I.D. Systems' CEO Discusses Q2 2012 Results - Earnings Call Transcript

I.D. Systems, Inc. (IDSY)

Q2 2012 Earnings Call

August 7, 2012 4:45 PM ET


Jeffrey Jagid – Chairman and CEO

Ned Mavrommatis – CFO

Darryl Miller – COO

Ken Erhman – President


Matthew Hoffman – Cowen

Zach Ajzenman – Griffin Securities



Good day ladies and gentlemen and welcome to the I.D. Systems Inc. second quarter 2012 conference call. At this time, all participants are in a listen-only mode. Later, we’ll have a question-and-answer session and instructions will follow at that time. (Operator Instructions) As a reminder, today’s conference is being recorded.

I would now like to turn the conference over to your host for today, Mr. Jeffrey Jagid. Sir, you may begin.

Jeffrey Jagid

Thank you. Welcome to I.D. Systems fiscal 2012 second quarter conference call. Thank you for joining us today. I’m Jeffrey Jagid, the Chairman and CEO of I.D. Systems. Joining me today are our CFO, Ned Mavrommatis; our Chief Operating Officer, Darryl Miller; and Ken Ehrman, the President of I.D. Systems.

I will provide a brief overview of our results for the quarter and year to date, Ned will detail our financials, Darryl will update you on the performance of our Asset Intelligence subsidiary, and Ken will review the highlights of our vehicle management business. We will then open the call to your questions.

Before we begin, let me reiterate the Safe Harbor statement under the Private Securities Litigation Reform Act of 1995.

The following discussion contains forward-looking statements that are subject to risks and uncertainties including, but not limited to, the impact of competitive products, product demand and market acceptance risks, fluctuations in operating results, and other risks detailed from time to time in I.D. Systems filings with the Securities and Exchange Commission.

These risks could cause the company’s actual results for the current fiscal year and beyond to differ materially from those expressed in any forward-looking statements made by or on behalf of the company.

The second quarter of 2012 continued a positive trend for I.D. Systems. Revenue increased from Q2 of last year to $8.7 million, marking our 10th consecutive quarter of year-over-year revenue growth. For the six-month period, revenues were up 14% to a first-half revenue of $18.5 million. So we are on pace to make 2012 our second year in a row of record annual revenue.

Revenue contributions in Q2 of 2012 continued to come from a balanced mix of products and services across multiple market segments led by increased sales of both vehicle and transportation asset management systems. As a sign of our growing diversification of sources of revenue, I am pleased to report that only one of our customers accounted for more than 10% of our revenue in the first half of the year.

The predictability of our revenue stream was also a positive. Recurring revenue was 49% of total revenue in Q2 and 46% of total revenue year to date. Our gross margin remains strong, at more than 50% in both the three and six month periods, consistent with historic levels. As a result, our cash flow from operations was positive in Q2, and our net loss for the first six months of 2012 improved over last year, as Ned will detail in a moment.

Overall, we are making progress toward our long-term strategic growth objectives, and we look forward to building on this positive momentum for the remainder of this year and into 2013. Our outlook for the rest of 2012 is especially strong due to expected deliveries of rental fleet management systems to Avis Budget Group.

In July of 2012, ABG confirmed delivery orders for the approximately 20,000 units representing the balance of the 25,000 systems earmarked for the northeast US and Canada, under the first phase of our master agreement with ABG. We expect to deliver all of these units in Q3 of 2012. In fact, we have already shipped a significant portion of the units.

We are working diligently to build shareholder value, and I look forward to reporting to you further on our continuing progress. Thank you for your time today, and I will be pleased to take your questions later in the call. Now let me turn the discussion over to Ned Mavrommatis to detail our financial results.

Ned Mavrommatis

Thank you Jeff, and hello to everyone on the call today. As Jeff noted, revenue for the three months ended June 30, 2012 increased 4% to $8.7 million, compared to $8.3 million in the second quarter a year ago, with 49% of all revenue coming from predictable recurring sources. For the six months ended June 30, 2012, our revenue increased to a record $18.5 million, up 14% from $16.2 million in the same period a year ago.

Our revenue growth in the first half of the year was driven by increased sales of our wireless vehicle and transportation asset management systems. Recurring revenue for the six months was $8.4 million, or 46% of total revenue. Gross margins in Q2 2012 was a solid 52.4% once again meeting our expectations.

SG&A expenses for the quarter were $5.7 million, relatively flat both year-over-year and sequentially from Q1 2012. Excluding stock-based compensation and depreciation, amortization, non-GAAP net loss in Q2 was $1.2 million, or $0.10 per basic and diluted share, compared to $1.1 million or $0.10 per basic and diluted share in the second quarter a year ago.

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