SuperCom Ltd. (NASDAQ:SPCB) Q3 2025 Earnings Call Transcript

SuperCom Ltd. (NASDAQ:SPCB) Q3 2025 Earnings Call Transcript November 13, 2025

SuperCom Ltd. beats earnings expectations. Reported EPS is $0.39, expectations were $0.055.

Operator: Ladies and gentlemen, good morning, and welcome to SuperCom Ltd.’s Third Quarter 2025 Financial Results and Corporate Update Conference Call. At this time, all participants are in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the appropriate key. To ask a question, you may press star then 1 on your telephone keypad. To withdraw your question, please press star then 2. This call is broadcast live over the Internet and is also being recorded for playback purposes. Joining me from SuperCom Ltd.’s leadership team is Ordan Trabelsi, SuperCom Ltd.’s President and Chief Executive Officer. I’d like to remind you that during this call, SuperCom Ltd. management may be making forward-looking statements, including statements that address SuperCom Ltd.’s expectations for future performance or operational results.

Forward-looking statements involve risks, uncertainties, and other factors that may cause SuperCom Ltd.’s actual results to differ materially from those statements. For more information about these risks, uncertainties, and factors, please refer to the risk factors described in SuperCom Ltd.’s most recently filed periodic reports on Form 20-F and Form 6-K and SuperCom Ltd.’s press release that accompanies this call, particularly the cautionary statements in it. Today’s conference call includes EBITDA, a non-GAAP financial measure that SuperCom Ltd. believes can be useful in evaluating its performance. You should not consider this additional information in isolation or as a substitute for results prepared in accordance with GAAP. For a reconciliation of this non-GAAP financial measure to net loss, a comparable GAAP financial measure, please see the reconciliation table located in SuperCom Ltd.’s earnings press release that accompanies this call.

Reconciliations for other non-GAAP financial measures and comparable GAAP financial measures are available there as well. The content of this call contains time-sensitive information that is accurate only as of today, November 13, 2025. Except as required by law, SuperCom Ltd. disclaims any obligation to publicly update or revise any information to reflect events or circumstances that occur after this call. It is now my pleasure to turn the call over to SuperCom Ltd.’s President and CEO, Ordan Trabelsi. Thank you, Operator.

Ordan Trabelsi: And good morning, everyone. Thank you for joining us today. Earlier this morning, we released our financial results for the third quarter ended September 30, 2025. You can find a copy of the press release in the Investor Relations section of our website at supercom.com. We continue to deliver strong operational performance and strategic momentum across key markets, building on top of our record-breaking first half of the year. Since mid-2024, we have secured over 30 new electronic monitoring contracts in the US alone, including entry into 12 new states and 14 partnerships with regional service providers. These wins reflect growing demand for advanced scalable EM and validate our ability to rapidly expand our US footprint.

Importantly, many of these new partnerships involve replacing incumbent vendors. A recurring theme that speaks to the strength of our Pure Security platform and the trust it continues to earn from agencies seeking modernization. We’ve seen this in states like Virginia, Utah, and Alabama, where multiple agencies have transitioned from legacy systems to SuperCom Ltd. technology within a short time span. In Alabama, for example, we recently launched our third and fourth deployment in less than a year. In Utah, a second sheriff agency selected our platform to overhaul its GPS tracking program after evaluating competing technologies. And in Virginia, another service provider fully transitioned its GPS operations to SuperCom Ltd., marking our second reseller partnership in that state this year.

These examples illustrate a growing trend. As agencies seek more reliable, flexible, and cost-effective solutions, they increasingly turn to SuperCom Ltd. for both technology and long-term partnership. Our ability to serve both direct government agency contracts and third-party service providers gives us the versatility to operate effectively in varied regions and support distinct program structures. In addition to these wins, our US presence is reinforced by the continued success of Leaders in Community Alternatives (LCA), our wholly-owned subsidiary in California, which recently secured a five-year reentry service contract valued at up to $2.5 million. LCA remains an important part of our integrated offering, supporting rehabilitation and compliance outcomes alongside our core EM technology.

Since our acquisition of LCA, we’ve secured over $35 million in new contracts in California alone. While our progress in the US has been substantial, we’ve also continued to expand our presence internationally. We strengthened our presence in Europe with an award of a $7 million national electronic monitoring project in Germany, Europe’s largest economy. This milestone marks a strategic foothold in a highly advanced public safety market, achieved by displacing a vendor that had served the German government for more than twenty years. We see this award as a clear validation of our competitive edge and execution capabilities on a global stage. Our leadership in domestic violence electronic monitoring continues to grow. We now support nine nations with domestic violence programs across the US, Europe, and other regions.

Governments increasingly rely on our PureTrack and PureChoose Shield technologies to support victim protection and offender accountability. Beyond new market entry, we’re also seeing our proven track record lead to deeper engagement in existing territories. A key growth pattern for SuperCom Ltd. has been our ability to enter new countries as a single project and expand into multiple programs as trust and performance are established. In Europe, we’ve seen this in countries such as Sweden and Latvia, where initial deployment has evolved into broader national coverage. We’re now seeing a similar pattern play out in the US. We have entered states like Utah, Kentucky, Virginia, and more with pilot or regional projects and have since expanded into additional counties and service areas.

This repeatable expansion model remains a key driver of our long-term growth strategy. Our ability to replicate our expansion model efficiently also ties into how we operate at scale, especially in the US. A core operational advantage for us in the US is our cloud-based centralized platform, as well as integrated inventory management and 24/7 support. This centralization enables us to support nationwide deployments efficiently from a unified infrastructure in one language. In contrast, European projects often require country-specific servers, local language customizations, and decentralized support models, which introduce additional complexity, local partner support, and increased costs. As a result, we can launch new programs in the US more rapidly and cost-effectively, whether at the county level or statewide, enabling faster time to revenue and higher margin potential.

This operational advantage supports not only organic growth but also potential expansion through other means. In parallel, we continue to evaluate strategic acquisition opportunities in the US market, targeting established local service providers can help us accelerate our market penetration, enhance vertical integration, and unlock operational synergies. A proven example is our acquisition of LCA in 2016, which, as I said earlier, has contributed to over $35 million in project wins in California alone. And as we scale, we see meaningful potential to replicate this success in additional regions in the US. Alongside these expansion strategies, we remain focused on addressing the core challenges facing modern justice systems. Our solutions directly address some of the most pressing challenges facing criminal justice systems worldwide, including high recidivism rates, prison overcrowding, excessive costs, and unsafe communities.

By providing modern scalable alternatives to incarceration, our technology helps governments improve supervision, enhance public safety, and reduce the long-term burden on public safety and correctional systems. Tackling these systematic challenges requires continuous innovation, and that’s where our technology leadership plays a central role. Our sustained investment in innovation has been key to our success. Over the years, we’ve invested more than $45 million in R&D for electronic monitoring solutions alone, enabling us to develop one of the most advanced and versatile electronic monitoring platforms in the world. This ongoing commitment to innovation is powered by our stellar research and development team, a group of highly skilled electrical engineers, software developers, product managers, QA personnel, and other domain experts who continue to push the boundaries of what’s possible in public safety technology.

Their contributions are a core reason why SuperCom Ltd. continues to win competitive tenders globally, often displacing long-standing legacy providers. As our capabilities advance, so does our ability to capture share in a rapidly growing market. The electronic monitoring market is projected to reach $2.3 billion by 2028, with approximately 95% of that opportunity concentrated in the US and Europe. Notably, the US market is estimated to be more than six times the size of the European market, making it particularly attractive as a driver for long-term growth. As more jurisdictions adopt electronic monitoring as a core public safety strategy, SuperCom Ltd. is well-positioned to capture this growing demand through our proven solutions and expanding footprint.

I’ll now turn to the financials, reviewing our performance for the third quarter of 2025 compared to the same period last year, 2024. In the third quarter of 2025, we achieved continued profitability and margin expansion, driven by operational efficiencies and improved cost structures. Our revenue for the quarter came in at $6.2 million compared to $6.9 million in Q3 of last year. We delivered significantly improved profitability across all key metrics. Gross profit actually increased this quarter to $3.8 million, with gross margins expanding to 60.8%, up from 45.6% a year ago. This marks one of the highest quarterly gross margins in our history, driven by disciplined cost management, operational automation, and reduced reliance on third-party service providers.

It also reflects a favorable revenue mix, with a growing share of higher-margin international project phases and US programs also contributing to the results. As we continue to bring more work in-house and streamline deployment and adoption processes, we’re seeing operating leverage as well as margin expansion. Operating income surged to $640,000 this quarter, up from around $30,000 in Q3 of last year, with operating margins increasing to 10.3%. EBITDA doubled to $2.2 million from $1.1 million in 2024, reflecting EBITDA margins of 34.6%. Net income reached $700,000, a turnaround from a net loss of $400,000 in the prior year. And non-GAAP net income surged to $1.9 million, up from $350,000 last year. Non-GAAP EPS came in at $0.39 compared to $0.17 in 2024.

And now let’s have a look at the nine-month performance of 2025 compared to the same period of 2024. Revenue was $20.4 million compared to $21.3 million in the first nine months of 2024, reflecting a modest decrease due to revenue mix and timing of contract launches. However, despite the lower top line, we delivered strong improvements in margin and profitability. Gross profit actually increased to $12.5 million, up from $10.7 million, with gross margins expanding to 61% compared to 50.1% last year. Operating income nearly tripled to $3 million, with operating margin improving to 14.7%, up from 5.3% last year. EBITDA reached $7.2 million, a 56% increase from $4.6 million in the prior year, reflecting an EBITDA margin of 35.4%. Net income more than doubled to $6 million from $2.5 million in the first nine months of 2024, supported by our improved cost structure, disciplined execution, and the positive impact of certain non-operational financial gains recorded during the period.

Non-GAAP net income increased to $9.3 million, with net margin more than doubling to 45.7%. And non-GAAP EPS for the period was $2.17. We also made progress in strengthening our balance sheet. In the past two years alone, we reduced our net debt by nearly $25 million. This was achieved through a combination of strategic debt-to-equity exchanges, executed at premiums of up to 100% or more above market price, and amendments to our senior debt agreement, which extended maturity to December 2028 and lowered the interest rate significantly. In parallel, we raised over $16 million in gross proceeds, including $6 million for a registered direct offering completed in 2025 and an additional $10.2 million for warrant exercises. These steps in unison contributed to a stronger cash position and enhanced our financial flexibility to support future growth opportunities, including new project appointments, continued investment in technology, and potential M&A activity.

As of September 30, 2025, working capital stood at $41.8 million, up from $26.1 million just a year ago. Book value of equity tripled to $40.8 million, up from $13.3 million a year ago. And cash and cash equivalents surged 111% to $13.1 million, up from $6.2 million a year ago. While current margins reflect the favorable mix of projects and contracts, they’re not yet at a steady-state level. That said, we believe our progress in streamlining operations, automating processes, and improving launch execution is sustainable and positions us for long-term margin resilience and expansion as we scale. Before closing, I’d like to highlight the broader transformation that continues to define SuperCom Ltd.’s trajectory. Since implementing our new strategic roadmap in 2021, we’ve consistently strengthened the business across revenue growth, profitability, and balance sheet health.

We find the results even more compelling when viewed over a multi-year horizon. Revenue more than doubled from a five-year consistent decline, reaching $11.8 million in 2020 to four years of continued growth, reaching $27.6 million in 2024. As of the first nine months of 2025, we reached $20.4 million in revenue, reflecting continued scale relative to previous years. Gross profit grew by 140% from $5.6 million in 2020 to $13.4 million in 2024, and gross profit for the first nine months of 2025 reached $12.5 million, closely aligned with the 2024 full-year figure. GAAP net income turned from a loss of $7.9 million in 2020 to a $660,000 profit in 2024 and has since surged to $6 million in the first nine months of 2025. Non-GAAP net income improved by over $10 million, turning from a loss of $1.7 million to a $6.3 million profit, and stands at $9.3 million year-to-date in 2025.

EBITDA has improved from $2.8 million in 2020 to $6.3 million in all of 2024 and has already reached $7.2 million in the first nine months of 2025. These improvements were achieved while navigating macroeconomic headwinds, a global pandemic, supply chain disruptions, rising interest rates, and a regional war, and they underscore the strength of our operating model, technology differentiation, and long-term execution strategy. Furthermore, they underscore the essential role of our solutions, which is resilient through market cycles. And as we continue to scale, we believe this foundation positions us well for long-term value creation. In closing, we are proud of our execution this quarter and the trust our customers continue to place in us. I’d also like to thank our global team for their dedication and performance.

Their expertise, commitment, and hard work continue to drive our success. As we look ahead, we remain focused on leveraging our momentum to expand strategically, deepen customer relationships, and continue delivering innovative solutions that improve public safety outcomes around the world. With that, I’ll turn the call over to the operator to open for questions. Operator?

Q&A Session

Operator: If you wish to ask a question on today’s call, you will need to press star then the number one on your telephone. If you are using a speakerphone, please pick up your handset before entering your request and speaking on the call. If your question has been answered and you wish to withdraw your question, you may do so by pressing star 2. One moment for the first question. Your first question for today is from Matthew Evan Galinko with Maxim Group.

Matthew Evan Galinko: Hey, thanks for taking my question. I’d like to start with the market opportunity in Germany. Sounds like a nice first step into that market. Is there an opportunity to expand there and what would the process look like to expand within that market?

Ordan Trabelsi: Good question. And we announced the win in Germany just a couple of months ago. It’s a great win and a very lucrative market. The project already that we won has four different types of projects in it, including alcohol monitoring, GPS monitoring, domestic violence, and house arrest. And like we’ve seen in many other nations in Europe, once we enter with an initial project, and we do good work, and that’s what we typically do, we have an impeccable record for our deployments, we end up winning more projects and expanding the existing ones. So while it’s our first one in Germany and it’s valued at a budget of $7 million, just like we’ve seen in the past, we expect this to potentially grow in numbers and to grow in scale as it adds additional capabilities from our ongoing growing product offering.

Matthew Evan Galinko: Great. Thank you. Second question is, I think you mentioned a service provider in the US that completely switched their GPS tracking over to SuperCom Ltd. products. Can you maybe expand a little bit on is that a repeatable opportunity and how do you see that sort of engagement with the service provider versus M&A like you know, with an LCA?

Ordan Trabelsi: Great question. And, we actually had 14 service providers just this year that signed on, and, the model in the US is so fragmented. It’s not like in Europe, where it’s just a national project. There are many different counties, and each has its own programs, multiple programs in each county. And what’s beautiful is that there are these service providers who become mini experts in the field, and they’ve tried all the technology. And then we come to them. We show them our technology. And they’re able to quickly evaluate just how much, you know, more advanced and superior it is in many aspects to what they’ve tried. So in many of these service providers, it’s actually completely replaced the technology they have with our technology.

Sometimes it’s all immediately. Sometimes it’s in process, but they swap out from live offenders. They bring them back in to swap the technology because the advantage is so significant that they want to go through that. Now when you go directly to an agency, and some of the larger agencies have the personnel in-house to run these programs, they know how to put the bracelet on, to write the report, to run the technology. Then we sell directly to that agency. When it’s a service provider, they aggregate five, 10, 20, more agencies, and so that’s an advantageous angle as well. Both of them are valuable. Are great strategies for expansion, and both have been working very well for us.

Matthew Evan Galinko: Great. Thanks. And final question for me before I jump back in the queue. It looks like your debt position declined by about $2 million in the third quarter. I know you mentioned historically doing those debt-to-equity swaps, but I’m curious if you can talk about if there was another one in the third quarter?

Ordan Trabelsi: As we discussed in the past, we strategically with our lenders have been doing conversions of debt to equity. It’s a small ones, and then in aggregate, they become meaningful to the company as you’ve seen over the last few years. And we typically do that at a premium, and that helps reduce our debt balance. As described. And you see that as well in the numbers as you follow the quarters. And one thing I wanted to add about your question with the service providers, another thing that’s unique in the US that we’re doing because we’re already in nine countries around the world with our domestic violence solution, and we have a very strong small bracelet with long battery life. It becomes very effective to put on people and ensure that after someone hits his wife, for example, he doesn’t come anywhere close to the victim.

And our technology does a great job in that. And many other vendors have struggled with this. In the US, of course, like any other place, there is domestic violence, and the fact that we can offer this with such a high level of experience and seamlessness allows our service providers to add a whole new solution to everything they’re offering today. So that’s also something else that helps us with these service providers together with the normal GPS and house arrest that you’ve been asking.

Matthew Evan Galinko: Thank you.

Operator: Your next question is from Gregory Mesniaeff with Kingswood Capital Partners.

Gregory Mesniaeff: Yes. Good morning, guys. Couple of questions. When you kind of analyze your revenue number of $6.2 million, if you break that down by geography, how does that compare to a year ago? It seems to me, correct me if I’m wrong, that your US business has been quite strong, and it appears to me that the softness has come from other geographies in the world. Can you kind of give us some color on that?

Ordan Trabelsi: Yes. It’s a great question. In Europe, most of our revenues are still from Europe and other geographies outside the US. And that’s where our focus was originally. We won over 50 national programs around the world with our Pure Security suite. And these projects are multiyear projects and have various phases. Some phases are more deployment and then scaling, and then afterwards, additional add-ons and changes and so forth. So many different projects are running at the same time around the world. And we need to, when we report the financials, we aggregate the revenues from each of them. And that, you know, can mix differently in different quarters. It’s not a consistent monotonous growth or monotonous decline. It’s just one quarter, there could be more of this project and less of the other ones.

So the volatility that you would see, between the quarters, a lot of that comes from those projects. In the US market, which is newer for us, we have a strong base in California that we’ve been running for years. And then over the last twelve months, we signed over 30 new contracts. And some of them, some start small. Some of them start at a medium size, but they typically continue to grow and add more and more units. And what’s beautiful with the market is that almost everything is recurring revenue per unit per day. Now the majority of our business is recurring revenue, but there are still components that are not, especially in Europe. In the US market, those numbers will grow and grow. And over time, because the US market is six times that of Europe, we expect more recurring revenue to be the prevailing part of our revenues, and we’ve the more consistency upon the quarters together with improved margins.

So we continue to grow in Europe and around the world, but the US is becoming and will become in the future based on our expectations and plans a more consistent and predictable element for our total revenues and our financials.

Gregory Mesniaeff: Great, Ordan. Thank you. And, if I could expand on that just a bit. As you win contracts in the US, what are typically their time spans? Compared to similar wins in, say, Europe. You had mentioned that the US opportunities have been much more recurring in nature, which is a good thing. But if you could just kind of give us some idea of how long what’s the typical length of one of these contracts? And, also, what is the renewal rate that you’ve been seeing on them as a on a percentage basis? Thanks.

Ordan Trabelsi: Okay. Great. Great questions. And let me try to structure it in a way. First of all, in the European market, these are national projects with long bid cycles. And with a competitive process for RFPs, and that could take from four months to twenty-four months or even more sometimes to win these. And, usually, the projects are structured at a five-year span, nine-year span, something like that, between five and ten years. And, typically, the incumbent vendor wins it over and over again. I mean, we displaced the incumbent vendor in Sweden. They were there for twenty-four years. Since then, we won two more projects in Sweden. When we displaced the incoming vendor in Israel, they were there for over twenty years. When we displaced the incumbent vendor in Germany right now, they were there for twenty years.

So even though the initial contract is for five years, or ten years, you typically see the incumbent winning again and again. Now for someone to come and displace them, you have to have a significant value proposition that’s more advantageous than what they have today. And that’s exactly what we’ve been doing with SuperCom Ltd. in Europe. We’ve been coming in, displacing long-term incumbents, showing that there’s a better way to do things with newer technology, and that’s helped us enter the market and then expand. And, naturally, once you win one project or two, you have an easier time winning the next projects. So in Europe, when there’s projects coming out in countries where we already exist, we have a much higher likelihood to win them than it was originally.

And, originally, we had in our expansion, roughly a 65% win rate in Europe. Now that’s the European market. In the US market, you have a mix. You also have, of course, these large RFPs like for ICE, and you have it for some state-level contracts. And some counties are very large. Some county projects in the US are $30 million, $40 million, $50 million alone. But there are also many smaller counties and many smaller programs, and then you could start with them, especially if it’s with a service provider. It’s not a government RFP. It’s a private company at the end, and they sign a contract with you. And the idea is they continue running with you indefinitely. The contract just continues to renew. And they run with you for many years just like in Europe because once comfortable with you and they approach with you and they like the technology, then there’ll have to be a big change for them to teach everyone brand new technology.

So in the US, it’s faster to deploy, especially with the smaller programs. We’re able to deploy them faster. Might even start with fewer units and then grow the amount of units, whereas in Europe, you start with a large amount pretty quickly on. And over the years, because we’ve been deploying so many programs, you have such a high win rate, and we’ve been expanding so fast. We’ve reached very fast deployment rates. Some of our projects in Europe, we deploy within a few weeks, and we’re able to manufacture very fast and deploy very fast and do it with an impeccable record of doing it seamlessly without causing issues, whereas some other vendors take a much longer time for the deployment. That’s one of our advantages. But in the US market, almost everything is recurring.

They usually charge per unit per day. So it’d be $4, $5, $3.5. Depends what services are included. And they like their technology. They start with you, and then you see the numbers. Right now, we’re doing the US with over 30 contracts in over 12 different states because we’re just putting the seeds in different states. And you can see that after a deployment, shortly afterwards, there’s another deployment in the same state. And then in some states, already a third and fourth deployment. I think that speaks to the satisfaction of the customers and to the work that we’re doing there. So there’s a mix, and it’s a little bit different between Europe and the US. But the US, as the projects grow in size, just like they did in Europe, then you also see the RFPs in the larger project sizes.

But we’ll hopefully, as we do continuously, the speed of the deployment will continue to improve as we get better and better at doing more deployments.

Gregory Mesniaeff: Okay. Great. So is it fair to say that as more and more of your revenues come from the US, your revenue volatility should decrease over time?

Ordan Trabelsi: Yes. That’s a great statement. And, also, over time, the margins should expand. So predictability, margin expansion. As I said in the prepared remarks, everything in the US is on the cloud. Everything’s in English. We have inventory management centralized, a 24/7 monitoring center that’s centralized. You can imagine that’s much more simple than having a server farm in Sweden, another one in Denmark, another one in Finland, another one in Germany, with local partners in different languages and different inventory management systems in different regions. So the US has a lot of advantages in that regard, and we’re very excited that we’re able to expand so effectively into the US market with our technology.

Gregory Mesniaeff: Got it. Thank you.

Operator: Your next question is a follow-up question from Matthew Evan Galinko. Your line is live.

Matthew Evan Galinko: Hey, thanks for taking my follow-up. Just wanted to touch on operating expenses for a moment. It looks like R&D has been steady for a pretty long time. As well as, you know, sales and marketing has been pretty level. I’m just wondering as you continue expanding in the US market, should we expect to see operating expenses pick up at all to help support that effort? Or if you put more spending into boots on the ground in the US, would that help to accelerate kind of your uptake into the US market?

Ordan Trabelsi: Good question, and it depends on how much growth you’re talking about. The beauty in this market and in our industry is that the contribution margin of each additional bracelet into an existing region is extremely high. It’s just that there’s fixed costs from running these operations. In that server farm, on the cloud, with inventory management, with the 24/7 support. And so now that we’re in the US market and we have a good hold, adding additional units doesn’t require a lot of additional costs. Our sales team is still fairly small, and maybe there could be some expansion to it. We’ve won most of these projects around the world based on our technology. We come to technology first, less, leveraging some relationship that other vendors might have.

And we come with new technology that works and that’s been resilient and successful in many other projects around the world, and that’s how we enter these new markets. So there could be some expansion, but minimal to our operating expenses in order to achieve the continued plan that we’re seeing. And in terms of research and development, doing very well. We already put over $45 million in technology. We’re far ahead of most of our vendors in almost all aspects. And we continue to invest to maintain and make sure that we are ahead of them. And even if a competitor comes with a brand new technology that they spent tens of millions of dollars on, it’s still gonna take them five to six years to get that operational to the level that a large contract would take.

They wanna see it first run in smaller projects for a year or two. And then another project, another project, and only afterwards, they’ll take it on to larger projects. And we’re already in the large projects. Some of our projects, like Romania, over 15,000 units. So we’re in a very good place with our technology. We continue with every new project to add more capabilities. We continue to add more seamless integration. We’re able to bring a lot of the things that are serviced that our local partners do. We’re able to bring a lot of that in-house. We’re able to bring all the technology that third-party vendors have developed in-house. We’re able to optimize to make the promise more seamless, to have lower cost, and also to make things much more efficient as we continue to deploy and improve our product offering.

Matthew Evan Galinko: Great. Thank you.

Operator: Once again, if you would like to ask a question, please press 1. Your next question for today is from John Mason with Aegis Co.

John Mason: I guess in terms of the rep sorry. Can you hear me?

Ordan Trabelsi: Yes. Yes.

John Mason: Okay. Great. In terms of the revenue year over year, I know, you know, you’ve been winning all these contracts in the US. Like, when do you expect to, you know, sort of return to growth year over year on a quarterly basis, as those contracts sort of start to flow in? And I know you mentioned the, you know, they’re essentially seeds at this point. But, you know, I guess, one, when do you expect that to inflect? And then, I guess, b, is it essentially that there’s turnover on the European market or, like, lower usage? Like, what is causing that kind of year over year decline? And I have a second question. Sorry. But Okay.

Ordan Trabelsi: Good question. Good question. So we don’t really we’re not really losing customers, essentially. As I said, many of these customers stay for a very long period of time. And as you see, we continue to announce more wins in the same region, either with the same government or with sister agencies in the same government. So it’s not that we’re losing customers. It’s that some projects that are not recurring have phases where they’re more heavy and they have more deployments, more expansion, more work. And then there are phases that require less work. And then until they again purchase more equipment and more expansion and more capabilities and more units, in the US market, that’s less of a metric because everything is pretty much recurring per unit per day, and that helps you just consistently grow.

Just like with any software as a service model. We lease our equipment, but a lot of it is software on the cloud, and that’s the model that’s prevailing in the US. As I said, the US is six times the size of Europe. So over time, we expect that our financials look very much in that way. Currently, there’s still some volatility, and it’s because of the mix of different projects and different stages that some have recurring revenue and some have purchases and other one-time items, and that can create naturally some volatility. Now we don’t give specific guidance and I said that some of them are seeds, but some of the projects in the US are also larger. It’s just that any project that’s in a new territory, and all of these are brand new, we see as a seed that can grow into many different plants or very large trees.

Just like when we started in Europe, the projects were Lithuania of $100,000 or Latvia of $100,000. And now we’re talking about projects that are $7 million, $33 million. And there are others that we’re bidding on that are also fairly large. So, it’s just a process. We entered the US just a year ago. We’ve been doing great, and we’ve won many different projects, and we’re winning against incumbents that are in the US market for a very long period of time and have very strong relationships. And we’re still able to come in brand new with our technology and displace them. And I think that speaks volumes to the potential that we’ll see going forward. And, so over time, we hope that everyone will see the benefits of our progress.

John Mason: Right. Thank you. And then last question, I guess, you know, I think there’s been quite a buildup of accounts receivable or trade receivable on the balance sheet. And I know, obviously, it’s a testament to the increased book value growth. But I guess, how do you see the cadence of release of that? Right? I think it’s been a pretty big drag on free cash flow. I think you’ve reported operating cash flow on, like, a semiannual basis. But, yeah, would love to know kind of how you expect that to flow through and when you expect to see that free cash flow.

Ordan Trabelsi: Yes. Good question. It’s not, and I don’t know if you followed SuperCom Ltd. historically, but there was a period of time where we were working in Africa and South America. And over there, collections are sometimes delayed. And it was more of a matter to look at here. We actually don’t have that in the US market and the European market. Things are timely. If we do see expansion to And the amount of to our AR, it’s because sometimes you have percentage of completion in these projects. The time and effort to recognize revenues is different from the time when you get paid. So there’s the misalignment in timing with percentage of completion projects, which is mainly coming from the, again, the long multiyear project deployments of the national scale in the European market.

But we don’t see an issue there. They’re paying on time. We don’t have any we haven’t had to have bad debt or anything of that sort in a significant manner like we had in Africa. And, sorry, South America. And, when you look at the bad debt that’s done on an annual basis, that’s typically from the e-gov business, from old debt from those regions, not from the electronic monitoring business in the US and Europe. And one of the reasons why we expanded and shifted into this market was because of the very good collectability and predictability with these customers.

John Mason: Got it. Thanks. I think that’s all my questions. Thanks so much.

Ordan Trabelsi: Thank you.

Operator: Your next question for today is from A. J. Hoffman, a private investor.

A. J. Hoffman: Hey, man. Congratulations on everything. I may have missed this earlier. But did you state a win rate so far for all these contracts you’re getting in the US for the ones where the bids have closed? Is it as high as Europe? Is it lower? And yeah.

Ordan Trabelsi: That’s a good question. We haven’t yet assessed in the US. We’ve been doing very well. It’s probably higher than Europe, but we haven’t assessed it because we’re still looking at such a large variety of projects in different sizes. So we’re gonna wait till we have more, a consistent flow and size of projects before we start to do analysis. But so far, as you see, we’re announcing many wins in many new states with many new resellers with direct agencies. And we have very good feedback from our customers.

A. J. Hoffman: And as far as scalability in the United States, have you guys calculated what your let’s say, after you launch everything, after you put everything on the ground and you’re expanding inside of that state, maybe to different municipalities, and at that point, all you’re doing is adding, you know, just bracelets to the equation. What is the breakeven for putting that bracelet on somebody to recouping the cost of that bracelet? Like, is it one quarter? Is it a year to recoup your cost? Can you break that down for us so we can kinda understand the longevity of these contracts versus when ROI is complete on actually assigning the bracelet to somebody?

Ordan Trabelsi: A great question, and I would love to share that with you. But for competitive reasons, we don’t share that specific number. As you can imagine, there are 10 other players in the industry, and everyone is trying to understand the cost structure and the exact prices per bracelet, that the competition and all the customers as well. So we at an aggregate level, you could see from my financials, when there’s a new project, a large one, there’s cash that’s outlaid to manufacture them. And then over the lease, we bring it back. But the margins, especially the additional contribution margins for additional bracelets, are high. And, over time, we expect to see margin expansion in our business as we continue to have the same cost leverage for high revenues.

A. J. Hoffman: Thank you. I can appreciate that response. Final question. There have been rumors circulating that you guys have been approached for a buyout. I’d take it with a grain of salt, but is getting bought out something that you guys are considering?

Ordan Trabelsi: I don’t know where these rumors come from, but I’ll share, and I’ve shared before that we’ve been approached by a variety of strategics or financial firms to acquire us. Our decision of the board, as always, will be what is best for the shareholders. So I can’t get into any specifics on that, but I have shared that that is a situation that has occurred to us. And it’s natural considering our performance in the market. We have a very high competitive rate. We’re expanding very nicely in our technology. I believe it’s highly coveted by other players and could perform very well to help disrupt the criminal justice industry.

A. J. Hoffman: Awesome, man. I appreciate your answers.

Ordan Trabelsi: Thank you very much.

Operator: At this time, I will pass the call back to Ordan for closing remarks.

Ordan Trabelsi: I want to thank you all for participating in today’s call and for your interest in SuperCom Ltd. Please contact us directly if you have any additional questions. We look forward to sharing our progress with you on our next conference calls, filings, and press releases. Thank you very much, and have a good day. This concludes today’s conference. You may disconnect your lines at this time. Thank you for your participation.