Camp4 Therapeutics Corp Q4 FY2022 earnings call

Management Statement and Operational Highlights

• Software and Subscription Growth: Software and subscription services revenue reached 60% of total revenue in the fourth quarter, the third consecutive quarter exceeding 50%. Approximately one-fifth of eligible device customers were converted to recurring contracts in the fourth quarter, with the remainder expected to convert by the end of the fiscal year. Secured new customers like ComNet and Cooltrax, and partnered with Noregon for remote diagnostics and preventative maintenance.
• International and Partnerships: Expanded partnership with Toyota in Spain via LoJack España. BMW partnership successful, with LoJack Stolen Vehicle Recovery system offered on all BMW Group models in Italy.
• Supply Chain: Impacted by global components supply chain constraints, but the team is addressing shortages with suppliers and maintaining customer relationships.

Segment Performance

• Software and Subscription Services: In the fourth quarter of 2022, software and subscription services revenue was $41.2 million, accounting for 60% of total consolidated revenue of $68.4 million. For the full year 2022, this revenue grew to $154.3 million from $129.9 million in the prior year. Remaining performance obligations (RPO) in the fourth quarter increased 47% to $200 million compared to the same quarter the previous year. Subscribers grew to 1.1 million in the fourth quarter, up from 954,000 in the same quarter a year ago.
• Telematics Products: Fourth quarter telematics products revenue was $27.1 million, a 43% year-over-year decrease. For the full year 2022, telematics products revenue totaled $141.5 million compared to $178.7 million in 2021. OEM products revenue in the fourth quarter was $10.4 million, down from prior periods.

Guidance

• Q1 2023: No quarterly guidance provided due to customer conversions and uncertain economic conditions.
• Backlog: Total backlog was approximately $285 million, including $200 million in RPO and $80-85 million in device backlog.
• Subscription Conversion: Expect to recognize over 45% of RPO ($90 million) in fiscal 2023.

Risks

• Supply Chain Constraints: Ongoing global components shortage limiting order fulfillment despite high backlog.
• Economic Uncertainty: Impact on customer conversions and revenue projection due to uncertain global economic situation.

Question and Answer

• Q: Interest in transition to subscription, specifically PULS to CTC transition and customer pushback?
  • A: Jeff Gardner mentioned the transition from PULS to DM CTC is beneficial for customers with improved security and device management. Customers are migrating well, with 100% conversion to date and an ambitious schedule for full completion in FY2023.
• Q: Telematics side component availability and gross margin?
  • A: Kurt Binder stated backlog is healthy but supply constraints limited shipment. Gross margin around 41%, with price increases passed on in Q4 and expected to show effect in H1 FY2023.
• Q: Impact of Ukraine war on international revenue?
  • A: Jeff Gardner said no significant effects, supply chain diversified with multiple locations, so little impact from Ukraine.
• Q: Projection on recurring revenue and component shortages?
  • A: Kurt Binder mentioned recurring revenue would be higher with more devices, but supply chain challenges affect projection. Subscription model has installed base providing revenue layer, and focus on converting more telematics device customers.
• Q: Subscription business in 12 months and new logos?
  • A: Kurt Binder expects subscribers to reach 1.2-1.5 million, driven by converting base and new logos. Jeff Gardner mentioned investing in sales, marketing, and product to drive new logos and growth.