SuperCom reports significantly improved margins as CEO buys up stock
SuperCom has reported significant improvements in gross profit, EBITDA margin and earnings per share in the second quarter that the company’s President and CEO Arie Trabelsi says make its shares undervalued. Trabelsi also announced he will purchase up to a million of the company’s ordinary shares on the open market to take advantage of the perceived undervaluation.
Despite SuperCom revenue decreasing from $7.5 million in Q2 2017 to $6.8 million in the latest quarter, the company’s gross profit improved 30 percent to $3.83 million, and its EBITDA improved to $1.4 million from $1 million in the same quarter a year ago, for a marginal improvement of 21 percent. Likewise for the first half, revenue declined from $15.8 million in 2017 to $13.8 million in 2018, but gross profit increased 19 percent to $7.7 million, and EBITDA leaped from $0.7 million to $2.9 million. Non-GAAP net profit was $1.1 million or $0.07 per share in Q2, and $2.1 million or $0.14 in 1H 2018.
Trabelsi also noted that the company has improved its cost structure to bring Non-GAAP core operating expenses down to $3.3 million in Q2, compared to $5.4 million a year earlier.
“We expect more cost optimizations in the following quarters bringing us closer to the lean operating structure that we have not seen since 2015, before the strategic acquisitions took place. Yet today, I believe our business prospects are multiples greater, with 2 additional business segments, a major presence in developed markets, over 50% growth in our steady-state recurring revenue, and significant enhancements to our technology portfolio backed by 119 patents,” Trabelsi says.
“We continue to execute on our growth strategy across our business segments. In the recent past we have been expanding organically into new countries and governments faster than ever before with an exceptionally high win rate, including 8 new multi-year project wins in the last 8 months alone. This brings us to over 16 concurrent multi-year project deployments globally, which are expected to generate long term recurring revenues for years to come as well as additional business from customer references.”
Highlights in the quarter for SuperCom included a contract to supply its electronic monitoring and tracking platform PureSecurity EM Suite, which includes fingerprint biometrics, to an established service provider in east Texas, and another to supply it to the national government of Sweden for $7 million. The company won contracts for the PureSecurity EM Suite in two other states in the first quarter. It also signed a new contract with an existing African government customer for $4 million in April, and deployed electronic monitoring systems as part of a protection from domestic violence project in its second new project in Sweden.