Senstar Technologies Corp. Q3 FY2024 earnings call

• Revenue increased 8% in Q3 2024 vs Q3 2023 and 7% year-to-date. • Gross margin in Q3 was 68%, up 11.4 points from Q3 2023, driven by streamlining, price adjustments, component market normalization, and favorable product mix. • Operating expenses decreased 3.6% from Q3 2023 and 9.2% year-to-date due to expense controls. • Encouraging growth in U.S. and EMEA; core verticals had 2% Q3 revenue increase and 9.8% year-to-date. • Correctional facilities demand growing due to emphasis on advanced security tech; integrated solutions resonate well. • Utilities vertical strong with broad demand in data centers, solar farms, etc. • Transport sector grew in EMEA, esp. airport sector. • Logistics and oil and gas had slight decline but positive trends expected. • Appointed new VP of Product Management and Marketing to expand market presence. • Initial sales from MultiSensor are promising.

Revenue for the third quarter of 2024 was $9.7 million, an 8.2% increase compared to Q3 2023, and up 7% year-to-date. Gross margin in Q3 was 68%, an 11.4-percentage-point increase from Q3 2023. Year-to-date gross margin was 63.9%. Operating expenses decreased by 3.6% from Q3 2023 and 9.2% year-to-date. Revenue growth and gross margin expansion, along with reduced operating expenses, led to increased profitability. Growth was seen in the U.S. and EMEA. Core verticals had a 2% revenue increase in Q3 2024 and 9.8% year-to-date. Correctional facilities demand is growing for enhanced security. Utilities have broad-based demand across data centers, solar farms, etc. Transport sector grew in EMEA, especially in the airport sector. Logistics and oil and gas had a slight revenue decline but positive trends expected. Geographically, North America accounted for 44% of Q3 2024 revenue, EMEA 39%, APAC 14%, etc.

• Year-to-date gross margin of 63.9% aligns with expectation of 60% or better. • No specific forward-looking financial targets provided, but growth trends and strategic focus indicate ongoing momentum.

• Changing market trends could impact performance. • Reduced demand in the security systems industry. • Intense competition in the industry. • Fluctuations in component markets could affect costs.

Q: What is the updated book value per share?

A: Alicia Kelly stated they don’t have that information in front of them at the moment.

Q: Are there synergies with AI?

A: Fabien Haubert said they are working on improving the intelligence of their devices using AI technologies.

Q: Material impact on revenue from MultiSensor in 2025?

A: Fabien Haubert said they are not providing forward-looking statements on MultiSensor's revenue contribution.

Q: Expectation of profitability in fourth quarter?

A: Fabien Haubert said they are not giving forward-looking statements on where they'll be in the year.

Q: Expansion on solar farm opportunity?

A: Fabien Haubert said solar farms are part of the utilities vertical, with high demand to protect solar farm plants.

Q: Expansion on data centers?

A: Fabien Haubert explained data centers are places hosting hard disk storage for various services with high confidentiality requirements, focusing on large providers.

Q: Role in tracking illegal immigrants?

A: Fabien Haubert said their technology is for situational awareness of intrusions, not directly for tracking individuals.

Q: Data centers and utilities synergy?

A: Fabien Haubert said data centers provide opportunity to secure both the data center and the infrastructure powering it.