Release Date: August 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Tantalus Systems Holding Inc (TNTLF, Financial) reported a record increase in annual recurring revenue (ARR) to $12 million, marking a 14% year-over-year growth.
- The company achieved strong gross profit margins of 55% in the second quarter, exceeding their long-term goal of 50%.
- Tantalus Systems Holding Inc (TNTLF) successfully executed a CAD10 million equity financing, strengthening their cash position and financial flexibility.
- The sales organization delivered record results, converting nearly USD33 million in orders in the first six months of 2024, a 46% increase year-over-year.
- The company expanded its user community to 302 utilities, adding 14 new utilities in the first half of the year, indicating growing market share.
Negative Points
- Revenue for the second quarter was $10.7 million, representing a slight decline of 4% compared to the previous year.
- The company's adjusted EBITDA was negative $174,000, impacted by a $1.5 million investment in the TRUSense Gateway development.
- Revenue was affected by capacity allocations with metering partners and supply chain logistics, leading to timing delays.
- The net loss for the quarter was $1 million, including $400,000 of non-cash-related items such as depreciation and amortization.
- Recurring revenue was slightly down on a comparative basis due to timing changes in migrating recurring licenses for certain utilities.
Q & A Highlights
Q: Can you expand on the initial 15 utilities that have secured orders? How many have received demo units, and what feedback have they provided?
A: Of the 15 utilities, two are from our advisory committee, and we expect more orders as we finalize firmware trials. Nine are existing utilities not in the advisory committee, and four are new to Tantalus. Most orders are small, ranging from a few to a few hundred devices. Feedback from field trials has been favorable, helping us refine the device and ramp up production. - Peter Londa, President, CEO
Q: Have the utilities that weren't part of the advisory committee indicated the pace or scale of their deployments?
A: The deployment pace aligns with our previous communications. Some utilities, like the City of Bolivar, are activating full deployments, while others like Chattanooga and EPB will see advancements over the next three to seven years. - Peter Londa, President, CEO
Q: You mentioned potential marketing investments to scale TRUSense. How will this be implemented, and what is the expected ROI?
A: We plan to invest a few hundred thousand dollars over the next 12 months, focusing on targeted marketing and engaging industry analysts. This will help us pursue investor-owned utilities and enhance our sales team. We expect a substantial ROI by increasing awareness and sales of the TRUSense Gateway. - Peter Londa, President, CEO
Q: Can you disaggregate the advisory committee opportunity by fiber, ethernet, and cellular? Are deployment cycles linear or exponential?
A: We've seen a mix of orders: three or four for cellular, the rest for fiber and ethernet. Deployment cycles depend on the utility, often starting slow and accelerating after initial adoption. We expect a steady slope of growth rather than a hockey stick pattern. - Peter Londa, President, CEO
Q: Gross margin in the quarter was strong. Are you getting better pricing from hardware vendors, or are there other dynamics?
A: Our supply chain team has managed market dynamics well, and previous price increases have held. Favorable product mix, particularly in commercial and industrial meters, has also bolstered margins. We expect this trend to continue. - Peter Londa, President, CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
