Earnings call transcript Q3 2023

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Operator

Good day and welcome to the Iteris Fiscal Third Quarter 2023 Financial Results Conference Call. At this time, all participants have been placed on a listen-only mode.

And we will open the floor for your questions and comments after the presentation. Please note, this event is being recorded.

I would now like to turn the conference over to Todd Kehrli of MKR Investor Relations, please go ahead.

Todd Kehrli

operator. you, Thank and call everyone fiscal for in participating third Good discuss thank Iteris's conference XXXX. XX, to ended its financial today's quarter afternoon, December you results XXXX for

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

covering remarks, the company's their questions from call Following analysts. for we'll the open sell-side

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

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

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

Joe Bergera

Thank appreciate everyone. you I Todd joining afternoon today. good to Superb. us you, and

valuable joining significant, experience X, stage Iteris point that Officer of some having poised a make Kerry and inflection earnings XXXX. and Chief February now particularly announcement Financial begin achieved with its that will today's our Kerry Iteris regular remarks growth. SVP for to we want Before be believe next relevant brings as I Shiba critical we highly will be effective about commentary,

Iteris with be arrival Kerry has huge course, him and to Doug And shareholder outside Kerry’s strategy Doug to our imagine contribution to have partner navigate extremely cannot execute unanticipated been a goodbye years, control. supply than team largely increase COVID-XX our global joining global business working to the past the we’ll and, events I Doug and of over saying tomorrow better a our challenging to of three with to chain complexities the associated look I which made Groves. forward Unfortunately, crisis. value. to due

the to a to To adviser ensure him an committed orderly our will XX-K and critical for other allow has contribute Doug preparation to senior serve as months, of which transition, four projects.

I course, his the endeavors. wish Of Doug best in very future

turn our results. let's our attention quarter third Now to

our fiscal For record XX% total a to of and for the third due XXXX economics progress the to to released minutes, sensor year-over-year. initiatives. products were basis product margins in more points alternative began product In improved shipping sequential color basis second I'll our a was products Iteris strong representing of normalize on chain a our demand growth and quarter. supply improvement $XX.X the circuit the production The Vantage services boards gross More as supply our provide increase on X,XXX began chain few reported which of revenue with our quarter, million, program, underlying lines. our specifically, we that

that is reported bookings $XX of bookings in year. an period than very the combination adoption given we quarter, to million. positive. we a potential In the quarter strong procurement of results impact reported cause comparison and tend concerns net We broader total of $XX.X customer million, a representing the increase row with the over unusual economy, seasonal holidays, pleased This of the prior which delays. fifth more third a platform of the Despite were ClearMobility the the about in slight slowdown prior remains

public award. quarter Although Intent to to multi-element that Southern comment on to from in results, a Award not Iteris Notice notices a normally We a not in multi-year, pleased of contract our bookings has included third agency received share California. I'm do

is two reasons. award for unique this However,

of And First, services, products this IIJA contracts, of progress time opportunity a Act, likely project provide demonstrating before making take mix Jobs expect it progresses and notable the funded of our least we by additional cross-sell we'll second, both Award to Investment to portion be information. couple the funding. from a sign first Infrastructure award our healthy Notice includes a of this at and at this is which to quarters include of It to efforts.

bookings, sales pipeline sustained year-over-year. our a with backlog increase representing net XX% ending a total the Due December velocity total million, ended of and strong we to record XX period $XXX.X

always, about XXX% figures of our which reported customer from and total total bookings ending As of customer basis, backlog on firm orders. value varies averages reflect The our net lending a quarter-to-quarter, contracts, historical backlog. total

a to continued to the our million, excellent performance market believe sensor detection In third extended performance. object demonstrating continues product in lead XXXX We sales AI-based increased gains. product share due record quarter, the XX% portfolio to we third revenue take fiscal market share classification, with scalability and system product execution, and our $XX.X framework. and further And security our year-over-year superior enhancements to quarter,

win we CVXX sensor, country. and initiatives every to fixed continue competitively Due position, sensor detection cellular virtually the large across our sensor travel market time strong sourced to

AI-based form of the representative Program an nation single Coachella order technology Region in in is Phase X quarter, following mobility the Smart of detection our high-definition full example, of value smart sensors the were $X.X to-date. This the selected with this of Valley largest third detection deployment the initiatives, for million. For likely for

Orlando a I-X coverage Elements to of Mobility I-X related as is extend part purchases Regional Florida on another Advanced Cellular CVXX between the sensors FRAME This or series program. Tampa sensor the program. to Iteris FRAME VXX or the of and in

detection the Richmond, and Virginia. intersection Meridian, to sensors and design replace intersection throughout of CVXX for deployed build implementation in-ground as part in our sensors corridor of project video an for wired to video-based Travel the across will competitors' be Florida, video-based lubes Tampa, Mississippi replace of detection sensors prior traffic time near sensors I-XXX city

Iteris' ability, These quarter successfully as the to following footprint. market third on orders five representative previously, dimensions discussed execute to expand we've our demonstrate

executing to that large CVAG our maximize win region-wide modernization standardization are of drive of initiatives strategy we like sensor First, on scale our [ph] rate our portfolio.

Second, and we penetrate FRAME leveraging intersection adjacent in detection deals category including C-VXX leadership emerging the in to are with our as did the I-X we I-XXX Florida. categories,

to Vantage revenue recurring annual occurred sense CV attaching and the orders. we're sensor with new Apex system Florida Spectra each CVAG and has Third,

total with legacy of share did above-ground as continue customer revenue superior disproportionate sensors; migration due a similar continue in-ground to fifth, we cost display advanced vendors, and such Richmond model. in capturing success detection we're and as product customers Meridian detection to of our ownership to Fourth, replace to performance, we

better Since our our further purchases, we aftermarket sources. enable with component and will component improvements reductions purchasing to of call, linearity inventory, last production earnings enhanced more released in manufacturing supply in additional traditional that our boards four circuit optimization power alternative our

gross comment brings quarter implications alternative forward. to a from the going of will alternative circuit released circuit In the these total purchase chain This Doug moment, our our boards a six new inception product supply margins boards fourth us program. of on variance on improvement and of price to production

quarter want XX.X% million, revenue increase representing XXXX performance lines total to was service review a the I of service year-over-year. our of Now $XX.X third business. Fiscal

in which bookings, net will In the revenue. $XX.X addition, service recorded we as of future be in annual million XX% recurring recognized

a agreement $X.X San for million agreements new task activities, Transportation, and subscription a a million arterial customer. monitoring Transportation and Virginia order value County the combined Florida District Notable the commercial from plan Bernardino for from combined a Utah Department from the of services of SPM data $X.X confidential develop project $X.X agencies of order of series and our task customer for million for smart from include million managed to extend non-disclosed a US subscription a a the including the worth X Department Canada -- Transportation data $X subscription agreement for phase a a $X Transportation, million $X awards Department a in orders a management second million in for ClearGuide various the and for of performance support to ClearGuide, clear county for activities combined Authority, clear

in an revenue attach the X,XXX being sensors. annual connected time and travel time, saw sensors, this connected to either we or of At rate of acceleration recurring our have connected C-VXX intersections ClearMobility are to Cloud. in services or which infrastructure we Additionally, X,XXX process our in over

Software-as-a-Service, service our market quarter in enhance cloud-enabled managed solutions. we the Data-as-a-Service to share To and sustain growth, continued third

and State intelligence we to For example, interface a subscription on for that set use set into address all through programming mobility we data data our safety-related customers integrated clear can introduced ClearGuide this new Zero data application Vision basis, new access software and our cases. new Streets a

strategic also our of proposition, offers. introduce strength value our Software of the price certain increases we Given to Service as on a began

quarter, pleased are improvement sequential quarter we ending expectations. the adjusted third summary, a achieved favorable consistent and improvement in total inflection with made prior and believe of third our financial supply program in revenue cost well Iteris on we the point backlog, associated as So and our direction, goods progress with the as record sold trending in various With record EBITDA. our we chain in an metrics financial total important

will third the provide note, Doug our over our On on turn like quarter which after expectations. that discuss to further I to fourth call color to I'd more financials, quarter

Doug Groves

everyone. afternoon, Good Joe. Thanks,

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

mentioned as an to take benefits began and chain management business, third the our see of Joe we point as really was plan quarter improvement As supply in our hold. we hardware expected, inflection the

the on as line the to top bottom face last supply severe challenges several the impact quarters. We on this chain as quarter, again components but and certain not were continue

i.e., spent prior quarters previously To markets, down that QX. million but which was secondary of in quarter. only $XXX,XXX The from this of from $X.X sold was impact inventory broker in quarter, significantly parts from was point, cost prior million an in in million goods $X.X we brokers, $X.X the purchased approximately purchases in from in increase down the

standpoint, expected revenue backlog of $XXX,XXX a the The ship the $XXX,XXX QX. to didn't of ship in end from quarter QX. in unshipped to decreased orders current in at From are QX the amount that

margins record low products we services our quarter to gross third XX.X% only mentioned, fourth continues quarters be chain which as ongoing to for initiatives in the improving first year. why Joe of year over compared be this and As to situation, a million, the hardware up prior Demand quarter. strong XX% back XX% supply the the evidenced three our the $XXX.X which by backlog of range is to was expect are

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

Our quarter-over-quarter, costs increase points quarter. gross approximately prior to quarter been to third XX.X% points the same from the up basis in XXX the quarter compared the of year to XX.X% or $X.X Adjusting component million last margins year. compared basis decreased net in margins XX% same XX gross would have the for

continue the as And XX.X% year. same mix. $XX.X we compared in noted, million the deals. to Turning to points sensor increased for strong our year. and large XXX revenue to win last the sensor our quarter market. This decreased The revenues margins million last on in compared position were to Product all demand XX.X% basis gross quarter $XX.X underscores same product XX% Joe market-leading to

second deplete chain inventory great the the product over the supply program sheet make margins on our we from to increase as continue balance and X,XXX gross our previous However, high-cost quarters. to quarter, points improvement progress, did continued basis

$XX.X revenue. and to revenue software to driven compared recurring annual increased service Our in In revenues primarily quarter, by managed million million prior the of XX.X% total quarter, third stronger year services the XX% revenue. was $XX.X services was outpacing This prior are annual with the down our reminder, our and software changed managed as comprised revenue services revenue And revenues. as product from of mix recurring a revenues revenue. quarters the

fee licensing Service data quarter than very to This margins. to XX.X% services be subcontractor a platforms last for primarily in providers from content the revenue, decreased compared XX.X% at same more year. XXX was professional and margins to low basis structure change points SaaS third-party on on which tends our our usual gross our due to

expenses which this quarter. Operating the product R&D primarily million by million, redesign board and quarter up was circuit driven down were forward. increased to support current in our $XXX,XXX, marketing and going to increases Sales efforts. $X.X $XX $XXX,XXX, costs was while were and year the up the support third and headcount higher or sales related expenses $XXX,XXX, administrative sales at the X.X%, in General in

quarter third a of higher the same operating in quarter in attributable costs, to year loss $X.X the GAAP operating million The GAAP solely ago. of a loss million a previously as operating reported loss mentioned. We was the component compared with $X

made or being than continuing is market operations $XXX,XXX QX, anticipating XX% to loss from less in the circuit The GAAP progress we're With $X.X spending which share same board when the loss in third per ago. loss million, broker million redesigns, to QX. $X.XX of on a net a quarter down which compared was share, year the in components per $X net operations in quarter from continuing $X.XX compares a or of

issues, GAAP were third Adjusted EBITDA GAAP previously in X% was loss, of $XXX,XXX The compares a loss operating the as EBITDA which net supply EBITDA by for adjusted chain loss the or quarter or of of revenue to approximately and the driven loss $XXX,XXX third revenue, X.X% year. of noted. of last quarter

outlined With in redesign quarters, anticipate the improvement take our the plans Joe, to supply for will improvement a boards chain chain since position circuit coming key additional continued the ship of we our the by to customers. supply through time it in

to to and new redesign components procure activities With hardware date, progressively in to circuit should the of this quarter mentioned. six the improved production boards boards this alternative in additional to These and as markets are product our return has inception year previously the margins increase the circuit mitigated XX% key introduced. largely about gross as sales volumes need broker fourth released

approximately end $XX.X million liquidity million quarter, of The component was Cash profitability from improved the Turning result million. a working in increase costs. was to at cash the and $X.X capital capital was and second of quarter to third resources. the the the $XX.X lower due

balance continue the million, will purchased continues decrease, year in With our capital, board parts this of as the cash $XX circuit broker the $XX continue the and this our and expectation market ending be expect to that quarter to improves further profitability would range in improve fourth we will working improve to fiscal redesigns million and -- to progress. to -- our improve

purchases property less CapEx in revenues, $XXX,XXX of asset-light model. of the and the reflecting we we spent in to and our year expect be quarter, equipment than Lastly, still business X% full third

chain levels. continue margins challenges plan we laser-focused which summary, In to chain be return sensor multipoint gross our back supply recovery to on Vantage and progressing is well, supply historical will our our

call certainly will Lastly, the support of finalized beginning sell-side at all yet the my investors want with future, to next as the be over in I many be I of Joe Iteris. last of and in our my years. the thank mentioned, analysts endeavor. this call, all cross paths I the to last with hope earnings you for I've received three

over call the turn I'll that, back With Joe. to Joe?

Joe Bergera

the of despite strengthen to The mobility trends you, and from significant smart Doug. COVID opportunities secular chain new subsequent supply historic and favorable infrastructure continued Thank market due about several IIJA quarters. management growth the broader investment market over the Iteris' and Great. to represents the despite dynamic in we've challenges long-term large constraints, optimistic Therefore, of the challenges position of potential our in remain last market, given this Iteris front the we this economy. extremely dynamic position, in opportunity the strength

both continue To sensor opportunity, targeted at realize on map solutions vehicle public A that CV Iteris sector releases. that this our quarter includes private for aggressive planned alert fourth deliver new Spectra safety to an is the markets. connected road following will and

sensors street New for value for will our further safe safety proposition. all Apex features Vantage enhance our

that for better intersection scalability differentiate on will price New characteristics. enable us features Vantage to based certain Apex

in mobility this that signal vehicle-based scheduled reporting to features solution priority and analytics features we and transit application ClearGuide, are Florida safety vehicle the spring. to our enhance intelligence for New pilot connected new connected

the offerings drive new adoption mobility believe further We of our platform, data of our releases our of improve the enhance ClearMobility these cross-sell monetization will ClearMobility and the sets.

against In addition, boards with our we'll to the quarter. execute to production four program alternative of chain in supply fourth improvement release the more continue circuit

achieved earnings all to improvement boards, will XXXX XXXX our those the program we the call. on release of June be chain reviewed objectives of supply the have Upon fiscal of X,

on parts, these quarter. release as our we reduce purchase More estimate further in less the Doug than dependence fourth which, importantly, be will will our $XXX,XXX broker boards of mentioned,

we and increase for basis improve to a to Given cash than fiscal range the flow to revenue on more EBITDA quarter, approximately dynamics sequential anticipate net margins XX% in million the these to XXX XXXX points $X.X year-over-year, fourth basis $X.X million. be of

revenue million range a $XXX guidance end with being end year result, low our full the As new fiscal our impact negative fiscal we're XXXX the and on $XXX raising year-to-date guidance EBITDA to range And million. high of constraints year we're full lowering the results. the XXXX supply our to being X%, negative the chain global adjusted XXXX revenue, with year full new reflecting fiscal of X% of

COVID quarters due subsequent to In chain closing, constraints. global supply last the been difficult have several and

to we leadership strategy in position execute continue smart and the structure and However, business mobility against market. platform-centric management our extended our

Additionally, global significant company. chain our for as remains to the XXXX by operating value lasting near-term we benefits supply shareholder value poised not believe generating improvement Therefore, Vision significant only but plan. is program our outlined Iteris create

that, delighted covering questions With -- any we'll respond questions there Operator, we'd any comments. our be are from or analysts? to to

Operator

be a Van Jeff Instructions] Riley. question we'll Sinderen coming from At session. first is this B. Absolutely. question-and-answer from Your [Operator time, conducting

is line Your live.

Jeff Van Sinderen

you going forward. and and Hi you're first wish let everyone whatever me Doug, best say, in you miss we'll the doing

Doug Groves

you, Jeff, I Thank it. appreciate

Jeff Van Sinderen

guys around really revenue you for service the of question sort first My is growth.

in XX%. around I it came think

growth your What think that the of segment rate. And wondering be? of drivers about just in talk the quarters. you are that next could expectations maybe some the should that business potentially Just growth do over what for accelerate that few

this here, down. I of sort service but multipart you of know said then was question And kind is a I apologize,

terms the in bps change then and SaaS think, of said you and the service I was had license sub-content on think I down margin you fee structure, in included. more XXX

can little maybe on you a bit So, touch that.

recurring but say on I with And wondering the apologize, -- of of kind how the then actual And much you of then getting but-- few are forward what a expect that was the lot you in was there, did quarters? going of SaaS? next much thoughts there's QX, I I over your guess, in think how concentration recurring that level

Joe Bergera

miss Feel free we if in pipe to anything.

I'll it. So, add to off then let Doug start and

so same hardware at XX.X% the And service just there, So, of our yes, is we the some first XX%. context noted well the of forms to traditional in at last coming quarters. provide saw that few demand there's as for I the ton that as -- think that obviously the with introduced a detection you that over market we've not of new sensors thing was growth revenue sensors the rate

what that so continued very drove expect strong is growth sensor forward. we growth, And and the going tremendous

and to to then service respect up professional both annual different With recurring revenue, point, SaaS. couple remember revenue is recurring of revenue annual the of a two and Jeff, services services managed made made further parts, that's of components, and your up

services in a not historically is tied but third quarter, in of have quarter directly difficult of to hours this professional is came the revenue soft, Most quarter. that demand, to our we lack the due professional a of number our During revenue relatively billable the for services us.

employees holidays, the we therefore, taking a And lot are due they're not billing that consulting to and projects. to various our have PTO of

it period, services professional continued always that's and quarter. XX have the an the our in in December so throttled current impact to And

quarter. and we grew QX, SaaS rates the our specifically growth at revenue substantially our in that higher a that will at come to and With higher will revenue the than respect had would annual revenue. expect professional rate services recurring in services rebound XX.X% I our than Our third revenue

revenue, Doug's place our contracts With margins services respect and providers. gross the the in data the have decrease on referenced that of with some the to we to new in

data good Over we particular in Essentially, the suppliers like our various processing that the a impact customer essentially was on that long-term, were associated we with short-term, the an have new margins. structure had the each negative agreements thing, gross fee a were it incremental that our deployment the for paying, customer. are for actually that we but prior did on

licensing And the Data so an data we're continuing as those basically We've of so data, to various all-you-can-eat costs have the to customers. our in for renegotiated our type from relation SaaS various contracts, and arrangement with revenue of amount a grow providers. our Service we

that As agreement, all-you-can-eat you the order floor. we raise would expect to needed in to get

currently we that revenue have floor our now But than going have we higher had. continues for we forward. won't So any as pay to to royalty a increase, incremental data

going bit But it this of over see little to impact So our will you threshold, reach gross margins. the a gross margin on back our actually until benefit we long-term, is line.

it of kind of bigger get subcontractor-based due a percent did subcontractor the on actually was The the impact was subcontract direct revenue. we on substantial revenue. in services labor and that revenue the revenue professional same we margin gross the portion high Like of to that recognize we period, don't of do

Let me you of anything stop there points. and see want if Doug those any to you add to have

Doug Grove

Jeff, them rattling you think hit off. I them them we did Jeff writing I as But down all. all? was them get was

Jeff Van Sinderen

No, you did. no, no,

is great. will are of that pain it's around a getting three guess or that long-term along know of that a benefit? us sort that. I that? follow-up long-term I to the short-term give said guys just color of And had out? any benefit, Any quarters those. threshold that I color You us margin. a quarter give you you sort But on bit you you can in inflect little have you where metrics think out, can I Do appreciate

Joe Bergera

Yeah.

suppliers these think you attach that different we I threshold suppliers, critical contracts, rate hit will for data that, there's better to that's have others. have different different data result than things multiple various at data-as-a-service And and which ability the kind to products, us software our of see which for products on we certain are impact as of that certain each it's for hard -- of give and terms. an that, implication because that the

point. couple orders that of the we will how next quarters reach quickly the So that see inflection we impact over actual makeup the of

for to to generally So a point like I problem that, difficult say not take optimization us But there. lot a this of to complicated and at going years would you very give guidance. it's is get it's this

think I point. of quarters, on that it a is to we should balance hit at which probably start point, that inflection matter

Jeff Van Sinderen

it. Got Thank Okay. you.

Joe Bergera

believe, Again, subcontractor and attributable professional agreements. several I these point the basis to was, content more revenue the the hundred services decrease, again, than new

So just sure again, understand I want that to you that. make

Jeff Van Sinderen

And to know, helpful. could project for mentioned for if That's be the kind you soon I contract. realize that in Any Okay. then we the that us when a of is shift project minute. the SoCal a you you sense dollars of you time in can that? give frame size can

Joe Bergera

Yeah.

the So aspects contract against a specific large sort is we making contract. any relatively ourselves would But don't about want of for us. to of I the by any say comments of negotiate financial this

Jeff Van Sinderen

Okay.

Joe Bergera

months. But put in – excess in trouble when can year. this and a awards to pretty approximately quickly, have long seems pay in to months amazing would of need along And I probably further that, a that to circumstances line, said, were be for seen about progresses it I be like be And as because like But this moving to from we it – it anticipating leave line, contract, couple think I contract. other certain get it's to a I to six at of we actually to for I the than out six always it quarters, then would time have that. I anticipate before I with convert respect award time probably how

Jeff Van Sinderen

a Okay. welcome speed. That's I guess helpful. forward also and to for guess get take he's a to Carrie, I while to And joining tomorrow to up I'll see them

Joe Bergera

in interested know of interested I meeting and as our any investors well. analysts be but all he'll Yes,

and to speak we Todd make option you and to introductions them those we'll any happen So I'd make or like would who out encourage reach that sure the with just to investors me,

Jeff Van Sinderen

then one And if Terrific. mind. you don't more, Okay. just

think got fiscal to year. couple I more your a you've here months

pretty You any backlog. continues on but early grow I'm you got here, thoughts to and to a – not – guide asking solid Backlog

Joe Bergera

asking. don't just really I Jeff. are you Yes,

Jeff Van Sinderen

or to And over you this of growth we can well, rebound bit of the that have really at normalizing think – rate kind How of guess any sustain sense How next get pent-up sort about trying several would you and moment. just a say I'm you I'm fiscal a – of get revenue revenue quantitative what I sort in about above-market you if isn't to guidance. trying at a quarters? that? a an I guess, XXXX, thinking a effect, or thinking are little are growth you this

Joe Bergera

So we saying of like that – percentage kind look? terms practice a think can in demand strong when practice does what small. you So market how public our our you're does your we overall just of get seem, I we've – of fourth So But Do small on be like basically still, earnings the do change seeing your the pretty you make try way And what are like as or provide make to seems or ourselves. like really strong of you how don't to guidance. – want a ahead other sizable, pretty right? what's other? weak? And positive. quarter pipeline And normal sure, think qualitative will small full answer but sort year signals velocity right? that know, for kind in as guidance? – the very so We're to company so they a words, to a really a still we're a environment like Are tried -- one variances like like question,

we're market our feel well past, position, to the to as the today's say try most industry, sense obviously, marketplace. define I to landscape. think is in move strategy going it. And and in their improve broader across ball can't sector. in productive call I exactly And got to I resonating take that really my the I and but the on we'll leadership said said competitive the in I forward, we've remarks on invest share channel that that take for think really that a our do continue And long, that to that's But and in continue the I product how to true continue we're going

Jeff Van Sinderen

Great. my Thanks for of much best taking Okay. luck. and question so

Joe Bergera

Thanks.

Doug Groves

you. Thank

Operator

you. Thank

Capital Latimore question next coming from from Your Markets. Northland is Mike

line Your live. is

Mike Latimore

right. nice Best new All Thanks, you. Doug, ventures. in of and Great. luck working with your

Doug Groves

Thank you.

Mike Latimore

a basic here. a from an sort standpoint, From stable for think OpEx question we just this should while? guess of here I OpEx remaining point about as

Joe Bergera

time. organization, done mean I that flat good this look but think people. to R&D, G&A in up line, revenue. you've I for X.X% that marketing quite of of sales the And we'll really pretty probably bringing conscious the job part a little sort And at keeping that of that and was product to year, new some support a X% around bit continue the invest hover if and you of was Absolutely. particularly decision a to on salespeople

So feet. will increase the hardware to the we I with really back getting see think some with business P&L start now the in its the on revenue, leverage in

Mike Latimore

Okay. Great.

of a have In terms of what the the unit rough do you roadside that product range contributed quarter? category, to

Joe Bergera

Look, would range to That's guess that $X but I like we a $X the million would would because even break guess I question. actually million? it way, in good don't be it out

Doug Groves

XX% to XX% our Yes, revenue. exactly. sensor of Yes, about

Joe Bergera

early is And that year that expectation $X billion only a All this a time like the product whole now our talking right that right. expectation that most million that it is market. America frame, on I is But could a $XX North strategy very in people's five-year started stage TAM. $XX over potential to addressable ago, probably market Got We probably look think million. it. -- And about a think our total segment, December. remember, we --

Mike Latimore

center Is winning of from about to Yes. else? get this sensor the it sensor Any And you? Yes. why as sort deals. the choosing to Great. you these Is to core consistent there much of message then strategy message? attached a Is a something all or software itself? customers they're consistent pretty talked large kind

Joe Bergera

our I the and that of think have engineering think I that But sector. because It's the we business works. of leadership our that's of all benefit lot express because -- It -- it's that fact the really a above. a of the And is the the technology it just that function their addresses way that's things. people priorities. part from it's capability, traffic in consulting domain we DNA of the expertise, unique

allowed sensors out meets of best how these understanding think, we it then supplement of that the with, customers. kinds information people field need support what they needs that industry. build of the And product so And and in operate the to the we us has

think, just again, mean, back wow, see does I people that there's a mean don't need, there's into the are I goes lot this a I lot work exactly but generally, like, vendors. easy, what So of I this on right? it But sounds I that, from end. other whereas

Mike Latimore

to a your there providers talked of Yes. And largest the are that provider Are use. just data to data couple the then you ecosystem? clearly about sort

Joe Bergera

so Well, Yes. announcements some relationships. those we've some about put out of

We've a our various long HERE Technologies. do Cloud because in hers format, other from of then map data And number we HERE. a with both announcements Otonomo. also out a parties. we've lot and about have with ClearMobility within map with presented about utilize also, of put recently agreements For a but is time, Wejo had HERE. relationship talked with We We the data announcements agreements we ingest

on But Some I now are those. commercial get we comment receive -- of can't data from we third-party confidential, suppliers. right them multiple so

because of across highway to entire State's devices additionally, of Like then system relationships with access are a like deployed function state's our agencies, data. the agency agencies. we lot relationship And certain states unique where to have virtually a with that's and there access the of we have of our IoT all

Now arrangement. that's not exclusive

about to course, -- data a our we're a into would or their because position. view in aren't But asset. they it anybody Of we're unique of because agencies either with going relationships, enter relationship proprietary as like exclusive public

access have know-how get data. relationships that how the to to to known We understand

the arrangements, is from sources. be in It's But multiple the primary curated. able get this data uniquely discuss publicly HERE, ones commercial terms the would at Otonomo. of So and I'm point we Wejo answer to our

Mike Latimore

that's a lot. Super. Thanks Yes, good.

Joe Bergera

Thank you.

Operator

you. Thank

Ryan Your next from Sigdahl Group. question is Craig-Hallum Capital coming from

is live. Your line

Ryan Sigdahl

Good afternoon guys.

more you Just directly. to one ask it want but for And I alluded bit us. earlier, maybe a to this little

the yet qualitative commentary the So year. guidance, quite EBITDA all revenue you for seems lowered positive. the you But raised

causing is relative pressure So additional to expectations couple ago? what, of I the your margin guess, months a

Joe Bergera

on mostly maybe And explain we Doug, lot could companies third of the prototypes the of some I in quarter boards, some which third parties the think and alternative incurred there developing dependency that that fourth. a you same availability circuit a some of we're of have resources to the we it's of in develop firmware. as seeing some getting And and so the those other in and the position rights, the we are some are scarce. way costs

Doug Groves

that's Joe. exactly No, right, Yeah.

lot more just anticipated. are companies we And of boards same resources. the it's with us competing bit really production, cost just we're it's it's So than into circuit those that other costing had using a a get so additional little the -- to

Joe Bergera

that's And so a Ryan, issue. temporary

end originally so we As we critical production the all the boards by fourth us. said, identified or that the be expect to as we behind chain supply of that will alternative released as program, of I part the of have delivered circuit improvement will quarter,

change things circuit that not the It's when this we're we won't under timeframe, various that boards, our in do same to because especially to environment. develop And we're in people won't we continue the time incurring be meet quickly to alternative should say pressure. markups asking order but to pricing scenario,

Ryan Sigdahl

guys. Thanks Okay.

Operator

Thank you.

is Your Tim EF next question coming Moore Hutton. from from

line live. Your is

Tim Moore

time longer or longer point and to lead extra bundled on just sales a services months am a congratulations close attached package strong few compete for of in award. in you types software the services? price less I'm do a when than curious trying triggers growth bundled higher take and those I the bid a negotiations quarter. the of think bidding as a the training Thanks to

Doug Groves

annual you every right? on engagement Tim, to occasionally sale, an cases, we introduce But to attach you're virtually I observation. some every every opportunity, In services have. revenue revenue Yeah, we down. desire mean, that our professional and or sensor cloud that's an extremely exactly is can good that right. recurring things analysis it do slow That's complexity,

actions which There want right don't now. taking, discuss we certain that are to we're

thread-the-needle, point. think share we don't So competitors with at want have I to approach this smart we try pretty which a to to we think we've

But we sales think And to that there's some go get can a at start of way going techniques. that these around we're we that. to I mean implementing not but to better going say that. away, that it's

have the isn't going to do sales does thread-the-needle. we're Actually, But an some techniques of eliminate -- think that process those we're completely to in in interesting That we way we -- of now. the introducing right fact, issue.

to over we're basis. sale, that the selling able of like to good extent complexity so the a hardware units, customer, way so right, sold create time say many but next then the just on going the we have that we're than which that we think would having news is long-term, much I on So you is when know, flip then a that transaction And revenue upfront, a the to for the it's recurring outcome side we're on piece better to another can able to levels again, revenue, And transactional to these attach like obviously it's recurring be great right? attach that mitigate it to and it. us

Tim Moore

That's color I the appreciate very helpful. on that.

maybe ago. over was Apex Vantage I'm AI-powered a little those more launched activated the that customers earlier active… maybe offering, more acceleration, and just sales other to mentioned as available on they more December? your year momentum, of wrap that around since trying it all features and are For the a now growth are potential head launches customers for most know is gain I my now the the Vantage call, attracted Apex features you

Joe Bergera

another That's Yes. really astute question.

the three, detection sensors market four sensors, So we of now. in actually generations have right

which were XX lighting. the product, end we're for December selling in period, Edge our we of -- it. have still through But of the We middle the

Fusion, today recently. were because They -- We largest sales. risk-averse. introduced were very which our industry, next have And then of the in which and Apex which we by pretty moves our product, very portion far detection represents our product have it's slowly just

think is of call, biggest our X,XXX to that represent remember at can probably [ph] and represents, -- Like mentioned about be could I deal, sensors just systems, XXX our of then systems, the Coachella actually bookings Valley Apex on I that XXX maybe thousand about we it'd And a bookings, that Seabag hundreds and I have deal our I this sold units. be multiple that a to units. deal-to-date point, in And of yes, -- talk you intersections. so X,XXX like there terms today's couple that thousand, think,

of And that And in early even of that largest be it's we're anyway, we've the the to innings with that product. the Fusion units AI-based But date. is respect still point will in point that will then be – detection. still high-definition the nation the is -- to sold largest fewer

really about our found our we make I three because product sure became so your expectation that before was sold products. slowly. in understands Tim, point, want It our market right us Fusion Apex that everybody took very units this years moves to that next our we But relatively mainstream and we're both on marketplace Apex that, the and to far. so track few with

Tim Moore

I'm sure helpful. that's customers spreads. activate word can like it it, more No, as features more on

I'm from not drag lapping and give Were fiscal call. there circuit the to costs. call basis be next when But my the it at you're guidance project, on back of your only this board on ends head, I seems incurred that looking broker costs of Just the have question. on headwinds for year? just development going costs won't one-off next fiscal month, the year year, that the cost points you'll this I'm trying like to my big next that the you year that ballpark probably maybe know, in other had repeat supplemental least you any XX fiscal you probably to and

Doug Groves

No, this big impact been is full variance talking about, those the purchase almost mean year $XX are -- I the we've mean you I the price I look ones. if just the million. think at numbers

our for number company -- a So big size. that's a

next cost be this, will done development we costs, mentioned, the of the ones come I the will So, are going as and as drive the the Joe redesigns -- that board continued part to the think I year. availability. down circuit and be improvement items. because, the evolution work one-off that through as be this two always just really But majority the wouldn't of will there year of chain are like biggest those mean, recurring supply

Tim Moore

founder-owned willingness time acquisition Thanks. recently an turns or really busy wondering, the guys lately, is That's sellers' or market really just around the appetite. And has acquisitions? maybe you to with family-owned on you south there helpful. improved in so been businesses question your that And spent organic December, been I'm between as summer much my just growth have haven't last

Joe Bergera

I issues. on supply negative resolve cash taken our Well, getting internally own impact -- also that busy work our chain impact trying profitability, because and but on only through right. been we've management mean share -- consumed And very of lot been it's seen of we've a focused We've those yes, it has unfortunately, a it's to we've our so issues, attention the to not also price. on

inflection are time start feel reasons, So practical focused acquisitions. us those be achieved it for to But like we point, we've going critical do on to and wasn't for all our circumstances change, pursue and to year think to fiscal X. a through, again our I first we'll new FY be as on progress April acquisitions better XXXX starts position much in we

financially nonviable. to overall In buy I a terms market would that conditions, of want business we probably the is that don't like say

anything distressed So that's we probably asset at looking wouldn't a anyway. be

of are made With necessarily which sophisticated. to not market small very -- don't companies, of respect I a fragmented a are -- really like are the that that these lot it's up more businesses viable,

that not a there's are a and say that going a But forma the conditions. given the reticence of they've the sniffers on. experienced of I that have of see people potential pro buyer, think market ton have would if of lot that like to processes they're then few processes I out that kind So occurred current some

months, with don't people but I activity And the to a well the same I so their down to deals. keep of we've their that lot in that pretty and next decided which I six lost problems I'm up. expect XX the I have, have line. I think not way our that so aligns exactly would we when, own sure think pick through time just heads generally think will work think

Tim Moore

that best Doug for and thanks endeavor. color, next Well, wishes with Great. your

Doug Groves

Thank you very Tim. much,

Operator

ahead. Thank remarks. concludes Please Bergera the for session. to hand closing Thank Joe [Operator you. conference That you. back go Q&A our now Instructions] will I

Joe Bergera

Matt. appreciate I Super. Thanks, it.

I support and questions. your thoughtful So as appreciate always, everybody's

in the host updates front, I plan On quarter. to short the Investor reiterate, wanted we investor Relations this a first to series of

at looking we're Specifically, March.

is such first result created of the budget The of line legislation. of on as a the will of and update breakdown programs aspects new the be will focus a various items status IIJA,

always, you to Additionally, events. follow-up we're with speak participating questions. as in available always should have various we're investors investor And outreach any

So please out fiscal meantime, our when continued the on feel look results. our In us. to progress report forward to updating free on year we to and fourth reach again our we full you XXXX quarter

everyone. that concludes that, call. you, with So Thank today's

Operator

today's event. concludes That you. Thank

may You Thank time, disconnect a at this you participation. and your day. have wonderful for

Iteris (ITI) 2 Feb 232023 Q3 Earnings call transcript