Release Date: June 06, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Xtract One Technologies Inc (XTRAF, Financial) has a strong total backlog of $36.5 million, indicating a healthy pipeline of future business.
- The company is experiencing increased interest and demand for its new Xtract One Gateway, with significant orders and ongoing contract negotiations.
- Xtract One Technologies Inc (XTRAF) has secured meaningful contracts, including a master services agreement with a global media and entertainment organization and a deal with the Colorado Rockies MLB team.
- The company is on track to start shipping the One Gateway in July, with inventory being built for the first five customers, totaling approximately $6.7 million in order value.
- Xtract One Technologies Inc (XTRAF) is seeing an expanding pipeline and increasing deal sizes, with a total pipeline of opportunities valued at approximately $100 million Canadian.
Negative Points
- The company's Q3 results were weaker than expected, with revenue declining to $3.5 million from $4.7 million in the prior year period.
- There have been delays in bookings and revenue recognition due to longer sales cycles and installation timing, particularly with larger organizations.
- The company experienced a noticeable pause with some customers due to rapidly changing U.S. economic policies, impacting the timing of solution deployments.
- Gross profit margins slightly decreased to 57% from 58% in the prior year period, partly due to one-time startup costs for the new Xtract One Gateway.
- Operating cash usage increased to $3.4 million compared to $2.4 million in the prior year period, reflecting higher costs related to new product inventory builds and startup costs.
Q & A Highlights
Q: Can you explain the reasons behind the delays in converting the backlog into sales? Is it due to internal capacity constraints or customer-related issues?
A: Peter Evans, CEO: The delays are primarily due to customer-related issues, such as reorganizations and policy shifts within large organizations, and construction requirements at customer sites. These are not related to our internal capacity, as we have the necessary manufacturing and installation capabilities.
Q: How is the interest in the One Gateway affecting current bookings and backlog? Are existing customers switching their orders?
A: Peter Evans, CEO: The interest in the One Gateway is strong, with some customers pausing their pilots to evaluate it alongside the Smart Gateway. While some customers are considering upgrades, they still see value in the Smart Gateway and are redeploying it to other locations.
Q: What gives you confidence in the July shipping timeline for the One Gateway? Are there any potential obstacles?
A: Peter Evans, CEO: We are confident in the July timeline due to customer commitments and our progress in overcoming supply chain challenges. We have built initial units and are finalizing production processes, with no current concerns about meeting the timeline.
Q: Can you provide more details on the revenue mix of the $21 million in signed agreements pending installation?
A: Karen Hersh, CFO: Approximately 70% of the pending backlog is upfront purchases, and 30% is subscription-based. This mix is consistent with our overall revenue strategy and includes a variety of industries such as sports, education, and healthcare.
Q: Are there any significant changes in contract duration or structure compared to a year ago?
A: Karen Hersh, CFO: While most contracts average around three years, we are seeing some extending to four or five years. However, there are no significant structural changes in terms of contract duration or terms.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
