SuperCom Ltd. Q3 FY2025 earnings call

• Secured over 30 new electronic monitoring contracts in the US since mid-2024, including entry into 12 new states and 14 partnerships with regional service providers.
• LCA, a wholly-owned subsidiary, secured a five-year reentry service contract valued at up to $2.5 million.
• Won a $7 million national electronic monitoring project in Germany, Europe's largest economy, displacing a long-standing vendor.
• Support domestic violence programs in nine nations with PureTrack and PureChoose Shield technologies.
• US operations benefit from cloud-based centralized platform, integrated inventory management, and 24/7 support, enabling faster deployment and higher margin potential compared to European operations.
• Invested over $45 million in R&D for electronic monitoring solutions, driving technology leadership.

In the third quarter of 2025, SuperCom Ltd. achieved continued profitability and margin expansion. Revenue was $6.2 million compared to $6.9 million in Q3 2024. Gross profit increased to $3.8 million (60.8% margin), operating income surged to $640,000 (10.3% margin), EBITDA doubled to $2.2 million (34.6% margin), and net income reached $700,000. For the nine-month period of 2025, revenue was $20.4 million vs $21.3 million in 2024. Gross profit grew to $12.5 million (61% margin), operating income nearly tripled to $3 million (14.7% margin), EBITDA was $7.2 million (35.4% margin), and net income more than doubled to $6 million.

• US market expected to become more consistent and predictable in revenues and margins over time due to recurring revenue model.
• Continued expansion in Europe and other regions expected as initial projects lead to additional wins and program expansions.
• Evaluation of strategic acquisition opportunities in the US market to accelerate market penetration and unlock synergies.

Q: Market opportunity in Germany, expansion?

A: Initial project in Germany has multiple components (alcohol monitoring, GPS monitoring, etc.). Expect growth as more capabilities from ongoing product offering are added.

Q: US service provider switch, repeatable?

A: 14 service providers in US signed on this year. Model is fragmented, technology advantage leads to service providers swapping to SuperCom Ltd.'s technology; both service provider and direct agency models are effective.

Q: Debt position, debt-to-equity swaps?

A: Strategically done debt-to-equity swaps reduce net debt. US domestic violence solution helps service providers add new offerings.

Q: Revenue by geography, US vs other?

A: US business strong, Europe has multiyear projects with varying phases causing revenue volatility; US to be more consistent in revenues and margins over time.

Q: US contract length, renewal rate?

A: US contracts mostly recurring, shorter deployment times, higher win rate initially vs Europe where projects have longer bid cycles and incumbent vendors are hard to displace.

Q: Operating expenses in US expansion?

A: Minimal increase needed due to high contribution margin of additional bracelets, sales team expansion minimal, R&D continues to invest in technology leadership.

Q: Revenue volatility, US vs Europe?

A: US more recurring revenue, less volatility; Europe has project phase variations with different deployment and scaling stages causing revenue fluctuations.

Q: AR cadence, free cash flow?

A: AR from percentage of completion in European projects, no significant bad debt issues, collectability good in US and Europe.

Q: US win rate, scalability ROI?

A: US win rate high but not yet assessed due to variety of project sizes; margin expansion with additional bracelets due to high contribution margin.

Q: Buyout rumors?

A: Approached by strategics/financial firms, board considers shareholder best interest when evaluating potential buyout offers