Core AI Holdings, Inc. Q3 FY2022 earnings call

• Strong year-over-year and sequential top-line growth and declining losses in Q3 2022 due to SD7 shipments and conversions to purchase orders.
• SD7 rugged push-to-talk handset saw growth, with certifications from North American and international carriers, and expansion into verticals beyond first responders.
• Launched SD7+ with wide-angle camera and partnership with Visual Labs for body camera functionality.
• Hired Dan Leech, a telecom industry veteran, to boost sales.
• Continued sales of in-vehicle devices and cellular boosters, with potential military contracts from U.S. Navy deployment.

Revenues for the three months ended September 30, 2022, were $2.6 million compared to $1.2 million for the same period in 2021, a 111% increase. The new revenue source from the SD7 and its related accessories was $1.4 million. Rugged devices and related accessories increased 588% year-over-year to $1.9 million in Q3. Gross profit for Q3 2022 was $860,000 (33% of sales) compared to $430,000 (35% of sales) in Q3 2021. Adjusted EBITDA was negative $1.6 million versus negative $4.9 million in Q3 2021, a positive variance of $3.3 million.

• Expect continued sales growth from Q4 2022 and onwards.
• Goal to sell at least 10,000 SD7 units per quarter, aiming for annual tens of thousands of units.
• SD7+ expected to be commercially available between Q1 and Q2 2023.

• Uncertainty in achieving profitability and meeting growth targets.
• Dependence on carrier certifications and market adoption of new products.
• Risks associated with federal contract timelines and competition in the telecom industry.

Q: About SD7 unit sales and revenue opportunity.

A: Marc mentioned they sold between 4,000 to 5,000 units in Q3, aim to sell at least 10,000 units per quarter, with a large market potential as they aim to displace millions of land mobile radios.

Q: SD7+ comparison.

A: SD7+ has a wide-angle camera, higher ASP than SD7, expected to be commercialized between Q1 and Q2 2023, with potential recurring revenue from software sales.

Q: Cellular boosters military opportunity.

A: Secured contract with U.S. Navy, working on additional military contracts but timelines are uncertain, and boosters are higher margin.

Q: Financing and cash position.

A: Raised $4 million through a registered direct offering, has a healthy balance sheet with minimal debt remaining.

Q: SD7+ carrier incentives.

A: Similar to SD7, carriers are incentivized by SIM activation quotas and the cost-effectiveness of the device compared to alternatives like smartphones.