SuperCom Q4 2024 Earnings Report

SuperCom EPS Results

• Actual EPS: $1.50
• Consensus EPS: -$0.09
• Beat/Miss: Beat by +$1.59
• One Year Ago EPS: N/A

SuperCom Revenue Results

• Actual Revenue: $7.05 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

SuperCom Announcement Details

• Quarter: Q4 2024
• Date: 5/14/2025
• Time: Before Market Opens
• Conference Call Date: N/A
• Conference Call Time: N/A

SuperCom (NASDAQ:SPCB) Ltd. (NASDAQ: SPCB) is a technology firm specializing in electronic monitoring, digital identity and secure IoT solutions. The company develops and delivers hardware and software platforms designed to monitor individuals in correctional and pre-trial settings, as well as to provide secure digital identity credentials for governments and commercial clients. SuperCom’s core offerings include GPS and radio frequency (RF) tracking devices, biometric readers, secure communications modules and cloud-based monitoring portals.

In addition to correctional monitoring, SuperCom has expanded into the digital identity and eHealth sectors. Its digital ID solutions leverage encrypted smart cards and mobile credentials to support national identification programs, border control and financial services. The company’s IoT eHealth applications combine wearable sensors and telehealth gateways, enabling remote patient monitoring and data analytics for healthcare providers. SuperCom’s cybersecurity expertise underpins all product lines, ensuring data integrity and tamper-resistant operations.

Founded in 1988, SuperCom is headquartered in Paramus, New Jersey, with research and development facilities in Israel. Over more than three decades, the company has served public- and private-sector customers across North America, Europe, Latin America and Asia Pacific. Its projects span community corrections, immigration control, welfare disbursement and secure credential issuance.

SuperCom’s executive team is led by Chairman and Chief Executive Officer Amir Eitan, who brings extensive experience in secure electronic systems and identity management. Under his leadership, the company continues to pursue innovation in real-time monitoring, digital identity security and connected health solutions.

SuperCom Q4 2024 Earnings Call Transcript

Key Takeaways

• Supercom reported record 2024 revenue of $27.6 M, achieved its first full-year GAAP net income since 2015 at $0.7 M, and posted positive EBITDA for ten consecutive quarters, reflecting robust profitability and improved cash flow usage.
• The company secured several high-profile contracts including the National Israeli Electronic Monitoring Project, over 20 U.S. state contracts since mid-2024, and major European wins in Romania, Finland, and Latvia, demonstrating strong market penetration.
• Investment in R&D led to the launch of PureProtect (domestic violence monitoring) and PureOne (all-in-one GPS tracking), which have gained traction across the U.S. and Europe and are expected to drive future revenue growth.
• Supercom strengthened its balance sheet by reducing debt by 32% to ~$23 M, extending loan maturity, cutting interest costs, and raising over $60 M in gross proceeds, enhancing financial flexibility for strategic expansion.
• Despite full-year profitability, Q4 GAAP results showed a $1.9 M net loss due to revenue timing and $2 M of one-time write-downs, while potential U.S.-Israel tariffs and macro uncertainties pose execution risks.

Presentation

[Operator]

Ladies and gentlemen, good morning, and welcome to Supercom's Fourth Quarter and Year End twenty twenty four Financial Results and Corporate Update Conference Call. At this time, all participants are in a listen only mode. After today's presentation, there will be an opportunity to ask questions. Participants of this call are advised that the audio of this conference call is being broadcast live over the Internet and is also being recorded for playback purposes. Joining me from Supercom's leadership team is Ordin Trabelsi, Supercom's President and Chief Executive Officer.

[Operator]

I'd like to remind you that during this call, Supercom management may be making forward looking statements, including statements that address Supercom's expectations for future performance or operational results. Forward looking statements involve risks, uncertainties and other factors that may cause Supercom'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's most recently filed periodic reports on Form 20 F and Form six ks and Supercom's press release that accompanies this call, particularly the cautionary statements in it. Today's conference call includes EBITDA and non GAAP financial measures that Supercom 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.

[Operator]

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'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, 04/28/2025. Except as required by law, Supercom disclaims any obligation to publicly update or revise any information to reflect any of the circumstances that occur after this call. It is now my pleasure to turn the call over to Supercom's President and CEO, Orton Trivulsi. Orton, the floor is yours.

[Ordan Trabelsi, President and CEO at SuperCom]

All right. I'm here. Thank you, operator, and good morning, everyone. Thank you for joining us today. Earlier this morning, we released our financial results for the fourth quarter and full year ended 12/31/2024.

[Ordan Trabelsi, President and CEO at SuperCom]

You can find a copy of the press release in the Investor Relations section of our website at supercom.com. We also filed our 2024 annual report on Form 20 F earlier today. Today, I'll provide you a detailed overview of our 2024 performance, including financial highlights, recent business developments, strategic direction, followed by Q and A session. I'm pleased to share Supercomp's outstanding performance of 2024, a year marked by continued momentum across our financial and operating fronts. We achieved revenue of $27,600,000 a record over the past seven years and 134% increase from our 2020 revenue low highlighting a four year growth trajectory in exceptional execution across our markets.

[Ordan Trabelsi, President and CEO at SuperCom]

Gross profit increased 31% year over year to $13,400,000 reflecting a favorable revenue mix of more later stage projects and continued scale efficiencies. Gross margin expanded to 48.4, up nearly 10% points from 2023 and our strongest level since 2021. We also reported positive GAAP net income of $661,000 compared to $4,000,000 net loss in 2023, representing our first full year of GAAP profitability since 2015 a nine year record net income. In addition, EBITDA rose to $6,300,000 up 31% year over year supported by strong margins and operational leverage. This marks our tenth consecutive quarter of positive EBITDA underscoring the consistency of our core business.

[Ordan Trabelsi, President and CEO at SuperCom]

We've also made consistent progress to improve our operating cash flows year over year from a use of $9,400,000 in 2021 to $4,700,000 in 2022, dollars '2 point '4 million in 2023 and now just $1,300,000 of operating cash use in 2024. This 85% reduction over the three years reflects strong execution across both new and legacy projects and positive change towards financial self sufficiency. Together with our growth in revenue and profitability, these improvements in cash flow underscore the success of our strategic initiatives and the operational leverage in our business model whereby we see improved margins as revenues grow especially when we're growing in regions where we have an existing project. The U. S.

[Ordan Trabelsi, President and CEO at SuperCom]

Market is an excellent example of that, but we will get to that a bit later. I'd like to take a moment to thank our incredible team for their tireless work and dedication, which made the success possible. We're proud of what we've accomplished together and look forward to the next chapters. During the past year, we won several important contracts in The US and Europe, and we're excited about the opportunities we see ahead. I'll go into more details in a few moments.

[Ordan Trabelsi, President and CEO at SuperCom]

This year was particularly exciting as we further established our leadership position through a series of competitive wins including the prestigious National Israeli Electronic Monitoring Project. This landmark contract not only displaced a long standing incumbent of nearly twenty years but also validated our technology and operational capabilities on a national scale. In The U. S, we significantly expanded our footprint with more than 20 new contracts secured since mid-twenty twenty four. This included strategic entries to West Virginia, Maryland, New York, South Dakota, Alabama, Ohio, Arizona, Wisconsin, Minnesota, Michigan, and Kentucky.

[Ordan Trabelsi, President and CEO at SuperCom]

These contracts wins continue to diversify our revenue base and support recurrent income streams across multiple jurisdictions. We are particularly proud of the successful integration and expansion of our tier one solution across these regions. This positive reception underscores both the technical strength and adaptation of our platform. These strategic wins coupled with our product led growth model have positioned us to accelerate our momentum and deliver sustained value to our customers and stakeholders. For those new to SUPERCOM, our mission is to revolutionize the public safety sector worldwide with our proprietary electronic monitoring technology, data intelligence and suite of complementary services.

[Ordan Trabelsi, President and CEO at SuperCom]

With over thirty six years of experience since our founding in 1988, we've been a trusted partner to dozens of national governments worldwide providing cutting edge electronic and digital security solutions. Our strategic blueprint is straightforward yet powerful. Firstly, we'll lead with innovative technology. Our proprietary technology, electronic monitoring technology, scores highly and competitive government tenders for various programs such as house arrest, GPS monitoring, rehabilitation services, domestic violence prevention, and more. Moreover, have recently broadened our portfolio to include advanced AI driven analytics, which are an integration into our electronic monitoring solutions.

[Ordan Trabelsi, President and CEO at SuperCom]

This addition enhances our ability to provide predictive insights and improve outcomes for our clients. Develop superior solutions, the second. Since 02/2018, it's become a security of 50 new multiyear government projects. Third is to expand our global presence with a strong growing reputation as a premium provider of electronic monitoring solutions and services, enhance our market position with each new win. And our fourth pillar will be the delivering of outstanding service.

[Ordan Trabelsi, President and CEO at SuperCom]

We have a strategic focus on the IoT tracking business in developed markets where the opportunity is the greatest. With electronic monitoring market projected to reach $2,300,000,000 by 2028, the U. And Europe constitute about 95% of these markets. We continue to amplify our technological leadership with significant R and D investments leading to the launch of advanced solutions like Priraprotect, also branded lately as PureShield and PureOne. These offerings are already making headway in various markets including The US and our pivotal and supercom expansion.

[Ordan Trabelsi, President and CEO at SuperCom]

PureProtect or PureShield is a life saving domestic violence monitoring solution providing preventive measures to families suffering from domestic violence or stalking thereby increasing their safety. PureOne is an all in one GPS tracking ankle brace and monitoring solution integrating comprehensive monitoring capabilities into a single device. Like many of our products, it offers top notch features placing it above the competition in most metrics. Our cloud based software enabled pure security product line has been particularly effective in monitoring offenders and managing real time information. This real time advantage is a game changer empowering authorities with actionable insights and timely intervention to mitigate potential risks and enhance public safety.

[Ordan Trabelsi, President and CEO at SuperCom]

Our investment in product innovation had directly translated into meaningful market expansion. The launch and successful adoption of secure security, PureProtect and PureOne have significantly increased our addressable market enabling us to penetrate new territories and deepen our presence in existing ones. We've been very pleased with the reception and traction and expect them to help facilitate the accelerated expansion of Supercom into The U. S. Market and further European countries.

[Ordan Trabelsi, President and CEO at SuperCom]

We fortified our operational infrastructure to support our growth and have revamped our sales strategy to a proactive outreach approach. Our sales team with deep industry expertise has been instrumental in achieving new wins and driving growth. In the fourth quarter together with our prime partner, Electric Security, we were awarded a high profile multiyear contract in the Israeli Prison Service, IPS, to deploy our pure security monitoring suite including PureCom, PureTrack, PureTag, and PureBeacon. The nationwide program is expected to cover all EM offender monitoring in the country with an estimated 1,500 enrollees and potential for expansion. The five year contract is already in effect with hundreds of units already deployed and includes the option for up to four one year extensions for a total of nine potential year contract terms.

[Ordan Trabelsi, President and CEO at SuperCom]

This project was secured through a highly competitive bidding process involving multiple valuation rounds, demonstrations, and technical reviews supervised by the IPS. We just placed an Israeli incumbent, as I said before, that held the contract for nearly twenty years. The winners exemplifies our commitment to excellence, technology, leadership, and strong partnership. A comprehensive set of offering positions us well to win multifaceted national projects, which is the one that are set to encompass all electronic monitoring programs in the country. Across Europe and The United States, we continue to gain traction in competitive tenders, often displacing common vendors.

[Ordan Trabelsi, President and CEO at SuperCom]

A strong track record supported by our proven technology and operational excellence continues to be a key driver of new project awards and long term partnership. In Europe, we continue to execute on a strategy that's delivering tangible growth and long term opportunity. Over the past several years, we've expanded our footprint into many countries in Europe with over winning over 15 national electronic monitoring programs for competitive tenders. These include large scale domestic violence tracking initiatives that align with growing public safety priority across the region. A standout example is our success in Romania where we secured largest industry award of 2022, National electronic monitoring pro project value at approximately $33,000,000 designed to serve up to 15,000 monitoring individuals simultaneously for over a period of six years.

[Ordan Trabelsi, President and CEO at SuperCom]

The program is actively running and shows the scalability of the peer security suite suite the program is actually running and shows the scalability of our peer security suite in managing complex deployments such as this one. We also strengthened our presence in Finland with a national level deployments of our domestic violence monitoring solution. This contract builds on our growing reputation in the region and reflects the confidence our European government partners have in our technology infrastructure. Most recently, we launched a new national project in Latvia, our third in the country focusing again on domestic violence offender monitoring. Ordered following competitive tender, this initiative leverages the pure security platform to support the Latvia and state police with enhanced offender compliance and victim protection tools.

[Ordan Trabelsi, President and CEO at SuperCom]

In parallel, we're actively receiving additional orders from current partners across Europe demonstrating the strength and stickiness of our solution. As more governments transition to our proactive monitoring approaches, we believe a strong European foundation and proven delivery model position us for continued success in the region. While Europe remains an important growth driver, The US market presents an even greater long term opportunity estimated to reach up to six times the size of the European market in the coming years. With the introduction of the Pure One electronic monitoring product now available in The U. S.

[Ordan Trabelsi, President and CEO at SuperCom]

And expansion of our domestic violence tracking solutions, we believe Supercom is well positioned to unlock substantial growth potential in this untapped market. In line with this, our expansion strategy in The U. S. Has accelerated meaningfully over the past eighteen months. Although Supercom already does business in multiple U.

[Ordan Trabelsi, President and CEO at SuperCom]

S. States, we're actively focused on further expanding our presence in The U. S. Our wholly owned subsidiary LCA located in California is actively expanding the size and scope of its existing programs, winning rebates with existing customers and winning new programs with new customers. The company strategically prioritizes Pier one's expansion into new markets and geographies.

[Ordan Trabelsi, President and CEO at SuperCom]

The Pier one has already received high praise during its introduction into various regions of The US where it has been successfully deployed and is actively utilized to monitor live offenders. Offenders. Moreover, sales activities for PO1 have commenced in promising new markets outside Europe and North America. Despite our long standing presence in parts of California, the U. S.

[Ordan Trabelsi, President and CEO at SuperCom]

Market remains largely untapped. Since we began investing in outbound sales efforts, we have secured numerous contract wins across The U. S. With over 20 new contracts since mid-twenty twenty four. The recent launch of Pure One coupled with a positive feedback from initial deployments positions us to accelerate market capture in The US unlocking significant growth opportunities.

[Ordan Trabelsi, President and CEO at SuperCom]

Our newly expanded strategic sales team has already delivered tangible results. Beyond contract wins we've seen a significant uptick in demos, pilot programs and qualified leads all which are contributing to a sharp increase in our US pipeline. Launching our Pure One solution in The US market was defining milestone in our North America expansion strategy. Since our last earnings call, we will discuss new wins in West Virginia, Maryland and New York. Supercom has continued its rapid expansion with several notable contracts.

[Ordan Trabelsi, President and CEO at SuperCom]

In South Dakota, we secured multiple contracts and county sheriff agencies along with the agency's share of agencies marketing our official entries the state. These deployments leverage our pure one technology known for its dependable performance in both urban and rural environments and are already contributing recurring revenue. In Alabama, we signed a new government contract to deliver GPS tracking and monitoring violence monitoring solutions, domestic violence monitoring solutions, expanding our public safety footprint in the Southeastern US and advancing victim protection initiatives. In Ohio, we secured a contract with juvenile probation agencies successfully displacing the incumbent provider. The project utilizes our discreet and compliance serving tier one solution tailored specifically for juvenile justice programs.

[Ordan Trabelsi, President and CEO at SuperCom]

In Arizona, we partnered with a prominent statewide service provider marketing our seventh new US state entry since mid twenty twenty four. This partnership broadened our reach across the state's justice system and accelerates market penetration. Through strategic regional partnership, we also expanded into, Wisconsin, Minnesota, and Michigan where our GPS domestic violence monitoring technologies are being introduced by an established provider network. And in Canada, we launched new projects with a longstanding tracking solutions partner, transitioned from RF based to GPS technologies using our advanced tier one devices. This should have began turning revenue in early twenty twenty four.

[Ordan Trabelsi, President and CEO at SuperCom]

As I mentioned earlier, introducing the Pure1 solution was a game changer in securing these contracts underscores our competitive edge and commitment to developing innovative and superior technology solutions. This momentum highlights the strong market demand for our Pure One and Pure Protect solutions and reinforces our trajectory for continued growth in various regions of the market. Now Despite macroeconomic uncertainties and ongoing global challenges including those in Israel, supercom solutions are becoming increasingly relevant. We continue to see growth driven by higher recidivism rates, escalating cost of incarceration and a surge in adoption of victim protection solutions worldwide. The company's pure security technology solutions have been designed to address these trends, offering an effective way for institutions to enforce home confinement, ease prison overcrowding, and lower cost significantly.

[Ordan Trabelsi, President and CEO at SuperCom]

For example, monitoring an offender on home confinement or GPS costs about 10 to $35 a day, which is 95 90% less than the hundred dollar to $140 daily cost at a correctional facility. Moreover, home confinement helps reduce repeat offenses highlighting its effectiveness in helping offenders improve their lives and communities. As we mentioned on previous calls, we believe there's also an opportunity to enhance our U. Growth strategic acquisitions of local electronic monitoring service provider with strong reputation and customer base in their local markets. We constantly monitor the market potential acquisitions that could generate significant value by immediately expanding market presence and providing vertical integration synergies.

[Ordan Trabelsi, President and CEO at SuperCom]

Our acquisition of LCA in 02/2016 for $3,000,000 is a great example of that. Successful acquisition has proven to be a great strategic value through the over $35,000,000 in new project wins it has generated since then in California alone. I'll now turn over to the financials. Considering this quarter, Q4 and full year 2024 in comparison to the same period last year, note that our multiyear projects do not run on a quarterly scale and thus can have fluctuating effects when analyzed quarterly. We'll start with the full year performance which helps neutralize some of the fluctuation.

[Ordan Trabelsi, President and CEO at SuperCom]

Full year performance of 2024. We achieved our fourth consecutive quarter of revenue growth. I'm sorry, our fourth consecutive year of revenue growth with revenues increasing to $27,600,000 This represents our highest revenue since 02/2017 and a 34% increase from 2020 of 11/2008, underscoring the strength of our multi year recovery. Gross profit surged to $13,400,000 a 31% increase over the prior year driven by continued scaling of our operations and favorable project mix. This resulted in gross margin expansion to 48.4%, up from 38.5% in 2020 a nearly 10% improvement and our strongest margin level since 2021.

[Ordan Trabelsi, President and CEO at SuperCom]

We reported positive net income of $661,000 a significant turnaround from net loss of $4,000,000 in 2023. And as I've said, this marks our full year of GAAP profitability since 2015 and highlights the durability of our operation model. On a non GAAP basis where we exclude non cash items like amortization of intangibles from prior acquisitions among other things, net income rose to $6,330,000 up from $3,190,000 a 99% increase driven by core business strength excluding non recurring and non cash items. Non GAAP EPS reached $3.66 for the full year of 2024. EBITDA reached $6,300,000 reflecting 31% year over year growth supported by strong gross margins and operating efficiencies.

[Ordan Trabelsi, President and CEO at SuperCom]

This marks our tenth consecutive quarter of positive EBITDA and operating cash flow improving materially with usage reduction to $1,300,000 in 2024, continuing a positive trend from $9400000.0.4700000.0 dollars to $2,400,000 in 2021, '20 '20 '2 and 2023. This marks 85% reduction in cash over the last few years, highlighting enhanced cash generation for both new and legacy projects. Quarterly performance, we'll look at currently. Revenue increased, in the fourth quarter to $6,330,000 up from $5,700,000 in the prior year period. This growth was driven by new project wins and expansion of existing programs both in The U.

[Ordan Trabelsi, President and CEO at SuperCom]

S. And Europe. Gross profit increased to 2,700,000 up from $2,350,000 with margin improving to 42.7%, up from 41 in the prior year period. This margin expansion reflects improved scale and favorable project dynamics. Importantly, our EBITDA increased to $1,600,000 from $1,090,000 achieved in Q4 last year, marketing our tenth consecutive quarter set of positive EBITDA.

[Ordan Trabelsi, President and CEO at SuperCom]

While GAAP net loss for the quarter was $1,860,000 compared to loss of $1,560,000 last year, this is primarily driven by timing of revenue recognition and certain operating items such as $2,000,000 in one time items including doubtful debt write down. In addition to strong year over year results, it's worth at this moment to take a step back and look at how Supercom has come over the past four years. Following the placement of new management team and business strategy in 2021, Supercom executed a transformation that drove substantial improvements across key financial and operating metrics over the four year period while navigating global challenges such as the COVID nineteen pandemic, geopolitical conflicts, rising interest rates, changes in various policies, supply chain disruptions, and volatile capital markets. Between 2020 and 2024, we achieved remarkable transformation in our financial operation performance. Revenue more than doubled, rising from 11,800,000.0 in 2020 to 27.6 in 2024.

[Ordan Trabelsi, President and CEO at SuperCom]

Gross profit also grew from, 5,600,000.0 to 13,000,000. Operating losses narrowed substantially, improving by 90%. On a GAAP basis, income improved from $7,400,000 loss to $661,000 profit, our first full year since 02/2015 of GAAP profitability. EBITDA more than doubled from $2,800,000 to $6,300,000 reflecting 125% growth. And on a non GAAP basis, net income improved from a loss of $1,700,000 in 2020 to 6,300,000.0 in 2024, dollars '8 million turnaround over this four year period in non GAAP net income.

[Ordan Trabelsi, President and CEO at SuperCom]

Operating cash flow usage was reduced by 86% from $9,400,000 to $1,300,000 by the enhanced cash efficiency across project deployments and operational usage. This four year turnaround demonstrates the success of our strategic road map, the scalability of our core solutions, and the strength of our global operations. We shifted from financial recovery to consistent profitable execution. We remain focused on building on this momentum into 2025 and beyond. Moreover, we achieved a longer term goal of transitioning away from legacy business of identification in Africa to the IoT business in developing countries.

[Ordan Trabelsi, President and CEO at SuperCom]

In 2024, over 97% of our revenues are from developed countries. In comparison to 2015, we're over 89% of the revenues were from Africa alone. IoT revenues over this period of time grew from 1% of company revenues in 2015 to 91% of company company revenues in 2024 regarding IoT revenues. Furthermore, in recent months, we have made substantial progress in strengthening our financial position. Since the end of twenty twenty three, we reduced our total outstanding debt by 32% from over 34,000,000 to approximately $23,000,000, a reduction of more than $111,000,000 in just over a year.

[Ordan Trabelsi, President and CEO at SuperCom]

This was achieved in part through strategic exchanges of debt to equity and negotiated premiums up to a % or more of market price as well as an amendment of our senior debt extending maturity to 12/31/2028 as well as an interest rate reduction that is expected to save the company more than $1,000,000 in interest and fees for the current loan term. Following the reduction in debt, we raised over $60,000,000 in gross proceeds, 6,000,000 through a registered direct offering and additional approximately 10,200,000 from the cash exercise of investor warrants that were outstanding. These combined initiatives have strengthened our balance sheet and provided the resource necessary to continue executing our strategy. In closing, I'd like to thank our global teams for the hard, tireless work to achieve our company's record setting performance in 2024. We've developed the right technology and products to help criminal justice systems, clients overcome challenges and make better use of over 80,000,000 80,000,000,000 spent annually in The USA on operating rehabilitation centers and prisons.

[Ordan Trabelsi, President and CEO at SuperCom]

The research showing approximately seventy five percent recidivism rate in The US, there's significant room for improvement when effective programs and technology are deployed. We're excited about the growth we've been experiencing and about the demand for our products. After several years through which we transitioned from our legacy business to the IoT tracking of offenders business, we were happy to show the shift to strong growth in revenue and profit in recent years. And we believe that we're well positioned for continued expansion of our solutions to more locations, geographies as we capitalize on opportunities that lay before us. These are being driven by multiple factors including a strong presence reputation in The US and European markets, the countercyclical nature of electronic monitoring industry, the growing public policy shift to monitoring instead of incarceration and the growing adaptation of domestic violence prevention solutions.

[Ordan Trabelsi, President and CEO at SuperCom]

We anticipate continued expansion in The US and Europe and potential other regions. Our commitment to preserving our technological advantage and our robust growth foundation remains steadfast as we continue to invest in these areas. With that, I'll turn the call over to operator for opening questions. Operator?

[Operator]

Thank And the first question today is coming from Matthew Galinko from Maxim Group.

[Matthew Galinko, SVP & Senior Research Analyst at Maxim Group]

Congrats on the strong 2024 and thanks for taking my questions. Maybe my first one is, it seems like I think it's six consecutive quarters above 40% gross margin now. Would you be comfortable calling 40% the floor at this point just relative to where we were a couple of years ago? Or do you think there's, you know, room for more volatility in the gross margin line ahead?

[Ordan Trabelsi, President and CEO at SuperCom]

Great question. As you know, our gross margin comes with a factor of numerous projects at the same time from different regions. And, we have shared and we continue to experience and we add more and more bracelets of monitoring into the same region, margins improved significantly because you have the fixed cost per project of the inventory management, of the deployment, of the support, of the the training and the technology know how servers. So all that is fixed and you add more and more braces, get higher margins. We have some very nice projects with the with the growing numbers currently and they're contributing to this higher gross margin.

[Ordan Trabelsi, President and CEO at SuperCom]

And as we plan to The US market since Autov is on the same platform centralized through the cloud, we hope to see improved margins as numbers grow there. But currently, it's still hard to say, how things will unfold as there's a lot of volatility depending on what happens with different projects. So it's hard for us to know, how things will move. They can trend up and down, but over time as our business plan unfolds, we believe that we'll have larger and larger, unit numbers per customer and per region and that will drive, higher gross margins actually than even what we have today.

[Matthew Galinko, SVP & Senior Research Analyst at Maxim Group]

Got it. Thank you. And I guess as a follow-up, could we maybe focus a little bit more on U. S. Market?

[Matthew Galinko, SVP & Senior Research Analyst at Maxim Group]

You've obviously had some pretty good success in that evolving strategy. So maybe give us an idea of what's next. Is it kind of more quota carrying sales reps and acceleration in new customers and larger customers in The U. S. Market?

[Matthew Galinko, SVP & Senior Research Analyst at Maxim Group]

Or do you start competing for kind of bigger contracts with bigger governments? Or just kind of what do you expect to what should we expect to see from The U. S. Market in 2025?

[Ordan Trabelsi, President and CEO at SuperCom]

Okay. So The U. S. Market which we've started we started expanding significantly into as of last year and since the mid of last year till now, we've already had over 20 new contracts. We're continuously signing more contracts and more, more partnerships to help us expand together with a local partner, which is also a very good thing.

[Ordan Trabelsi, President and CEO at SuperCom]

These partnerships and so far the the the deployments are going well. We're getting good feedback and technology is a great fit. And we didn't expand as much early in previous years because our technology is more focused on the European market and now we adapted some of it like the pure one to The US market. So all of that is going well. As we continue to expand to more locations and bring on more partners, we're gonna grow also the the size of the projects.

[Ordan Trabelsi, President and CEO at SuperCom]

As you remember, probably in Europe, started with small projects over a hundred, 204 hundred thousand dollars, and then we grew to 2,000,000, 4 million. And now, you know, one of our latest ones is over $33,000,000. So same thing in The US. We're starting with with with small and going up to mediocre and then over time to larger and larger. So so we'll see that we'll see that continue to progress over the coming years.

[Ordan Trabelsi, President and CEO at SuperCom]

We had a passive bidding strategy in Europe. We didn't have as much of a big sales team. In The US, it's more fragmented. So we actually have more people that are quota carrying as you mentioned before together with sales support. So we're actively in pilots and demos and the pipeline continues to evolve as we're doing that throughout The U. S. Market.

[Matthew Galinko, SVP & Senior Research Analyst at Maxim Group]

All right. Thank you. And last question for me is on the opportunity to consolidate some of the partners in The U. S. Market.

[Matthew Galinko, SVP & Senior Research Analyst at Maxim Group]

Is that something that you see as being a more of a possibility, especially with your debt starting to come down and breakeven cash getting pretty close? Or what do you think the likelihood of deals closing in the next eighteen months looks like or what are the biggest barriers to executing on that?

[Ordan Trabelsi, President and CEO at SuperCom]

Okay, great question. Thank you. We've mentioned in the past, just to give everyone context, some of these partnerships with local value added resellers, they'll provide the services, they'll take our technology or our competitor technology and provide the services and they'll aggregate maybe 10 to 30 counties. Because some of these small counties, it's hard for them to do everything themselves and they go to a local player who does that for them. So we sell to these to these partners already and there's interesting opportunities with acquiring them.

[Ordan Trabelsi, President and CEO at SuperCom]

We did it once in in California in 02/2016 and worked very well because you replaced their their technology with our technology which is newer and also creates a lot of synergies in, you know, significant profit quickly. But also it opens up your ability to grow that business with the newest technology in that region. So there certainly are opportunities and we have been discussing this at some level over the past over the recent years. It's it's we've as as you've seen, we also had a big focus on trying to grow our organic operations, reduce our debt, strengthen our balance sheet and we've been doing that and that of course makes it easier for us to to complete these deals. So it makes it more likely.

[Ordan Trabelsi, President and CEO at SuperCom]

We're still dependent on on the price and fit and we have to see that due diligence. We see that everything makes sense for us and it's good synergistic fit for us. But it does certainly the stronger balance sheet makes it easier. Also makes it easier to win larger projects because when you're looking at the very large projects, when you have a small cash base or and a lot of debt, it was harder in the past and now it's becoming easier together with a positive net income. That's also gonna help us on various opportunities. The general direction, the financial direction of the company and the balance sheet is helping us on multiple fronts.

[Matthew Galinko, SVP & Senior Research Analyst at Maxim Group]

Great. Thank you.

[Operator]

Thank you. Thank you. And the next question is coming from Greg Mesnath from Kingswood Partners. Greg, your line is live.

[Greg Mesniaeff, Research Analyst at Kingswood Capital Partners]

Yes, thank you. Question on your entry into The U. S. Market. Obviously, that's a key cornerstone of your strategy now.

[Greg Mesniaeff, Research Analyst at Kingswood Capital Partners]

And I'm wondering how you're addressing the recent tariff situation as far as supply chain, product mix, hardware versus software. Just kind of give us an overview of that. Thanks.

[Ordan Trabelsi, President and CEO at SuperCom]

Okay. Great. It's a great question.

[Ordan Trabelsi, President and CEO at SuperCom]

Let's say that that that our manufacturing for our products is done currently. The end the end of the manufacturing is done in Israel. We supply from various regions, and we have actually production here. We've done that. We changed that throughout COVID.

[Ordan Trabelsi, President and CEO at SuperCom]

We know how to produce in other places as well. But throughout COVID, when we're requested to to create a lot of bracelets also for for COVID confinement, we we developed that ability here in Israel. So we're doing from Israel. Israel and The US, it's still to to be seen what the tariffs would be like, and and we also have abilities to to do some manufacturing in The US. But as things evolve in in the coming, let's say, weeks and months, we'll have more updates as we see how how things resolve on tariffs between Israel and The US and our strategies around that.

[Ordan Trabelsi, President and CEO at SuperCom]

But currently, a big portion of our operations is in The US and the recipe a provisional in that regard. So we don't expect, you something very high, but we'll but we'll see how that folds out. Thank you. Also, to to also to on that, to remind you, a big part of our service is software as a service. You know, we have the the monitoring software, and that's what they're paying for.

[Ordan Trabelsi, President and CEO at SuperCom]

And they they they a lot of them lease the bracelets rather than just selling hardware components. So that that will help as well.

[Greg Mesniaeff, Research Analyst at Kingswood Capital Partners]

Good point. Thank you.

[Operator]

Thank you. And that does conclude today's Q and A session. At this time, I will pass the call back to Orden for closing remarks.

[Ordan Trabelsi, President and CEO at SuperCom]

I want to thank you all for your participation in today's call, for your interest in SUPERCOM. 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 release. Thank you and have a good day.

[Operator]

Thank you. This does conclude today's conference. You may disconnect your lines at this time. Thank you for your participation.

Participants

Executives

• Ordan Trabelsi, President and CEO

Analysts

• Matthew Galinko, SVP & Senior Research Analyst at Maxim Group
• Greg Mesniaeff, Research Analyst at Kingswood Capital Partners