about company across entire growth dedication business hope better To start, We will have and that thank for and million, understanding fundamentals by and we across so giving the of clear why sales continued work will you excited of to are came future organic like strategic XX%. even at our $XX our focus one each an call, high I'd finish plan. our revenue of idea It bolstered vision our going by to is after forward. my proud our employees a company I'm that record for the hard QX in number report their opportunities

of gross quarter a compared XX% increase, Our saw XXXX. to profit third the

to adjusted Importantly, XXXX. quarter led to the strong driven of the of in customer improved by to demand our line for an the third This XX%, $X.X AI improvement This all profitability. of quarter. which EBITDA path resulted million bottom our revenue segments, compared in saw increase a was across growth

the this agreement of several AI-based also Solution vision chain one product. North product with asset machine for supply using the We continues what During receipt on in intelligence Health. positive ONMIQ’s of the the an I hospital. in announced further self-service robotic potential an named ONMIQ’s State-of-the-Art American kiosks achievements We to OMNIQ a management we would changer. as U.S. our We major Airport now Israel's purchase newest medical Partner more global XXX focus penetration retail emergency purchase to the healthcare sector our follow-on announced cards largest QSR we the in game Total announced including into of patient like chain Israel $XX for of healthcare a deploy AI over approximately a our breakthrough for the leaders it fast than consider order order quarter, is in enterprise AI-Machine management. and locations retailer XXth for Vision million from for for U.S. as food with system stores intelligent Ministry featured with and related X,XXX Solution the having announced major success now automotive receipt

of Our is patented and cards, this in object provides traffic security vital AI-based proprietary color, case parking Historically, for Vision Technology make, less Machine accurate, management. enforcement, information plates. identifying the law this license identification human automation and including

discounts market identifies By drive habits throughs invaluable and how identified potential business, the many times so lacking QSR information that of they when AI and immediately the such about customer the entrance or will Once profile business or sector, retail things a built, system are past, for for the and have order, on. what the customer eligible we is locations know the rewards is visited, our consuming us. presents the customer. owner about of installing in which they any last as thousands However, usually customers they the their opportunity significant information in visited their products the

a U.S. time, result companies first been never habits in knowing Quantum as to their automation in and For Most now. significant quick collect we we XXX,XXX the have use the able be which to by Thus largest ones, there that machine create alone. to efficiencies. the approximately customer blind conducted are replace Advisors, manual effectively collected to in enabled information about processes study machine are customers. restaurants until service with According

this imagine and You of on impact sector, have as can restaurant in what now potential well as retail the type could OMNIQ.

additional each essential individual targeted. relied in of increased is the our products Fortune logistics continues growth service the OMNIQ long that significant to shortens XXX know sites the and with car customers, information their provider drives XX-plus our longstanding is This instantly identified years whom have of company we throughput. was relationships basis solid came retailer's any on stability of for automotive of service ahead premises new the the handle orders U.S. the sectors. customer a challenges. to retail engines, of to into In supply that chain and AI with standing the from legacy addition alerts immediately addition for Fortune of allowing product. provider our QSR them retailer base customer These and to most X,XXX XXX and QSR, the automotive time. on one There customers the management, X,XXXs to our with the enjoy similar turnaround to over within locations other characterized public significant upgrading safety, by QX restaurant growth have traffic our many

becoming crime real investigation only platform enforcement show prevention time law tool. a tool to is Our he nine ago, safe success. as crime Shield product and city continuing months announced Shield Q is Q a

model, helps cities Q already we keep in increases safe, As is aim cities and creative XX new deploying reduce and Shield. income pipeline Q resident communities. to to interested in municipalities see talent's do, This we the that our it the now initiative offered, the continue through Shield the U.S. invested has is into it time of back business growing

do not team we is anticipated than provide we stronger demand is guidance, busy While had executing. and our

positive bottom with Q top corporate recurring this Shield’s to than expect revenue sharing Thus, lines. the significantly average. business the margins in As and higher strength impact model we a based result current is on both to noted

our let over look Neev? now financial turn to further, I a Before go this results. to Neev me into take deeper

Neev Nissenson

hello, Yes, everybody.

were September XXXX, million of we quarter our down as revenue million, Dangot increase operating $XXX,XXX, from XX% of the XXXX acquired million revenue in statements of XXXX. the QX OMNIQ Dangot with As with third $XX to Computers the XX, X% quarter reported of growth quarter for $X.X $X.X QX of Total for financial million July. highlighted an to with the the adjusted basic beginning for a was XXXX. for the with a loss for loss third million compared $X.X of of million we of of loss in of ’XX. a quarter $X.X in our is in consolidated organic adjusted Shai Net quarter as third in loss The means ended $XX.X earnings profitability. already million expenses share the before of of depreciation third quarter Difficulty] quarter $X.X the our Adjusted $X amortization, year, per of a interest, of quarter last loss third adjusted XXXX or and improvement taxes, compared per an the EBITDA $X.XX [Technical profitability. amounted or in million EBITDA, EBITDA loss improvement $X.XX the in $X.X which million for compared basic of share,

XXXX XX, from $XX.X December $X.X loss or adjusted million the from of note for class of for XXXX. first $XX.X of compared the the Computers, months of the to September nine the per with growth. a the of Our million end the ended revenue The the XX, at months of loss nine XX, XX% in Difficulty] September with was nine $X.X Total the month OMNIQ a reported organic million an an cash revenue first results million XXXX. of spending with are amounted statements financial basic $X.XX balance a $X.X a million impressive months million the to quarter compared XXXX, $XX.X XX, as we $XX.X reflects compared as loss basic with $XX.X operating [Technical well. for compared September well ended $X.X that nine same share, September million, would the in million at of nine the September $X.XX last $X.X at XXXX of loss of the The for XXXX months July Adjusted XX, months which of of of increase ended have share acquired XX, year. Dangot. in increase expenses with or per consolidation million, period our Dangot September XX, XXXX. consolidation XXXX. in second with I loss period of we months for that million XXXX. EBITDA $X million XXXX from nine nine or like as million, to XXXX, same Cash $X.X EBITDA reported for ended

business Shai? opportunities strength Now to Shai and for ahead. the on back highlights the the further of

Shai Lustgarten

our AI ensured execution focused time for invested our in better I potential it successfully the on the remind markets the and significant you focused company for company, products making started Technology we stronger foundation is shown year In In that like discussed you, we spend ahead. of as Neev. executing sheet support balance what to and a in a plan. we help significant uplisting by our XXXX To XXXX, you, you next for would Machine profitability, Thank NASDAQ taking achievements performance of just plan years our Vision next the generation product. focus making is the understand more on penetration call. our XXXX, ahead. on we We To path earlier bring. show This to AI was AI various the this lies our These say, beginning. the achievements continued our milestone. scalability to the on This the our we I the

significance the focus on the to reference In references next potentially as the addition which the of are expect allow equally of more important many to obvious wins are they to we us opportunities, points. what the market year. of These during course capture

achievements, are we markets all these Vision AI our based on with Technology products new many These penetrated With Machine products. our platform. AI single

Our eliminating from airports, platform and and automation cities, parking a countries, to the OMNIQ’s visible, products allows human relevant by so markets. allowing and needs produce stronger much security, references to and proactive lots, products hospitals, increased successful more for and makes building focused be that XXXX OMNIQ’s growth and process, concluding of a is achieve the enterprises schools, note year in the a Technology year that answer invisible unparalleled many and us touch XXXX. ahead. any are technology path efficiency a satisfaction. far is we to to important that the indeed customer as team created is productivity, looking than have It creates

our next and now fastest call to I'll focus over We continuing which into quarters questions. to the reporting clear have the growing Operator, back markets, and look you continue of penetration we in ahead. we a strategic for will execute the forward turn on to roadmap

Operator

open now you. for you. and [Operator Instructions] the Thank gentlemen, questions. Thank is Ladies floor

first ahead. go is Our Lake Please from Schmidt Street. question coming - Jaeson

Jaeson Schmidt

for across anticipated. on Shai, prepared your questions. whole remarks, Thanks Q Shield guys. to stronger just just to Hi, portfolio? than taking I want just regards clarify, to you my or mentioned was want that the company's I follow-up is in product that demand

Shai Lustgarten

Jaeson. the for question, you Thank

see. and But other prepared the related products of demand really as your to serve. question we was yes, increased do -- Q in On on strong see well the we sectors we answer Shield this increase elaborating our further, demand remarks, that it also to the all or

backlog in still growth happening, it's is the it's the board. say and across So continued I would

Jaeson Schmidt

that, the just where at Okay. about, on cities That's enforcement talk today? really helpful. of, contract pipeline sort Can And that under you that sits is up space. how growing law in XX pipeline then following

Shai Lustgarten

only it I XX Yes. we mention cities cities the think in more than that the -- of in to and We've contract, they wait, happen election. had we about right elections end, reason all call, could even previous XX the before contracts under today. for wait we seeing spoke larger why pipeline. have them to to reported Important council a about did is the that cities not something decided because that QX of We're after kind amount the so city of, of until can sign this

continued that growth the So under cities in are we to be contract. expecting

Jaeson Schmidt

should I'll back think from Obviously, lift portfolio of continued the dynamics me et one some that How headwinds. Okay, in of gross cetera forward? about And have growing going to I AI imagine margin great. contribution shouldn't queue. last just are some contribution supply we up, those but and creating then and chain the the jump or inflation

you how in here margin any color think about QX? can gross provide we So should on

Shai Lustgarten

how going the required because the in as Obviously, the to with the in well components. We alternatives equipment backlog have it's still I in that stated see would about case order that discussed up, We're picking explain AI we talking and seek about I the gross had is trend growth as showing of discussions for we quarter-over-quarter. secured to as And provide demand in as And Yes. provide still the we continue going to as can well. challenges that previous product. to original margin several we growing or that different as started in calls continue manufacturers, designers, doing again before continue objectives increased it. say, we and we assured, or we're well. response able how mean, We

a illustration, an just had to $X now year. about about while give So bit $X backlog, million over in little time still this right we you this at in already backlog have XXXX, in million for we

Jaeson Schmidt

a really That's helpful. guys. Okay. lot Thanks

Shai Lustgarten

Thank you. Appreciate it.

Operator

Thank you.

coming go is Acquisitions.com. with question Pober from next Please ahead. Moran Our

Moran Pober

you answering Thank for Shai. question. Hey, my

AI the compared XXXX? first So XXXX, in question is are what sales to

Shai Lustgarten

actually, AI year-to-date in compared or is XXX% sales more half -- in of it in $X better to so than QX XXXX, say XXXX about basically increase. is million

Moran Pober

how XXXX? plan do see the for what's And Nice. next year? Like you

Shai Lustgarten

to want that double year. continue next to We our objective keeping

least So this doubling see doubling doubling if see we -- we'll our saw than or next is more -- ourselves least that see at year, we'll year. objective to at

Moran Pober

right. All

Sounds good. Congrats.

to Looking forward see that.

Shai Lustgarten

Thank you, it. sir. Appreciate

Moran Pober

you. Thank

Operator

Thank you.

Our John Please Ragard Spouting with go Rock. question coming is from ahead. next

John Ragard

the because incurred product you to to facilities in sales additional business Did supply couple, little that get I the some the components? bit could there you. the things Shai, quantification shipments, one as Thank of chain impacted were if, well? have the a you And cost is Yes. a and costs of give the -- third were how us miss to in on you revenue quarter? both short first complete

Shai Lustgarten

Yes.

So quantify still chain. partners, with have, need probably different that, I yes, had challenges. reasons products our some lack It's with say, to a the to I in in we we would missed we've shipments, million due of -- $X -- if facing -- that work we supply of OEMs work to

it systems, provider. as be the like that the our sell to and then to as of designers. we and happened meet we or of other have usually products, $X I OEMs meet On some delivering we we level total said of being would the solution the part of well could about But the objectives the solutions deliveries million. quantify component of able still alternatives are solution that When a products that affect certain as find

we're So million, a revenue. basically but fact million, regarding to revenue record-breaking sold happy could have $XX of still we the show $XX with able sales that's the

objectives, more that unique you you expenses that this to Regarding your $XXX,XXX you of incur, need want the sure about -- that to gross quarter. say, cost shipments to serve that the would or to roughly about, close importantly say I only expedite relate customers. expenses revenue I make to but margins, would That meet you to not deliveries, because $XXX,XXX relate

So these as going all a can can't are EBITDA, you forward? basically at to adjusted I I'm growth parameters. this the because we'll doing again, How or to be that question, could And well. we're next in basically, breaking see positive. challenges, world little good if bit show look you we a need all But you're much doing going -- and this I if the even say probably but company hoping is better continue already is better that much see that already to to do I a we'll say, finish as able the year.

John Ragard

I Thanks. the quality model you've get a and prudent and which go is and to One the what just of how trying future and and reliability get high relates as under of that as contract many install we of more it to what generating may, can will there continue pace are pace be kind cities new a a if the you Q We're had. and Shield forward? installed out cities revenue distributor your at safe cities,

Shai Lustgarten

an install as Our as to, possible just give in is of illustration. course, you plan many to

by started in due Jaeson, over previous If And sign to that, question revenue the you and that, still we we But then in over as double again, a to only. And are looking $XX -- amount rule. contracts. that we we probably conservative. now, conservative installed, of this thumb trying return year. I'm mentioned, if million I I mentioned be go asked be about by get this -- to contract like but But do million ago for year to postponed that for talked there the elections, we ready I'd like this revenue, we months forward of kind cities, a example, like again, mean, XXX we're to nine but initiative $XX we're signed this have here,

And you then in So cities it as towards real cautious and this penetrated If about path -- that that ago. months all at look year, we Q We're happy quicker quick interest. more the conclude that statement, We're with XXX happy we ever doing pace. because given it's nine Shield, if the is happy signed, but of happy than would still a are XX precautions we expected. with product performance market the we just the importantly, with with we're the deployment. with ever than most expected, the this

that So hope question. you kind of your answers and gives more color I

John Ragard

No, so us cities. help. a Thank it's for you updating big much safe on

Shai Lustgarten

your Appreciate you. support. Thank

Operator

sir. Next have do from Office. a question. [Operator Family apologize, Phoegan] Please question I (ph) ahead. with go Instructions] [Neil We

Unidentified Analyst

Shai. top the line. Hey, line Congratulations on and on growth progress the bottom

Shai Lustgarten

you. Thank

Unidentified Analyst

real quick, to back cost. QX, I wanted of understood So this expedited to shipping expedited that make primary of had wasn't back in go one you $XXX,XXX questions, about wanted but go shipping just and I I my sure

you cash or flow flow EBITDA basis breakeven is positive normalized? on an hear So would Did I basically, right? been cash have was that that

Shai Lustgarten

Yes.

Unidentified Analyst

incurring you are QX? shipping in cost expedited And

Shai Lustgarten

than Less in what QX. saw we

Unidentified Analyst

All right. Okay.

we're the out were so solution questions. understand is brings And ask what for don't to really there, make a industry? taking work? couple Can table? this solution it where XX me combined here global to I are to around a And partner Company, tell table I couple partner news that of basically it is that you what questions we total of to we're solutions the doing bring long-term you that Enterprise that ours the of wanted October the large So what to what the named Intelligence Asset the release,

Shai Lustgarten

course. of Yes,

that. of to face say, solutions world selected these is And release now to company of can the unique that only, automation really to in the XXX% customers world aim of deploy of respond part we PR always unique because but additional customers. And company -- ones again, the that are today gives different what customer, we to customers of world's bring robotic processes. solution the chain provider not robotics huge are this partnered customers. for organizations, our the in is a and total that the largest as know, for can and the XXX to automation that you OMNIQ what automating together are and table, the supply the also our that processes responsibility their technologies so to we with. enterprises. some is their also to the our we part technology integration total to they we to The Technology of with but also of in we that deploy, makes the again, we to to respond of have be total with needs. we as So solution to that it, that that is to a would largest solution, one us total refer what not heard the we needs is a Being needs robotics. Fortune you call and I that we robotics, supply chain mean fact about Vision attracts levels, refer robotic share the it -- efficiencies total Basically, to their want but these but I bringing provider chain course, press that we the due table a solution also few in partners selected supply with this such Why? be in they of Because -- all have to to part unique only, we're respond were Machine you

Unidentified Analyst

on selling feet benefiting their this into we Are that with they're the involved offerings comes sales ground if having leader piece from benefit these I from to space, have in Okay. a taking do we're a a global assume it they when big people the team, basically solutions? we marketplace? large these their And off

Shai Lustgarten

handed by Absolutely. And in their were sales that that opportunities always effect takes team.

and channel because that our huge have being huge ecosystem technology we're that have are team, you them, depend Now daily to mentioned, getting reseller like their leads being more come they that relevant and exposed sales and being they on they to to opportunities partners, partners.

generate getting opportunities Now revenue. we already also which are leads

Unidentified Analyst

Okay. -- quick final I potential next on that mean One over we're out that you bit? to what it look quantify today when could revenue expand this XX I be terms the to to Shai, mean, in you topic, is what now can so with a the it of Is little this one XX-months the XX XX-months, is from partner? this generating to revenue? compared

Shai Lustgarten

if probably regular technology know higher chain seeing can If really should least double-digit, to say now seeing in so that partnership offer supply and with Machine example, we basis and considering we witnessing don't our we're regular created I that chain I that operation have of in quantify. double supply today, into I the capability products the it on -- for percentages. supply our -- much from we're mean, that which percentages, so I single-digits chain breakthroughs in if that minimum now bring in we together that go XX% year-to-year we supply Vision growth segment. higher not that we're can growth the double chain. This should growth in eliminate we should at

Unidentified Analyst

targeting? share the the other one other you're couple kind of space one Shai, you sounds are your what retail space. that If targeting we, automotive off And we you're that space if automotive retail could and box of, of a final in Okay. you biggest The verticals in restaurants, companies question. opportunities like mentioned

Shai Lustgarten

Yes, of course.

a relevant as AI nine different We made patents the have us one to markets And using spoke, mentioned we in cetera. of platform, designing spend on, the created we we As to during call, penetration. lot we became already platform we et that that markets. and relevant one many time

of is automotive. more the additional One retail XX. had you into car got washing exposed with ones, everything hanging restaurant. drive-throughs or look either the low not retailers dealerships, the more than were different are all retail now at space has that exposed the car makes what we fruit, all we to that ones only them in that that today, -- drive-through go anything additional you that mentioned, in anything It to airports different is different in But when today, major

We and it's have plug-and-play solution in becoming unique. that excited, we crossing that's what so a our what limitations. it's that a looking we're platform us it's makes that so or relevant to makes the to is between are and now one because box That's eliminating We're markets. looking on borders is just We're on markets. eliminating all not relevant markets the now many relevant

that's algorithms that we the excited. the opening food markets So the up and talking box the product but for to a as product in this it us makes examples. what now ones we're to and to that components design, retailer mentioned, up additional we that we're engine, identify that it vehicle type taking any restaurant, That's restaurant, in of a about it opens with but other scalability really train for the fast drive-through, example, different like I give providing some you

Unidentified Analyst

or from to Well, look I four hearing three and Okay. you you forward again, thank again months. in

Shai Lustgarten

Thank support. you sir. Appreciate your

Operator

further There to you. questions be queue. Thank in appear no

Lustgarten Mr. closing any would I'll he for to to make. like back it So comments hand

Shai Lustgarten

to with the loyal shareholders as of much. Thank you quarter. success least, I'm extend very not you as all well we us, would to really next like sharing our my to continued thank I'd operator. to for first Thank like supporters. talking looking forward success. like customers you, you thanks conclude, strong really Last would to wish And our I to sincere and all, professional and other team our but suppliers,

Neev Nissenson

Thank you.

Operator

this Thank ladies and gentlemen, you, does and conclude today's call.

we wonderful thank You day. you And for may have and disconnect participation. lines time your your this a at

OMNIQ (OMQS) 15 Nov 222022 Q3 Earnings call transcript