CEO, SuperCom
SuperCom's Investor Presentation Webcast - October 2022 LD Micro Conference
About Ordan Trabelsi
Ordan Trabelsi, CEO of Supercom, has been promoting the company’s electronic monitoring technology as a solution for public safety and criminal justice reform. In a December 2024 interview, he described Supercom’s ankle bracelet system, which he said can alert both authorities and potential victims if a perpetrator violates a restraining order by approaching a protected person. Trabelsi stated that the technology is “superior to any monitoring system on the market” and argued that it could reduce recidivism rates, which he cited as 75% without such programs, to 30–35%. He also noted that Supercom had reduced its debt from $40 million to approximately $30 million over the prior year through stock issuances and a one-to-one forgiveness arrangement with lenders. In an April 2025 interview, Trabelsi discussed Supercom’s business model, describing it as a SaaS-like model where the company sells or leases devices and charges a per-unit, per-day fee to government agencies. He said the company’s customers include ministries of justice and probation departments, and that once a contract is won, it typically leads to five to fifteen years of recurring revenue. Trabelsi added that over 70% of Supercom’s recent revenue was recurring, and that the company had won multiple new projects, building its presence in the electronic monitoring industry, which he said has only about ten players globally.
Transcript (62 segments)
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Moderator0:09
Happy to introduce the CEO and President, Ordan Trabelsi. Go ahead.
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Ordan Trabelsi0:14
Thank you, and thank you everyone for joining us today. A very exciting day indeed. We put out our Q3 financials this morning before the market opened, and we're happy to show over 100% year-over-year growth in our revenues, return to profitability, and a lot of interesting things that we'll talk about today.
SuperCom, and this is our corporate presentation at the LD Micro Investment Conference. SuperCom's been around since 1988. We're a global provider of electronic security solutions to governments around the world. Our current focus is offender electronic monitoring services. What does that mean? House arrest, GPS tracking. You ever see an ankle bracelet on someone? We do that, but we do much more. Ticker is SPCB.
In 2021, we had a billion dollars traded. We have a lot of volume. Insider ownership of 13%. We invest a lot in R&D, over 30 million dollars over the past few years. Over 10 new project wins lately. We're on a roll, and our recurring revenue is over 83% of our total revenues.
We have nearly 120 patents. I've actually been in the company for 10 years but entered the global CEO role just last year, from the CEO of the U.S. role previously.
Our mission, it's a very important one. We want to revolutionize public safety around the world through proprietary electronic monitoring technology, data intelligence, and complementary services. Why? Well, there are many challenges in our world today with criminal justice. The system just doesn't work, and we are trying to change that one step at a time.
We'll go through the main elements of problems: recidivism rates, prison overcrowding, excessive costs, and that all leads to unsafe communities for all of us.
We'll start with recidivism rates. In the U.S. alone, there's over 75% recidivism. So if you are in prison and you come out, there's over a 75% chance that you'll be rearrested within five years and go right back into prison. So this is the cycle if you're stuck.
And that leaves also the highest prison population rate in the world in the U.S. Nearly 1% of people in the U.S. are incarcerated. That's multiples more than other countries in the world. You could see in Sweden and Denmark, it's roughly a tenth of that. It's a big problem we have here in the U.S., and it's something that we're working to solve here at SuperCom. But other countries do share other problems with criminal justice.
There's prison overcrowding. In the U.S., 106%. That means that 6% of people are sleeping in shifts or together in a bed or not sleeping at all. That doesn't sound like a proper plan, but that's what happens. And that problem is shared with other countries in the world: in England, Belgium, Italy, Sweden, Denmark. We actually won projects there, and today we're actually working to solve this problem.
And we're trying to win other projects in other locations as well. Excessive costs. In 2020, there were over 80 billion dollars annually spent operating prisons. Maybe that's good for the people operating them, but for the rest of us taxpayers, a big waste of money, especially when the prisons aren't really working as well as we'd like.
But also from a cost perspective, $36,000 to keep someone in prison per year versus under $3,000 on house arrest. A potential savings of over 90%. But that's just a direct savings because when someone is in prison, they're usually not their most productive self, spending a lot of time looking at the wall and working out. But at home, they could read, they could learn, they could produce and help their family and help people around them. So the actual cost to society from keeping someone in prison instead of at home when they could be at home is much, much higher.
This is where we come in, SuperCom. We have a Pure Security Suite. A bunch of nice, geeky Israelis out of Tel Aviv put this together over the years, and most R&D comes from Tel Aviv. We developed the entire suite from start to finish. You see, there's software on the cloud, PureMonitor, which keeps track of all the offenders, where they are, what they're doing, what they should be doing, what they shouldn't be doing.
We have a PureTag, which is one of our flagship products. It's a compact RF bracelet, and this bracelet is all you need on someone's ankle to track them. The battery never runs out throughout the program; it can run for over a year. And this compares to the bracelet that you may have seen on TV, which is very heavy, very clunky, and you have to charge it every single day to the wall. How do you charge a bracelet that's locked on your foot to the wall? You take a cable, you connect it to your leg, and you connect it to the wall. It's a very pleasant experience. Don't try it at home, but that's what you have to do every single day with the old technology.
Luckily, with our technology, you don't have to do that. You don't have to charge your leg at all. And it's very small and lightweight and waterproof. You put it underneath your sock and you forget about it. Why? Because when you come back into society after being in prison, you want a second chance. You want to get a job. You want to be treated like a human being, not flagged like someone who's horrible non-stop. So that's one of the key parts of our solution, but it's so much more.
Our bracelet communicates with a smartphone, and the smartphone you can do video calls. It's not just having a brick on your leg, but now you can actually communicate with the offender, what you need to do, what you need to improve. Courses, vocational training, substance abuse problems, anger management problems. We provide the full solution to help people go back into society.
And this is an important point. Sometimes people think that some people are just bad and they need to go to prison and stay there. We don't believe that. We think people are in their core good, and something happened along their life that led them to make some wrong decisions. They go to prison, and it's supposed to rehabilitate them and bring them back into society better, but it just doesn't do that so well.
So if they come back into society, you have to give them the full service to rehabilitate them. You have to help them find a job, help them deal with their issues, help them become better citizens, and that makes society better for all of us. So we provide the full technology and the services, the rehabilitation services. And we have various programs: house arrest, GPS monitoring, alcohol monitoring, domestic violence, inmate monitoring.
Luckily, we have been able to convince and persuade different members of government to launch over 50 projects in the past years alone. We're new players in the field, but we've been doing very well, and we're happy to see the continued progression of our services.
We invest over 30 million dollars in R&D, and together with our complementary services, we have a full solution. You just saw our capabilities, mainly in tech. We have over a 65% win rate in Europe. There are 10 players in the industry, many of them based in Europe. So we alone have been winning more than all the other nine players put together. Think about that for a second. One company, a small new company in this space, wins more than all the other ones put together. I think that's very interesting, and I think that is a signal to what is going to happen ahead.
Why is our technology better? Well, first of all, our focus is on technology, whereas other companies sometimes put technology as the last part. They leverage maybe a relationship or just past habits to win more projects. We come in and try to revolutionize and break the norms and make things better.
Battery life, much longer, runs a year or two. It's very lightweight. We have biometric authentication, video calls, two-way communication, next-gen cell and location tech. What does that mean? If you're using just an old GPS ankle bracelet and you go in the subway, nobody can track you because there's no GPS in the subway. But Google and Samsung have already resolved this problem because they have Wi-Fi networks and their phone communicates with them. So why not leverage the problems that people solved? We try to leverage technologies and capabilities developed in the world into our solution. So our solution, you could track people underground in the subway in urban cities like in New York. You could do a video call with the offender, and you can do so much more. And this is just the tip.
The projects are long-term government projects. That's good and bad. The bad part, it takes a long time to win them, very hard. The good part is it takes a long time to win them, very hard. That means our competitors have a very hard time taking the projects away from us. Our recurring revenues are already 83%. Once we start a project, we're usually there for 5, 10, 15, 20 years. One of our projects ran for 25 years already, not necessarily in this space because we're newer in this space. We've been in this space five, six years, but in the biometric identification and passport ID cards, we had a customer for 25 years. It's great, through many different government regimes.
So how does it work? First, you have to bid and you have to win. But you can't just bid blindly without knowing what's going on in the country. So you have to have a local partner. We're a company out of Israel. In the U.S., we have operations in California, a little bit in New York, and in Israel. We don't know everything about every country in the world. We don't know their culture, we don't know the language, we don't know what the government's looking for. But we have launched many projects in the last year in Denmark, Czech Republic, Bulgaria, Finland, and Estonia. How do we do that? With local partners.
We came up with local partners in different countries who know exactly what is needed to succeed in that country. We bring the technology, and they bring the rest. So the first part is the bid, and that's teaming up with local partners. We get the RFP, we negotiate, we win, launch project. Then we have the deployment.
We just won a project in Romania, a very interesting project. A 33 million dollar project in Romania. I note that our revenues lately have been 12 million dollars a year, and this project is 33 million. It's four times bigger than any other project we had in the space, and we just announced it a few weeks ago.
That project is up to 15,000 offenders for domestic violence. Let me explain what that means. Currently, in most places in the world, if someone gets hit, their only option is to run away from home and go into some shelter. That's usually the situation. We don't believe that. Someone who gets hit does not need to run away from home. It's the person who committed the violence who needs to get out of home. So we developed a new solution together with all the complementary components that I showed you.
And essentially what happens is, in Romania, if someone hits their wife or someone hits a person in the family, they automatically get a bracelet. Until there's a hearing and the judge sees it, they get a bracelet. They cannot come close to that person. The person could be at the kindergarten, at the shopping center. As soon as the offender comes close to the victim, the victim's phone starts to alert, and the police start to alert as well. So they're not allowed to physically, and that gives people the confidence to actually complain and to go to the police, say, 'Look, this person is hitting me, and please help me,' because there's a solution that works. It's the first time for many of these people they've ever seen something like this.
Very, very exciting. Up to 15,000 people per month. It's a six-year project, so you can imagine how many hundreds of thousands of people can be saved from domestic violence just from one project. That's one out of 50. But essentially, that deployment in Romania is taking time. We went live in October. It takes a while to get the entire country to understand how this works, to teach them, to bring the technology. We have to integrate. We're very good at doing that. We're able to do it actually in two weeks at this time. Usually, it takes months or even close to a year, but this last project we did in two weeks. Very, very exciting. And we launched in October, and now our revenues in Q3 included that project or part of that project.
Then we're finally at the software-as-a-service and lease stage. The average, it's different from country to country, but the average is $3,000 per year of recurring revenue. It's great. You have software as a service, and you have the hardware that we lease out. That's it. And then you run for years and years and years, so long as you're providing the service. Our technology is completely being updated, so we always have the best and the latest technology. And it doesn't really give any reason for customers to leave us.
The market itself is growing, estimated to reach 1.6 billion dollars in 2025. I remind you that our revenues were 12 million dollars annually lately, so you see there's a big growth opportunity ahead for us. We keep winning projects, and we think the project size will continue to grow with electronic monitoring solutions and the services.
Recidivism is reduced. I could tell you firsthand that our programs in California reduce recidivism to these rates, and there's other programs around the world that do the same. That's the technology together with the services. That means that if someone comes out of prison and there is no program, they're likely to reoffend, over 75% chance. If there is a program and it's done well, 30%, 35%, sometimes better, depends how well you do it. But this stuff works, and we're happy that it does. We decrease costs for the government, for the taxpayers, for all of us significantly. We eradicate prison overcrowding, and at the end, we enhance public safety for all of us.
This is a very interesting slide, and if you're going to remember one of the slides, try to remember this one. This is our traction. And when a small company like ours moves fast in a big field, it's important to see how they're moving, what is happening. So when we started five, six years ago, we started with Lithuania, a hundred thousand dollar project. Those are the only ones who wanted to listen, and they gave us a shot.
Because again, we were in the government field but not in this space. We were doing something else, but we said, 'Give us a shot. We know what we're doing. We have good tech, we have good people, and we have a mission.' And they gave us a shot. We did a good project there. Then we did in Latvia, then we did in Denmark, we did in Canada. Canada's 1.8 million dollars. Denmark was, I think, 3.5. Finland, 3.6 million dollars. Sweden, 7 million dollars. Sweden police, another million. You know, you kind of go up this ladder stage by stage. You can't start off with the biggest project in the industry, but we'll get there. We'll get to the biggest and the best projects because we can, and we have the technology to do so.
Now with just one Romania, as you see, 33 million dollars. That's more than four times our largest project to date, and that was just a few weeks ago. You're probably all going to open up your phones and look at the stock move that hasn't moved. So that's an opportunity for all of you guys. But that is the biggest project in the industry this year, and the biggest one for us by multiple, four.
What are we seeing ahead? We are at a very unique time in Europe. It's a time this year, 2022 to 2023, there's a lot of rebids for the projects. They came out in '17 and '18, and now they came out again. That includes Belgium, that includes England, that includes France, that includes Italy. These projects need to be awarded. We're bidding on them. We had a 65% win rate for the smaller projects. Let's see what happens with the big ones. So far, one Romania. Either way, it's going to be interesting, so stay tuned.
North America. This market is actually bigger. It's two-thirds of the global EM market, but we started there later because we were in Israel, and most of our tech and our team was in Israel. They had an easier time starting with Europe. The tech was developed for the European market, which is a little bit different. They're looking for things in Europe. It's more house arrest. In the U.S., it's more GPS tracking. The U.S. sells to alcohol monitoring. Either way, we have all the technology. We just have to customize and fine-tune it.
And in the U.S., we acquired a company back in 2016 called LCA, Leaders in Community Alternatives, and they've been doing since 1991 complementary services and electronic monitoring to help people rehabilitate into society. After we acquired that company, we won 25 million dollars of new projects. The company cost 3 million dollars, but they won another 25 million up. So we paid 3, we still have that company today, it's still doing great. I was there yesterday, and we won 25 million.
So what we're trying to do in this model, the U.S. is scattered, it's fragmented. We want to try to get into locations and get the customers and get the presence through these small positions of service providers. We come in, we put in our technology. They already boosted their offering significantly. There's obvious cost synergies now that I need to buy from other vendors, they buy from us directly, and we do things much better. So we're still at the early stages in the U.S. We're moving into larger counties, and then state and federal projects.
We have expanded lately into Texas, Georgia, Tennessee, Wisconsin, South Carolina, Wyoming, Idaho, Kentucky, and more.
Our growth strategy today, and this is just in the last year, because until then we were kind of passive. We were bidding blindly on these RFPs. But I came into the role of global CEO in February 2021, and I had a very strong feeling and confidence that we can grow faster. And our technology has already proven itself, so it's time to invest. So we started by ramping up our sales and marketing, ramping up our R&D. That brought us into negative profitability, and some people were scared. But this quarter we turned the corner, we're back. So our revenues grew by 100%, our gross profit grew by almost 96%, and we're profitable again.
So we needed to make that investment. It didn't take too long, not even a year. We made that investment, now we're seeing results already, and it's just the beginning. There's more and more projects, there's more and more things we can do, and the operating leverage is there. We were able to show unequivocally that when our revenues grew, we did it on the same exact cost structure more or less. Our operating expense has stayed the same, but the revenues doubled. So imagine what happens when the revenues quadruple or multiply by 10. It's going to be nice.
So our new sales team comes from the industry. We've moved from a passive to an active outreach strategy. We're doing it in the U.S. and in Europe. And in North America, we're going to expand through local partners and government agencies, as well as through creative acquisitions.
This is very important, especially for someone who opens up their Bloomberg and sees revenues going down and they're thinking, 'Wow, this story is great and all these good things are happening, why are revenues going down?' So this is what happened. In 2015, our revenues were close to 30 million dollars, but that was not this business. It's not IoT tracking. It was government identification: biometric passports, ID cards, driver's licenses. That's what the company was doing in the past.
And it worked well until it stopped working well. So in 2015, we decided to get out of Africa and South America. There was too many delays, too much lumpy revenues, too much unpredictability, things that are not fit for a public company. And we decided to shift away and go to developed countries and go into a business model that's more recurring and one where we can control and define the stakes in our industry.
Now in IoT tracking, we believe we have the best technology. We could define how the programs look, we could define the market, we can navigate it to where we think the industry needs to go. We couldn't do that in the previous market, so we left that market, we left that industry, identification. And you saw revenues go from 30 million down to one or two million, and we grew the public safety IoT tracking that just keeps on growing and growing. And in my head, wow, the places where it can get.
I want to go over the highlights and then open up for questions. So what did we talk about today? The market of 1.6 billion dollars. Very high barriers to entry. Only 10 players. Surprisingly enough, only 10 players. Even if a large company wanted to enter, they could not. They would have to show that they've been doing this for 5-10 years, and they haven't. So they have to buy in.
By the way, we had over 65% win rate in Europe alone. One player won more than the other nine. 200 million dollars in upcoming year of bid opportunities, which are very exciting for us. In California, we acquired a company for 3 million dollars, and we had over 25 million dollars in past wins from that company or from the presence the company gave us. We expanded the U.S. Our new sales team. Over 30 million invested in R&D, and we continue to invest every single quarter. This quarter we doubled our investment in R&D compared to last year, and we'll continue doing so because tech is what we lead with, and that is how we stay in front of the rest.
83% recurring revenues with over 50 project wins. I tell you, in our old business, identification, we were lucky if we had one project win a year. Now we're talking about 10 project wins every single year, and we're new to the industry. So imagine where we can go. We have 13% insider ownership, and I think this is a great investment opportunity. If you look at the stock again, you'll notice it hasn't moved today, even though we announced 100% growth in revenues. It hasn't moved. A few weeks ago with the Romania project, I think there's some sort of disconnect. But it'll move in time when people get the story and people understand. So we're here to tell it.
Financial summary. This is for Q3. Revenue, 6.3 million dollars. Gross profit, 2 million. Those are both double of the previous quarter, Q2 2022, and also double the same quarter last year. Our EBITDA reconciliation were positive. EBITDA, we returned to profitability. And we have some cash, and we're going to get cash from the projects and so forth. We have some good trading volume.
And that's it. This is our IR, investor relations contact. If you have any questions, and I think at this point I'll just open up for Q&A from the audience, if anyone has.
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Audience Member21:04
More importantly, what's your backlog going to be this year from California?
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Ordan Trabelsi21:08
Okay, great. So yeah, some of the projects in California are four years, five years, six years, right? I think in 2021, the revenues for California and the U.S. all together, mainly California, I think it was 6.8 million. It's in the 20s. This year, we'll see. A lot of our growth has actually been coming from Europe, from the projects we talked about, Romania, and so forth. In California, the projects are $800,000 a year, $500,000 a year. You'll win a project that's 3.6 million dollars over four years, things of that nature. We're in Stanislaus, we're in Sacramento, we're in Solano County, we're in Marin County, we're in Alameda County, we're in San Francisco. In the past, for Riverside, in LA. So that's kind of their business, and we're trying to continuously help them. But we have a global view, so we can't just look only at California, even though we're in California today and we love California. But let's look at the whole world.
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Audience Member22:00
Yes.
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Ordan Trabelsi22:04
Great question. We don't give guidance, but I'll tell you that some projects are 33 million dollars over six years, kind of uniformly spread. This is not that. This is front-heavy. That's what you're already seeing in Q3, a big uptick. We expect further upticks, or let's say we expect more revenues from this project in the coming quarters, not just this quarter. We'll see how it falls out. You don't actually get to decide how the revenues will fall. It's dependent on the government and the deployment. Even if we control the deployment 100%, they have to meet us to install, to integrate, to do it. And sometimes they want to do it fast, like this country did for October. Sometimes they want to do it slow. They have their own political agendas, and we're just there to support.
But that's okay. We have patience. We're very long-term focused. I've been in the company for 10 years, even though I look young, I'm old. No, but I've been in the company for 10 years, and we're not going anywhere. So we have time.
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Audience Member23:07
Probably.
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Ordan Trabelsi23:11
Right, exactly. So in Europe, some years you see 20, 30 million. This year, because the biggest projects came out in '17, '18, and now they're up for rebid. That's, you know, England alone is probably 60, 70 million. Belgium is a similar size. They've invited us to bid because we're one of the most prevalent players, and we're competing. And so again, it's going to be harder for us to displace a local British company in England, but that's what we've been doing everywhere. In Sweden, we did it. In Denmark, we did it. Estonia, we did it. Finland, we did it. Bulgaria, we've done it. In the U.S., we've done it.
So what makes you win? You win compared to the competitor, right? Well, the first thing is technology, because we develop our own stuff. It's always cutting edge. So imagine, someone gives you an iPhone and then gives you a Nokia from 10 years ago, and you put them in your hand. It's not hard to see, even if it's your buddy who grew up next to you your whole life, he's British like you. You don't want to take his crappy Nokia, you want the iPhone. So forget my language, but sometimes the answer is quite obvious to them. That's the main thing. The more programs you win, they hear from their friends in other countries, 'Wow, these are great, this is great, this is great.' And then you become like IBM, and no one gets fired for getting an IBM computer. So that's our goal.
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Audience Member24:26
Any other... yes.
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Ordan Trabelsi24:33
There's actually no debt. All we have is some vanilla warrants and 5.5 million warrants at 32 cents. But I think because the stock's under a dollar, maybe some people are worried about that. We have a resolution for that. There's a reverse split in the process. We'll get it done in time. We have until December 13th. Again, there's other ways to resolve the problem, but the minimum price requirement of one dollar, which is a technical issue for us that we're going to resolve, maybe is creating some concern. Otherwise, we're just in an odd market. Not everyone has a chance like you fine gentlemen and ladies to speak with me today. So they don't know what's going on. They just see, 'Wow, what's going on? The stock isn't moving. Maybe there's nothing happening.' But there is stuff happening, and that's what I'm here to tell you.
So if you have any questions beyond this, I think we're out of time. You could reach us at [email protected] or give us a call, and we'll set up a meeting and we'll talk more. So thank you very much.