ITI - Earnings call transcript Q1 2023

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Operator

Good day and welcome to the Iteris Incorporated Fiscal First Quarter 2023 Financial Results Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Todd Kehrli of the MKR Group. Please go ahead.

Todd Kehrli

Thank you, operator. thank Iteris’ participating first financial ended XX, and call today’s fiscal everyone, June discuss to results XXXX. afternoon, you in for conference quarter Good for XXXX

Bergera; President CEO, Iteris’ Doug are: today CFO, Mr. us Mr. Joining Joe the company’s Groves. and

open we’ll for call outside remarks, company’s questions the the covering the Following on analysts.

of like statements current events SEC, cause the all call, from information, change assume continue, the participants based and identify that make any may is are Before date, or we substantially the to future statements differ future. to to undertaking subject of refers statements. during company’s most the future which comments we’d factors and may discussed updates today, valid. in XX-Q forward-looking XX-K, differ risk important that will one we contain forms documents guarantees you the could future to the are X-K, no an Iteris from the that are what on at performance. contained recent these provide to remind which not results in results later from regarding be files time still with and those are not and time today to the forward-looking to a that should performance forward-looking statements Iteris materially is that this Actual company, obligation the actual course specifically company’s company of

the As website always, on www.iteris.com. today’s call the Investor you find company’s section of of will webcast replay

Joe call CEO, Bergera. proceed. over please Now to I’d Iteris’ Mr. the like and to Sir, turn President

Joe Bergera

today. of to afternoon you good and joining I everyone. Todd, you, appreciate Thank all us Great.

$XX.X to brings $XX.X continue In reported the million, total net mobility representing to first relative our minutes. the prior XX% position orders the in these a to positive. of discontinued Weather And the million, the representing on orders. the sale quarter we’ve operations revenue same decrease The highly recognizing Agriculture chain of for smart total and DTN and X, as year-over-year. leadership all million Rather periods therefore, revenue our prevented Vantage this few our the $X.X year-over-year for net exposure supply more and million. segment period. XX% of slipped chain presented results confusion, supply a XXXX. of clear mitigation year our increased XXXX total that remainder challenges, decrease representing our $XXX.X reported fiscal Despite would fully want in first quarter of completed of be As to earnings million for I’ll program in quarter announcement. did XXXX, fulfill and discussing operations have a not quarter of the we customer This to supply million, $XX.X total company the today’s of in the shipping, to to to continuing Analytics the the To same already bookings detail fragmented market. I fiscal discuss bookings we our backlog the chain right, $X.X we chain revenue of on platform, infrastructure in XX% us strengthen compared record If period. Vantage first the increase trailing supply is ClearMobility prior The quarter sensor reporting of first to increase LLC we an I’ll reminder, to $X.X avoid that only not May in a lose record a started our segment some supply attributable backlog. million chain XX-month adoption challenges, that of X% status remains challenges very from be management second call.

in opportunity figure entities through bookings XX-month very local or funds Act large with the to of or flow front IIJA. funding. either trailing our reference, funding federal the Investment your will Under not a IIJA, us formula For Jobs Infrastructure does grant include

funding As state we’ve law budgets said, the since and the show formula XX, will XXXX. after on first local law in up into to begin signed was IIJA in the into fiscal November year effect. went

related With most IIJA transportation state under be and issued X, October entities, For that’ll local U.S. the not any to DOT date. to intelligent XXXX. funding, grant respect has funding systems grant

Initiative, of from Due meaning, applications. have a criteria the total entities with The year of ended or backlog XX% this various grants this support state be record At June of won’t meet transportation’s sustained X% the early for increase representing Streets the be ending will in first and of they bookings, total initiative. period a until this grants grant next. tranche pricing These local XX million, included to Iteris net year-over-year U.S. record in on Safe $XXX time, a sequential and we basis. calendar increase must their awarded late All

Vantage the million attributable as and XX% quarter, lag an total was and the in order. Again, figures ending first revenue million period, to impact chain the revenue, orders. minimis quarter XXXX the increase year fiscal revenue first prior $XX.X X, same relative quarter, our decline. product product recorded was Of XXXX The firm quarter in time a product to to quarter constraints. our quarter sensor The in revenue. or to in sensor chain an $XX.X versus of was revenue, bookings period. due Fiscal Whereas our underlying first total reflect our the if was unit shift service revenue. always, Therefore, net XX% first $X.X de backlog and quote was XX% first supply in mix the $XX as XX% increase would year-over-year backlog, As as price is unshipped recorded reported prior product increase in not XXXX January recorded same constraints, demand. from reported year for product revenue X% and XX% supply quarter $XX.X fiscal our been higher representing have representing revenue for product reflect fiscal million million million was service revenue XXXX customer largely first XXXX as

modernization We continue for introduction fixed intersection levels travel relentless continue performance of every the monitoring and for we across performance on market country. the our for to a application, sensors, for the product time Connected In with Sensors, of Apex as have we which new VXX introduction virtually product of Vantage first our extended historically industry. sensor, and roadside Because experience our Spectra units. the standard the Iteris’ product artificial quarter, detection, sensors, resource health superior capabilities lead to of set performance, the well focus above the to win as Vehicle intelligence new competitive large third-party initiative cellular demand

the selected Intercity program, Arlington, we alone, initiatives. II intersection modernization market Mississippi as example, citywide loyalty as Integrated modernization notable these modernization program, a initiative, intersection first X the for cost DOT For and to to program, to we possible than model, management components quarter rural Xx had of their maximize of DOT global consolidate Virginia DOT components of chain supply for you’ll more program. prior and A normal our the Pasadena, the Phase Phase we supply customer our devoted quarter business of California earnings first and X range in the Corridor hurricane X Phase in Phase Florida renormalize modernization reviewed impact To a first management market substantial and source challenges secondary million. implementation XXXx following attention a share remember our in on which call. a chain $X.X we program, our regional the mitigation To Zeta from total key quarter, in manage were restoration The cost. Colorado much

strategic accelerate and directly organization, consultants reduce that and calendar manufacturing lead a year. unlock quarters. a We network stages to sensor you hire partners, the drove access and X backlog supply specifically, of outside reporting lean reports in on for under and market inventory and major buffer to we earlier issues. X We remember we from moved specific Groves, During brokers reduce alternative chain to overcoming giving All circuit dependency these future This the Doug planned major and chipsets to reliance time. process completed $X.X sourced boards new the as going Groves. Doug our in quarter, our significant automation worldwide. our chain that toward Vantage to line design create every are we testing broker improvement. help of continue supply appointed will we made build various well this our and headway this us in as enhance at strategic increase We efficiencies to to hire forward. our on engaged electronics these key direct to manufacturing in expanded components More And inventory, million XX different boards for

want inventory service the the representing year-over-year. plan. expect $XX.X in meantime, period, quarter we $XX.X Doug same supply increase revenue XXXX was few versus to review As related we will the chain our service the of year stages I’ll I discuss levels business. in our the Fiscal next first minutes. normalize, discuss, a as program supply performance lines of in And to mitigation further chain a complete million of million prior X%

we X forms reminder, of a recognized As revenue. service

have managed our Data annual project-based second, as recurring services that consulting activities. First, Service, is Service, associated and a with as a Service, from and as Software our Platform there we is revenue revenue a offerings;

first XX% substantially annual The outpaced our portfolio as was period. ClearGuide, attributable million, adoption year-over-year quarter representing revenue. the managed of is of ARR product the of in Our SaaS our growth total rate representing mostly recurring services $X.X an XX% increase in of revenue our which lines service and of such growth to

year-over-year our due growth, revenue line first ARR quarter project-based solid supply our indirect revenue was experienced While to chain constraints. flat

integrator to some example, program could because delayed parties which function schedule we chain supply own third systems challenges. deliver a equipment large the project manager, not their as certain through the or for due projects were For critical

service net XX% annual in of the bookings, service the recognized service the future may the recorded and recognized quarter, disruptions. in be continue be we’ve small annual as net are in as taking While the bookings future action we this next few for projects, frustrating In mitigate which exposure identified and will of bookings revenue. is is our $XX.X net these to revenue. of and XX% a million recurring recurring quarters, number to limited first of Again, the will

Additionally, we bookings. large convert executed to contracts that several future will

the Transportation for Some services. of has Road Infrastructure TTRIP a a multi-year million. recent of include what This call we customer or value Department and Program, Traveler $XX contract notable agreements minimum with Traffic, Virginia contract

actual million contract million. We $X.X first We the value will booking our approximately recorded a in against this quarter. expect be $XX

Secondly, we our to Area advanced use Metropolitan Transportation from the information Bay received a Francisco of San order the $X.X million system, traveler Commission task extend ClearRoute.

contract extension received order to a services dollar multi-million company. a Bay million broadcasting a $X.X U.S.-based to provide Fourth, recorded we our to managed the clear Area we MTC Third, data large task activities. extend for

aggressive more $X.X and with development contract for our road data the continued quarter To the across support and software. our a for drive received multi-line ClearGuide better we task X utilization, proof states. restructuring first in a enhance our than orders we for sensor a and orders into a clear our accelerate received And finally, support $X.X organic million and inorganic ClearMobility combined in combined to to production and model we software growth. task Additionally, portfolio, company concept map, completed million our a to than deployment Cloud business alignment our vehicle platform-centric of operations resource solutions transition large insurance in commercial of more

realize as aforementioned cost supply very In total benefit chain material response offset road addition as our full to of an will summary, backlog. reorganization our the mitigation increases, bookings, strong, $X.X plan. until record of cost benefit, annualized resulting to million to ending we the record In continues approximately to net produce first begin help well ClearMobility total this be solutions in to customer map saving quarter

good prevented begin produce progress Although to a backlog, believe will and competitors outperform to us chain our environment, continued we shipping in financial $X.X second Vantage quarter quarter. benefits implementing supply our program, which we our chain from our mitigation Iteris supply first difficult sensor that constraints in made million of

Doug on first to I to forward more over expectations, some I’d our Before elaborate like color on turn those to financials. provide quarter the call

Doug Groves

Thank afternoon, everyone. you, Joe. Good

for and which the company’s of please matters XX-Q IR reminder, are today. under press a As website posted description discussion release our the filing on a further during call see

within up To through there we our components line resulted see $X.X expected, of i.e., needed, we we certain circuit XX% revenue continue quarter. shippable the of year-over-year quarter, incremental backlog, that chain we $X.X necessary that material in would the could we to available components about from From growth both as many normal quantities not million XX%. which was approximately suppliers, slipped and million been million XXXx mentioned, If QX supply point, again board our core not Joe several and all Vantage up As of we spent Sensor prevented the top be the Xx X product source to to in impacted normal cost in all inventory sales we the needed to any of million were that have this to which results. assemblies anticipated face to that be to fulfill or these their quarter, and Vantage continue approximately channels. the QX. continue the the We $X.X challenges, out in components product challenges market, costs continued and that in the purchases a we the had standpoint, us from $X.X brokers, manufacturing sensor in secondary family revenue cost. approximately from bottom This from components

As many initiatives to have situation. Joe we improve ongoing the mentioned,

we chain We the supply [there’d] pressure. these initiatives. before continued However, the next there few chain be pressure to over quarters that supply be expect realize of continued expect not we benefits full do do

demand On and record strong our record continues to and as $XX.X side, million. of evidenced $XXX be our for by bright bookings backlog the services of million products

compared XXXX to revenue of quarter in to move quarter year the X% million details a I’ll ago. first for million on Now, $XX.X fiscal quarter results. the $XX.X to decreased the Total same first

quarter compared to quarter decreased same gross basis margins first from XX.X% year. in to X,XXX the Our points XX.X% the last

certain unavailability the pressure mentioned, gross As and previously components due to those the the of to available. cost margin constrained our revenue were that for was due higher components, was

million the gross margins basis million mix. issues, the been of XX% about underscores a as not revenue because the the same The gross previously. to quarter our chain chain have historical our due cost from position product XX% to decreased same X,XXX market shortages, component normalized would take basis, were Product continue million in as declined last year. market-leading clearly points quarter-over-quarter. account share $X.X market, This same which competitors. compared of to $XX.X $XX Taking that the XX% revenue the into was margins cost revenues we supply the last Turning to X% is average sensor year, product On and in for XX.X% to XX.X%, quarter to the compared mentioned growth excluding revenue recognized been have supply about the issues the would of to XX%. our

in XX% up by increased prior driven recurring Our stronger the X% same prior the sales. to $XX.X software was year the revenue million total service $XX.X XX% year quarter, million first in compared quarter, primarily of to was which quarter. In revenues revenue, annual from

income was support Service GAAP were extensions invest first support first a the basis the record in the primarily ago. was key contract double-digit future operating compared operating about with were out a operating certain as We product the G&A to to reported product marketing year $XX.X labor quarter up in revenue incremental points loss the managed year year. gross timing last in and XX.X% million in organizations GAAP in in once $XXX,XXX, XX% we to our contract of sales expenses by $X was revenues. million, million loss service -- and from the compared growth reminder, of shortfall million prior a investments quarter-over-quarter, same expected Sales inventory restructuring $X.X charges. in the revenues same $XXX,XXX driven decreased and building some increased quarter was the bookings. a again ClearMobility platform. R&D $XX.X million the and our which flat continue annual Operating our to This while $X.X mix. $XXX,XXX $XXX,XXX quarter costs and increased to and margins product are The in As of due quarter. and compared revenue to same of related quarter to comprised our recurring of costs, software XXX expenses

charge expect quarters. ongoing share continuing X the by first the with of about year the restructuring quarter reduce over operations The $X.X operations diluted was net a continuing from in to a in same our ago. per next loss costs $XXX,XXX the income from GAAP $X.XX net $X.XX We million million, loss per $X.X Adjusted quarter share, compares which or the or of million of and $X.X the noted. revenue for quarter The GAAP revenue the first of all million year. X.X% to chain GAAP of the operating EBITDA positive product loss which were issues charge quarter shortfall, of X.X% adjusted first compares loss $X.X net approximately last by driven supply in or a restructuring loss was the of and EBITDA previously loss, or EBITDA revenue,

progressive outlined quarter, our half chain plans improvement through will supply XXXX, of second to Joe, the it the for beginning second occurring mitigation key take with our majority of time anticipate the With in we improvement boards year the customers. our supply position by of in to circuit chain redesign fiscal in a ship since the all our the

again redesign fourth and redesign of the We X another and year. the and to will These deployment XX% return quarter deployment in key the redesign about complete product QX, expect to margins should of X boards in boards circuit complete activities QX, in QX of and gross respectively. this circuit the by

of of inventory stock. plan, stock and of in build increase $XX.X The our supply $X.X capital equivalents planned repurchase a first decrease net loss, net in the resources. the of million. and part in of recovery million liquidity million end $XXX,XXX cash cash capital were as quarter, to and and company million working quarter-over-quarter Cash $X.X result buffer $XX.X chain equivalents turning a was Now at the to the was

we As normal we $X.X previously quarter. extended in this markets, offset unable secondary our practice which get negatively markets from procured million business working to the in is the components mentioned, carrying and any payment terms, impacted costs, also were in inventory the so capital to these

remainder the see or volume increased to in in year. purchases With of increase QX, not inventory inventory the in large expect the such QX a the do we of

key expect is we the constrained of the However, previously all do circuit be until redesign still boards remaining the X mentioned, by to components completed.

first property increase the simply This quarter. of the year spent $XXX,XXX timing quarter, still the of than was in less difference, model. expect our reflecting equipment in is full year Lastly, business up $XX,XXX purchases first and prior in we and be X% from a CapEx which to asset-light we revenues,

be in focused So, continue supply laser on challenges. chain summary, to our we

mentioned, Joe plan. redesign progressing designs. As already part X well QX plan materials and another our We’ve of our multi-point of assemblies the is as board deployment mitigation for begun in with new buying circuit

storm chain So on even customers we products, Vantage can with are functionality upon. supply features any for other weather multiple come board circuit sacrificing have confident rely come out and side that and without center we designs to stronger the market-leading our the and our

the back with over I’ll Joe. that, call to So turn Joe?

Joe Bergera

Super. Thank you, Doug.

well freedom most market lack. new and platform-based of opportunities investment So, to smart enhance in degrees infrastructure as and trends, global market. management strategy, disruptions, dynamic position market supply access, provide significant highly despite continues companies This mobility fragmented to in associated the the favorable secular optionality its and and that chain the pandemic from represents due flowing IIJA. our Iteris’ market Iteris historic large know-how as

competitive Iteris, above-market our As front actually a proposition very we believe and the improves of growth, about the demonstrated disruption despite result, value chain current near-term sustained supply environment position opportunity bookings by from remain ClearMobility as optimistic some in constraints. and

sustain map, our leading of road should we the market we execution earnings suggest continued indicators outlined which our on last solutions In track, growth. future fact, share call,

XX% the our strength performance, new up to the For basis remain qualified value win example, increased sales Due a our to record side XXX to total year-over-year, demand over of the is management our able execution mentioned. reach of supply proposal rate begin of and opportunities is and program objectives, program unlock which To high. has the near-term on supply backlog, focused will that to mitigation that following mitigation renormalize end, of cost chain our some historic we’ve Doug structure. identified chain already points has our

supply prototypes in develop shipments our lean in completed XX months we’ll of of to that year. continue shipment X second a this begin buffer accelerate the supply we’ll third, effectiveness QX; should board key to increase production of board build circuit X additional, circuit portfolio. and our the drive chain beginning in of December -- the and XX% in circuit And reach October we’ll We’ll we’ll were stock more efficiency and QX production in in First, shipment our Fourthly, components. and for to X which processes. we’ll QX. our X final we’ll X, in more Fifth, additional price complete average designs prototypes sensor X. the QX implement all and an QX; in effective XX by across surgical development chain for manufacturing set boards the quarter, initiatives level production for We of about for Vantage second, beginning manufacturing

chain begins other progressive even inventory quarter, continue meaningfully midpoint at we dollar forecast benefits. plan our specifically, we and Based XXXX secondary from $XXX we current as the we’re we conditions. challenges. line up our global expect Our of record the XXXX same improve margin supply chain second market a revenue future Likewise, quarter the line guidance fiscal begin mitigation current our of of to the would global resume in In of supply environment ourselves broader words, our fiscal More and successive million, $XXX growth Vantage margin through XXXX EBITDA we we which insulating XX% components. if organic expect year full backlog XXXX, produce in revenue range. growth our to rotate position, sensor bleed fiscal starting chain growth, remains in progress our through in largely through broader second bookings gross benefits as program should million supply the to to quarter, year-over-year our total to performance revenue our as fiscal as step should in second quarter, our anticipated fiscal our revenue our XXXX fiscal on and represent third

result, EBITDA fall year revenue. range adjusted continue year of X% to to within that we a forecast a full As should X% full of

fiscal it extremely So, with companies program. quarter been this said, most challenging, XXXX our first That mitigation as that has was this we closing, Iteris in for period. clear for to difficult offers supply public program reported and this our execution chain period, our navigate a pathway have pleased are very of

that high level of XXXX we potential believe strategy represents significant market outlined platform-centric our the our demand value operating Additionally, for and sustained, by shareholder as model. validates Vision

be that, prepared we’ll we’d time? do with questions to this we any conclude to So your questions remarks, comments. Operator, and at our and delighted have respond

Operator

Our our -- Latimore I’m Shlisky sorry, Instructions] participant Northland questioner from Mike Capital [Operator first this is -- from first Davidson. DA Mike is

Mike Shlisky

them a kind the you Are additional deliver the curious right changes date? the deadlines just of under some certain and shipped in in at sensors contracts of have ask not you by on go or back risk I’m were had don’t or the you of for to there. have -- and time delayed contracts? any products were if time, if penalties Do that you to to the Some customer those to

Joe Bergera

virtually nature. regardless faced And right kinds where instances issues certain being -- of are There any the this what we’re extending period, of no. is that our by facing, are delivery all answer every have participant have and specific may particular customers we that are dates. in substantial now, so latitude. But risks we market the in of don’t The

of to be of be there orders. cases, going product. So but all some ship shipped, firm orders as delay my I said the in they’re terms some are all in may our will In when we remarks,

We that have any and would be orders for. penalties not responsible we had canceled, any aren’t there

Mike Shlisky

for RFP hit you start build is any you have to a from market? funding with I’m do customers might have ago. -- any that Or you about money feel to from with couple quarters of build projects see question that seen spend some the other My roughly infrastructure bill? when curious, new the past

Joe Bergera

Sure. Yes.

funds mentioned and as to time respective the everyone that was year to local the Jobs expect Investment that Act, you’re I they think down was flowing that infrastructure entity. the signed, the I So, which local next fiscal last we until call to the the year. the state any referring shouldn’t that in XX signed the IIJA Infrastructure November begin At told bill level for is and from

just We’re begin state of fiscal most In see starting new to their X start jurisdictions that and cases, this will October local year year. year. fiscal on new

would their at so, formula to show will And in begin expect we funding point in that budgets up that time.

by funding, Formula the with other get funding. way, in mixed can

in underlying to instances know it’s difficult of So, funding some the what the is. precisely source

of is tranches. is funding The in of series to out of form a I other going form come the in funding grant being as doled the grants. And also mentioned,

approximately to be X- The Safe dispersed for for initiative. And expect for currently call U.S. money And grant Department a applications those Transportation right various going XX. we for September evaluated to proposals proposals now. brands. to there’s is be on Streets associated window those or that X-month the call close period to with first for be is tranche there All The through will

expect So, the anybody show able the move answer the we’re grant mentioned your see way, see make I IIJA it, on by a also application to a question to the fall, believe don’t nobody do the that, market in the not And next submit funding to as to to the accelerate start we but this ourselves. any that I and that we as sure to vendor, call, is want it up is calendar from expect happen year. at missed I into in point, has we ITS seen that, as

as authorized We several in that’s in their grant we to some local And applications. cooperation agency, well with to submit have public support as I state local to said, or as and pricing universities, do instances to university applications. the and with a provided that grant state agencies,

year. grant certainly benefit we would from they’re that as we’ll expect the so this later applications And awarded

Operator

Latimore Mike from Northland. from comes question next Our

Mike Latimore

So guidance the I guess year. just on for EBITDA the

for bit You’re lower EBITDA start-off quarter. first reiterating guidance year the little a with the

gross talking margin on you’re year XX% exiting think sort instead of the I of XX%. now about hardware

we making on difference up OpEx just So a it should of here savings? -- think some you’re

Doug Groves

That’s correct.

As we’ve last been been quarter in it echoing, as has quarter. flat the G&A this be should year, over this

And so can there. be the we cards ship then, And to get will see margin product a circuit pickup should and fast the reflection the the how we of customer. into new some

where So, gives keep both of guidance to of those I confidence the think it’s EBITDA the the combination at. us

Mike Latimore

or And the should we third think quarter here? about reaching positive second EBITDA in

Doug Groves

Sure.

the is third quarter function of end it’s be going but to get at expensive by our bought these the of a try -- first that components the to the tail we flow-through definitely quarter. and the of So, quarter, by plan second there

will not will through -- the quarter. but to filter maybe that second some, that all of So

there, we’ll go. So products’ shipments the to get I our plan try think how Yes. is to and but have see

Mike Latimore

then, increase budgets sort do a will regarding your your Is to of way have of the quantify resources of Any have increase the like much expand your XX%? to And for XX%, this more IIJA, much sense will products? a type this? of of of how you how customers because customers

Joe Bergera

question. great a that’s Mark, Yes,

the back a like basically, So and for funding be and predetermined number road the flows basis, is jurisdiction, that on overall it criteria formula And to comes of gets miles, number based government, allocated a formula local on of then population, percentage the among factors. the other would a funding reason. which federal the called money GDP, revenue

will largest absolute said, the those And have -- have Texas expect, But given expected budget percentage are also the less, some funding the those largest is smaller as That There on transportation California, Florida share and you IIJA. criteria, it begin might formula under of a the less. to receive states larger may being an on a receive since basis, basis their with. states budgets to are impact. so,

the the window, so, that total And each XX% to on to think what in IIJA the And much executive the to our state-by-state based specific state states to over at of what could also funding be. understand you are being to I X-year those the approximate departments of is really funding formula. most But XX%. said, need uplift funding it transportation increase look directors as current going the is in level that order of relative expecting by as then various

right we to going a is But a directed be towards IIJA to of lot funding. that have maximize substantial some line to the it are has we infusion it. projects, which like construction-type just to components huge of only it our Iteris’ things of benefit to certainly in a everything Now, in that can would trillion And actually brick-and-mortar expect lot time, funding a there’s we’re to go peripheral is and this of that’s $X.X wheelhouse. last funding. period of clear, A the But federal that share is for Iteris. to doing bottom

Mike Latimore

And then on the Virginia deal.

about talked You it.

million. I go could million initially, to think $XX you $XX said

And to I just you’re I million, that So XX% And much how is kind of guess $XX there? catalyst level? third, is of what’s what to of doing to is with starting that the incremental that guess, software-as-a-service your much you sort already involved sort get there? of -- how of the then

Joe Bergera

great really questions. all Yes,

I activity contract. which the includes Commonwealth related system, getting already at. ATIS So, hold TTRIP to you’re think the that We program some

potential And But most totally meaningful X-year the upside, $XX additional incremental I $XX is related ATIS generating -- a of of will of that’s represents that be that’d already that, to ATIS so, million, program. would amount by over arguably the new work that or say that revenue. probably Commonwealth. -- winning million Commonwealth I from that the the we revenue the period. would are for and a we doing, But the would that contract, preserve the say we’re work I -- guess to because revenue, replacement we’re the transparent, currently the doing already TTRIP majority be

Mike Latimore

services additional that So, be what you $XX would providing in million?

Joe Bergera

in So, and seeing including issues, virtually evaluation, this a selection every cybersecurity management needs to all contract. the is various general state the then the be the technologies the the for the and is on state selection even mandating management migration a the of -- departments, department. infrastructure state variety that to transportation due including mentioned that activities cloud, related calls, -- -- of we’re factors, fantastic governor’s the also prior the of as office The involved CIO agency activities all to including cloud, to that I’ve

Virginia evaluation of case this in in pursue the the the Transportation result, the took it of means it involvement we is license wide is across that Commonwealth. Federal activities only CIO And contract this the very authorized went because activities longer and Administration. contract win of related a But gives CIO the expected upside technology-related than by of the office, to to as through. process. range a to evaluation in a So, authorized also in the process contract to what Virginia that particular had Department huge Austin contract is, state involved that that by was it be to hunting us that’s And Highway office a honest, CIO lot is we this the

to going go we we hold has No similar but this being not states extremely into other I’m the similar to going specific by contract. expect vendor contracts and So, see forward. date, to are other contract details, awarded excited a to

Mike Latimore

Right.

will reference So it be for sure. good account

Joe Bergera

This important reference a contract. account. is Fantastic really

that in to we’ve contract focused seeing offices is won of across that CIO it. all excited about a type, our been first various on phenomenon because of talked is As very states this we’ve the country. happening the we’re its meets extremely and technology past, ensuring the major of requirements the This have the of we’re

Mike Latimore

us? that Or -- independent the is that? of helped funding this any IIJA the That’s great. is of -- Does

Joe Bergera

a It’s question. great

federal of flow the that it U.S. not by contract mentioned, Transportation office, very but and this federalized, I was as CIO funding only FHWA. contracts contract many Virginia are, the is Department approved was meaning So, Department this and Commonwealth can Through the the from that directly -- Transportation FHWA, activities. meaning also or not approved performed meaning by it various [ITRS]

mean in receive to IIJA this it contract does called federalized, it through but explicitly So because it’s funding are contract. the that out is we not likely

Mike Latimore

last increases. price just on the then And

going which the -- hit can about you you’re bit can already I one are you increase margin? and when gross getting And products me So had should think they talk remind price and revenues just you to a do little another just one.

Joe Bergera

sure. Yes, for

price increase Vantage products. XX% was first the all increase across our on the board of So,

of a there of is As quote the between like and delay preparation of submission I’ve order. the the our mentioned, actual fulfillment quote,

real our we price the strength on latitude that This costs. are are into future position, would we see price now price additional to highly we to so it, additional We of were impact it’s pleasantly have price continued And able, from in so, cover chain perspective, an the that in these XX% increase first see right lot pushback. any pushback of that fact across surprised effect that current I well we’re that supply beginning go went take October the to our increase. from And just increase January the a we we’ve market considering differentiated any and light In take to feel especially products didn’t the challenges think only circumstances, the performance price into -- a to chain and that but first can a had on increase supply to were of aware of we our -- due customer without X. customers X. the second price increase market, premium always effect

after first, first. unlike months So, the it’s the XX

So, it’s not across going board. the to be

which But to to across price point. We’re get another we’re X. and go going potentially perhaps increase it out the average increase more at into will increase less the should XX% on going XX% we’re than to most specifics effect some increase about on components, take additional into that but will on I then October this about components probably Obviously, portfolio. going others, not say to

Mike Latimore

think grow rate? prospects And there getting X.Xx is the on you goal Xx XX%, said. at what to overall the for I there? us is just think I to growth this of guess the you what that grew Or one And goal can ARR company just remind last me. And year? kind I already

Joe Bergera

Yes. about Doug, do that? you want talk to

Doug Groves

Yes. Sure.

And -- those memory Joe Xx normal the his at to mean, expecting of grow total That’s at the I So is. to were good. what were ARR. is majority growth ARR bookings, in in our in we bookings least your as alluded rate right. all service revenue line service comments, X.Xx our the to

and build probably able come contract that’s be in piece when backlog the of while software to takes because to a seeing the speaking, get that, generally bookings ARR, support we’re generally you sign you know, that because the going. bleed as So [XXX] and you in it that to get

years. a ramp. for north of to that’s to the take to ARR it the our next get of to going while But couple in still XX% expectation it’s XX% So

Joe Bergera

those which impacts and growth XX% subject contracts, services there managed noted healthy growth -- growth Mike, period. due very, higher to effects, lines total on that big got was that services And included so to in I line, timing timing recall that less product our rate proportionately very the recurring of you on annual of revenue. the can kind some our big software comments down be for drags and isn’t managed my SaaS and product may some was our big But and timing. for that our We’ve growth

Operator

queue. ladies questions no This conclude and gentlemen. today’s Instructions] conference in does [Operator There currently Okay. you, the additional are Thank call.

your phone disconnect day. lines wonderful this a at have may time, You and

Iteris (ITI) 7 Aug 222023 Q1 Earnings call transcript