SuperCom (NASDAQ: SPCB) stock is bucking the bearish trend, trading 17% higher since April despite a challenging market backdrop. While indeed impressive, the better news for SuperCom and its investors is that the bullish bias sending shares higher is likely to continue. Why? Because this microcap company keeps signing deals.
Last month, SuperCom announced receiving over $5 million of new orders from European government clients. Better still, the revenues from that deal will accrue over the next three months and add to an already impressive 2024 deal flow. Reading between the lines, that's only part of what the agreement shows. It also demonstrates solidifying client relationships, likely due to SuperCom's unparalleled dedication to enhancing public safety through innovative products and solutions. That's not all. It's also validation, essential for trailblazing companies like SuperCom that intend to transform market segments with better product and service alternatives.
SuperCom's PureSecurity Suite, its end-to-end electronic monitoring solution with state-of-the-art GPS tracking, delivers on that intention. It proves that more than pure ambition drives growth, tangibles are also, with this platform uniquely providing secured communication, monitoring technologies, and a secure software platform that provides real-time tracking and monitoring. Few, if any, competing products can make a similar utility claim. And the platform excels beyond offering better and more sophisticated functionality.
Other benefits include catalyzing positive and respectful societal change. That's accomplished through SuperCom's robust electronic monitoring ("EM") systems that can overcome specific client challenges without sacrificing the personal integrity of the people being monitored.
Spearheading Change For Over Three Decades
SuperCom's mission for the prior three decades has been consistent and to the point by redefining public safety globally through seamless integration of proprietary electronic monitoring technology, data intelligence, and comprehensive support services. That's more than a mission in progress; it's also a declaration of further intent being expedited by leveraging advanced, proprietary technology that delivers government and private sector clients a proactive and practical approach to crime prevention, rehabilitation, and community well-being.
That's been the case since its inception in 1988. Over its roughly thirty-six years in business, SuperCom has strengthened its core by staying committed to innovation. This has resulted in the company being recognized as a sector leader in providing the most advanced offender tracking and monitoring solutions tailored to meet the specific needs of large-scale governmental implementations and smaller private operations. Many of its products have been instrumental in reshaping the EM landscape.
That includes its cutting-edge RFID and GPS tracking technologies, which could be the best at providing practical, effective, and scalable monitoring solutions for tracking violent offenders. Yes, its products read as personally intrusive. But here's what readers, investors, and potential clients need to understand. SuperCom solutions can improve life for those requiring supervision by providing a proactive means to monitor and restrict the movements of convicted offenders without resorting to prolonged incarceration. That can be invaluable to a better rehabilitation process. And with advanced real-time monitoring, communities may be safer as well.
A Cloud-Based SuperCom Solution
In that respect, SuperCom solutions, particularly those in its cloud-based software-enabled PureSecurity™ product line, have been particularly effective in monitoring domestic violence offenders and managing real-time information. That real-time advantage is a game-changer to the space because it does more than streamline offender monitoring processes; it also empowers authorities with actionable insights and timely interventions to mitigate potential risks and enhance public safety. As expected, that distinction is driving sales higher.
Before announcing the $5 million in new sales last month, SuperCom reported 5-year-record revenues of $26.6 million, 51% higher YoY, EBITDA Growth of 2350% to $4.8 million, and gross profit of $10.2 million, 60% higher than last year. Providing momentum into 2024, Q4 revenues reached $5.7 million, generated EBITDA of $1.1 million and EPS of $0.15. Also contributing to record-setting performance, its subsidiary, Leaders in Community Alternatives (LCA), secured a new EM contract in California with an established California services provider in the judicial sector and added additional revenue-generating business in Canada. A third order to SuperCom from the Romania Ministry of Interior provided a $3 million contract to deliver Alcohol Monitoring technologies in California.
Other value drivers announced include:
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Launching a $3.6M national EM project in Finland with the national government in Q1 2023.
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Commencing a $4.25 million contract to provide adult re-entry services in Northern California.
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Implementing a new project in Iceland to upgrade its deployed system to support the secured issuance of National ID cards and passports.
The best part about these deals is that they should lead to significant revenue accrual throughout 2024. And more could soon follow, enhanced with go-to-market capability after a successful $2.9 million capital raise that closed earlier this month.
Seizing On Market Opportunities
SuperCom's record-setting performance is not coincidental with being in a hot sector at the right time. Instead, it's from having the right technology and products to help criminal justice system clients overcome challenges. And they do it with ingenuity, determination, and, more importantly, a goal to reduce the 74.8% global recidivism rate often encouraged by a failed rehabilitation system. Industry research and reports suggest SuperCom's data-driven approach to rehabilitation and reintegration strategies can help reduce that number to roughly 35%, potentially reducing the staggering $80 billion spent annually on operating prison systems.
The benefits can be far more beneficial than financial. A more significant contribution from SuperCom's electronic monitoring and house arrest solutions is that they offer humane alternatives that alleviate overcrowding, improve living conditions, and enhance rehabilitation outcomes. At the same time, they prioritize the protection of vulnerable populations, including victims of domestic violence, by its technology acting as a shield, offering rapid response mechanisms, providing secure communication channels, and real-time monitoring to safeguard lives and maintain community peace. Accruing those abilities has been a work in progress.
SuperCom's technological and innovative prowess results from investing over $40 million in research and development. Moreover, they have accrued 119 patents, a verifiable testament to its pioneering spirit and commitment to pushing technological boundaries. Those patents protect more than function. Additional recognition and protections relate to design excellence, including aesthetic and ergonomic features that ensure user comfort and allow for seamless integration and unparalleled reliability in real-world scenarios.
Advantages Drive Impressive Contract Win Rate
Combined, product distinctions, which are also demonstrable advantages, have led to an impressive contract win rate of over 65% in National Government Tenders in Europe. That rate could increase as SuperCom expands its business footprint, a mission already in progress, evidenced by recently announced deals and the cementation of strategic partnerships in several other countries. More than just deals made, the results from them have been phenomenal.
Thus, despite its impressive April gains, growth stock investors may still be timely to the SuperCom investment proposition. In fact, based on deals made and those expected, the over 17% increase last month may be the precursor to better trading days ahead. Yes, that's bullish speculation. However, with SuperCom posting real-time top and bottom-line growth and, as importantly, showing its ability to cash in on near-term expectations, it's warranted.
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