SuperCom Ltd. Aktie

Good day, and welcome to the iAccess Alpha Virtual Best Ideas Fall Investment Conference 2026. Our next presenting company is SuperCom Inc. [Operator Instructions] I'd now like to turn the floor over to today's host, Ordan Trabelsi, Chief Executive Officer of SuperCom Inc. Please go ahead.

Thank you, and hello everyone. Welcome to SuperCom's Investor Presentation, September 2026. We're going to slide along here, and at the end, we'll have some time for Q&A. General safe harbor statement.

And here, we have a little overview of SuperCom. So we've been around since 1988. Since then we've been a global provider of electronic security solutions to governments around the world with our focus in recent years on [indiscernible] Electronic Monitoring Services, essentially ankle bracelets and complementary services for house arrest, GPS monitoring, alcohol monitoring and so forth, which we'll go more into. It's on the NASDAQ Capital Market trading under NASDAQ SPCB. I, myself as the CEO and other senior management transitioned in February 2021. And since then, we've been on a very nice run.

We've had a CAGR over the last 4 years of roughly 30% for our Electronic Monitoring business. We've had an EBITDA CAGR of 47% over the last 4.5 years, leading to a trailing 12-month EBITDA of $11.7 million, as of Q2 2026. We invested over $45 million into the R&D of this unique proprietary platform for Electronic Monitoring that we developed. And with this technology, we're able to expand very effectively in Europe with over 20 national Electronic Monitoring project wins and over 45 new contracts in the U.S. across 20 new states since mid-2024. A lot of our technology is supported with a strong patent portfolio, and we have a track record of working with over 70 different government customers and over 100,000 individuals around the world.

Our mission is to revolutionize public safety worldwide with innovative electronic monitoring technology and complementary services. And the reason why this mission is so important is because right now, there are some worldwide challenges with the criminal justice systems. They come from many different directions. But essentially, this leads to high recidivism, prison overcrowding, excessive costs and ultimately unsafe communities. The recidivism rate in the U.S. is around 75%, and that's the chance of people recommitting crimes and being arrested within 5 years of their release. That leads to an inflation of the prison population. And the U.S. has the highest prison population in the world with 570 prisoners per 100,000, which is more than 0.5% of the population in the U.S. are behind bars today, and that number is not improving. You can see it's significantly higher than in some of the countries in Europe.

But even in those countries in Europe as well as in the U.S., we're seeing prison overcrowding. There's no room to put people behind bars. And beyond the higher recidivism rate and the prison overcrowding, there's excessive cost for this whole operation. It's over $80 billion annually just regarding prisons in the U.S. And you put -- you could save over 90% of those costs like keeping people on house arrests -- and when people are on house rest, not that they are only saving costs, but they're also allowing themselves, to study to help their family and loved ones and to prevent themselves from becoming affiliated with other criminals and getting mentored towards the wrong direction. So trying to help communities to become safer. This is a great solution, great technology that has been proving itself over the last couple of decades.

The market is expected to reach $2.3 billion in 2028, growing roughly at a 7.5% CAGR annually. And in Europe -- in Europe, the market size $330 million and in the U.S., also 6x that of $1.8 billion. And there's only 10 global players, which we see consistently in the competitive tenders. And you can't enter the market. It's very highly barrier to entry as it shows roughly 5 to 10 years of industry experience, to even bid on a competitive RFP. And that creates a nice moat in the industry, and we're always seeing the same players consistently compete, and we're actually able to perform very well in those tenders and continue to expand within the market and to grow the market within the projects that we have.

If we look at our technology, this is all developed in-house at SuperCom, this is the PureSecurity suite, and it starts with the PureMonitor on the cloud or on-premise at various countries. And essentially, it tracks where the tenders are at any given moment, the 24/7 tracking and you could put exclusion zones where they're not allowed to be. Is it just schools or various locations, inclusion zones where they're supposed to be in certain times of the day, if they're at work, they're at home. You see we have an array of different hardware technologies. We have a PureTag that works with the PureTrack, which allows mobile tracking, smartphone tracking together with the bracelet on the leg which is tethered. We have the PureOne, which is all-in-one solution, which has been very successful in the U.S. in our recent expansion. The PureProtect here, which is the domestic violence solution, and we're one of the main players in domestic violence submarket. We're across 9 nations already with our solution. And essentially, if somebody causes domestic violence, they receive a bracelet and then they can't come close to victims. And if they do the victims phones alert, through our technology. And it's a very effective solution and really helps to change the paradigm and really creating headwinds -- really traction creating towards progressing on this massive global problem, and we're happy to be at the forefront of finding solutions for that.

With our technology, we're able to support a wide array of programs, house arrest, GPS monitoring, which allows you to leave the house as well, domestic violence, which I just described, inmate monitoring where we track people in the prison. Alcohol monitoring, we're actually tracking the alcohol levels through the sweat or through breathalyzers, and we provide complementary rehabilitation services, vocational training, anger management and what have you to reenter society in an effective manner. And with our technology in the U.S. in the last 2 years, we have secured over 45 new projects, new contracts, which we're very excited about and the progress is in the U.S. is just starting. There's still much more to go.

With our technology, which we believe is industry-leading, we invested over $45 million into it in developing this R&D and we continue to invest every year. We're able to achieve a win rate in Europe of over 65% in the competitive RFPs. There's 10 global players roughly. We're only -- we've been able to win more than 65% of the bids and the rest have won the remainder. And a lot of this we attribute to our technology, which we believe is superior in many factors, including the long battery life where some tags run for a day or 2 and our technology architecture allows you to run for up to a year or more. We have ultra lightweight solution. The bracelet is ergonomic and ultra lightweight and small, the next-gen location tag, multiple methods of biometrics, video calls that are capable of two-way communication and the domestic violence solution, which we do in a unique way, which has been proving to be very effective.

In Europe, which we started several years back, we had a very, very nice traction. We started with small projects like Lithuania and Latvia of $100,000 or $200,000 in size, which closes with the latter in size with larger references, more successful deployment like we saw in Denmark and Finland. And then in Sweden, we have a $7 million project. And then we just recently, earlier this year, we announced a new project in Sweden from $17 million to $75 million, which is the budget announced by the customer. And that shows the continued belief for the customers in our solution. Romania was over $33 million. Norway, which we just announced earlier this year as well, which closes off all the Nordic countries. We essentially displaced incumbents in all of the 5 Nordic countries. And in many of them, we displaced incumbents which were there for 20 or 25 years. And we believe that the stickiness of the solution is what is a very interesting part of the industry. It's hard to displace someone. But once you do, you have a long-term customer for a very long period of time, just like we saw with Sweden and Norway or the project in Israel.

There are many opportunities that are still out for bid in various stages. We spoke on the calls about Italy, the projects coming out in Italy or the projects coming out in England, which are very large. And we expect to continue to compete in an effective fashion in the European market and continue to bid on larger projects as well as projects of medium size and continue to bring on our solution to more customers around the world or at least in Europe.

Furthermore, we discussed the APAC region, South America, Latin America, which we started focusing on other areas of the world where we think our technology can be a great fit. And we've proven to be very successful in our deployments in the past, and we think that its time to start looking at other regions as well. But beyond the international markets, in Europe here, some of the contracts we won up too late and recognize is once you enter into a geography, there are many other opportunities which you're accessible to, like in Finland, we started one project we had another one. In Israel, we won a project which covers all the EM programs in the country. Romania, we started was the largest project in '22, up to 15,000 enrollees and domestic violence. And we're looking for -- with our customers. That was the first project that they've done in the EM space. So we're happy to be a trusted partner there as they explore more potential solutions. In Norway, we just won a project there. And Sweden started, like I said, years ago, and we've already done [indiscernible] different project wins in that country. And this latest one is significantly larger than others. So once we get into a region, we start expanding, we offer more capabilities, more programs, more enhancements, and we're a great partner, a trusted partner to our customers, hopefully for many years into the future.

In the U.S., and as I described early on, roughly 6x the size of Europe and the market is very well organized into solution on the cloud. The pricing is kind of standard in the price per unit per day. Everything is in English. We're able to support it in a much more seamless fashion. And we just expanded into the U.S. market in an effective manner 2 years ago, and we've been expanding at rapid speed and to 20 new states already signed 18 regional service providers who have access to all the technology suite. So these are experts in the field, and they chose our technology, which is a great testament to their belief in our capabilities together with counties in 20 different states and over 45 contracts in general.

Here as well, just like in Europe, we started with small counties, programs that were maybe 10 or 20 units. We've grown to larger and larger. And over time, we expect to win larger counties and states and then at some day, state and federal projects. And most of these wins, we displaced an incumbent, again, showing the customers have chosen our technology over that of existing long-term players in the U.S. market, and we displaced many different players on different contracts. We're very excited about our trajectory. Everything in the U.S. is per unit per day. It's a very standard structure of recurring revenue with higher margins. And we did announce on our latest quarterly call that the technology ARR, the ARR for our technology in the U.S., not the services in California, has grown roughly 290% from the summer of '25 to the summer of 2026. So really accelerating very nicely there and the progress is something we're excited about.

A lot of these projects, important to know whether you look at the U.S. market or the European market, a lot of them are long-term government projects, very sticky, hard to get in. But once you're in, you're there for a long time, especially the large ones that are national sclae in Europe. The first stage is collecting information, understanding what the customer wants, what the existing projects look like, teaming up with the right subcontractors and then putting out a bid, going through evaluations and then winning and signing the contract. A deployment can be between 3 months and 12 months. Sometimes the deployment is even faster. We run it as quick as 3 weeks or less if the customer needed. We're very polished with our deployment. We've done so many projects in the last years, and our operations are quite smooth on that section of deploying the project as well as serving our customers into the recurring part of the project, which is just providing more equipment, more services, add-on and capabilities. And the average that we see in the market for the technology and the services is roughly $2,900 per offender or per year. And that runs for many years going forward, 5, 15 and more.

So we've had this very nice growth over the last 4 years, the CAGR from '21 to '25 is roughly 30% for the Electronic Monitoring business. We continue to invest in growth, of course, in R&D and lately, we've been developing our sales team. Our strategy is on multiple fronts. Firstly, we're continuously bidding and hope to win more national projects in Europe where we have a great reputation, great standing, great references and our technology is very good fit for the needs of the European market. We started expanding into the U.S. very effectively 2 years ago, and we're entering through direct wins and through partnerships with our service provider partners across 20 states so far, and we expect that number to continue to expand. We're considering acquiring service providers to strengthen our presence. We did that in California years back, and that helped us win many new contracts in California over $35 million of new contracts, and that presence is very valuable to us, which we consider for other areas in the U.S. We are enhancing our proactive sales efforts in the U.S., in Europe, in other markets such as LatAm, as I described, and we're innovating with our technology to unlock new growth opportunities with new submarkets such as that of domestic violence solution. So on multiple fronts, we hope to execute on our growth strategy.

Our shift in the industry for those who look back, the company has been around since 1988. In 2015, the company was mainly doing identification. Now we're almost entirely doing public safety, which is Electronic Monitoring. We have a small section that's still cybersecurity software, but the majority is public safety, and we see the transition from identification move down at the same time, there's been a consistent growth in public safety with a CAGR of 48% over these years.

We look a little deeper into the recent years. The market has grown roughly 7.8% and at the same time, we've grown roughly 30%, roughly 4x faster than the industry, and that's of course, because we're taking a lot of contracts away from our competition and displacing them. And together, we've been able to show operating leverage and efficiency and optimization of operations such that our EBITDA has actually grown faster than our revenue at a 47% CAGR over the last 4.5 years or so as we see here the consistent upward movement in growth in our annual EBITDA.

Some investment highlights. We're looking at a $2.3 billion market and annual revenues of close to $30 million. There's still a big and exciting opportunity for us going forward. We've had nice growth, and we expect that to leverage our technology to expand to many more opportunities and geographies around the world. In the U.S., we've had rapid expansion, 45 new contracts in 20 new states. And I think that's something that's not been seen yet in our industry. In Europe, we have good scale with over 20 national project wins, and we continue to bid and win more projects in Europe at a large scale as well. The 30% CAGR for Electronic Monitoring business has reflected roughly 4x growth of that of the industry. And our financial performance continues to improve with 11.7 -- trailing 12-month EBITDA as of Q2 2026, record Q2 2026 revenue of $8.1 million and EBITDA of $4 million, high recurring revenues, whether they're in Europe or in the U.S. from long-term government projects, a very strong technology-based competitive edge where we put over $45 million, and we have a strong patent portfolio as well.

If you look just at a high level from our financials in the first half of the year. So we look at H1 first, roughly $7.5 million of cash. Since then, we've secured another financing of $7.5 million to grow our cash balance higher and that will support our potential growth opportunities. And as we bid on different projects, it's good to show a strong balance sheet to help give customers comfort. Our revenues in the first half of the year, roughly $15.7 million, leading to non-GAAP EBITDA of $7.3 million and nice margins, gross profit margins of 61%, non-GAAP net profit margins of 36% and non-GAAP EBITDA margins of 46%. You see our stock has been moving around a little on that amount of outstanding shares roughly 6.3 million as of the last offering that we shared is in July. And in Q2, which we just reported recently, you can see here revenues -- record revenues of $8.1 million, representing gross profit margin of 60% and net profit margin of 35% EBITDA margin of 48.8%. When you look year-over-year, we had nice growth in revenues of 13%, roughly gross profit grew by 15% year-over-year and EBITDA grew by over 55% year-over-year as well as non-GAAP net income. So across the board, good improvement, good progress.

This supports our continued expansion and operating leverage and the optimizations we're doing in our business, such as sharing various processes and optimizing them in our European projects that we discussed on the call as well.

At this point, we'll open the call up for Q&A. Thanks for all those who [ had time ] to listen.

Okay. So I have a variety of questions here, and I'll read the questions and answer.

Okay. So first question here is by Chris, it says here. With so many wins, it seems like revenue growth should be much higher. A lot of these deferred revenues are in the backlog he's asking.

So a lot of these wins take time to see into the financials to convert into the financials, especially in the U.S., we announced wins continuously, and it could take up to 6 months or more until the deployment is actually effectuated. And these are existing programs that are running on existing offenders to other company technology and need to bring all the offenders back and replace it, so they don't necessarily do that in that inorganic fashion, they wait for the offenders term to end. And when the new offender comes on, they'll put our technology. So it's a little bit of a process. In Europe as well, we just announced a project in Sweden that could be between $17 million to $75 million. That's over the next years. So we're just at the beginning of a lot of these wins, and those would fall into our backlog.

Next question. What does [indiscernible] SuperCom displace incumbents that have held contracts for so many years?

So that's a good point. As we mentioned, we displaced incumbents for 20 years, 25 years in Israel, in Norway, in Sweden, in many of these opportunities around the world. And I think a lot of it -- we believe a lot of it is to our technology. And the more deployments that we do, the more strong references we get for more customers that we'll be able to deploy effectively, successfully with good service, with good support. The technology keeps getting stellar reviews, and that's what helps us essentially win.

A question here, is what is driving the increase in units deployed within existing U.S. contracts?

So this follows up to the previous question. Let's say, a county has 300 units and they want to replace them with our technology from incumbent technology. Some of these offenders are running programs -- they're on programs for 2 months, 3 months, 4 months, they'll wait for the offenders to finish its term and then before they put the next offender on because they have to come back and bring technology, then they'll put our technology and swap it out. So there's a process of swapping it out. It doesn't happen overnight. It does take a period of time. And then you'll see the annual recurring revenue or the monthly recurring revenue start to build up. And that's what drive the 290% change in ARR from year-over-year that we described earlier in the presentation when we look at the summer of 2025, 2026 for technology in the U.S. outside California.

Looking here for few more questions. It's a long question. Essentially If SuperCom closed deals over $100 million of expected value, accelerated U.S. ARR year-over-year and generated record cash flow as he is saying here. Despite that, the stock is down, and we're trading at -- the stock is trading at less than 4x EBITDA. And the U.K. contract, if we win, it would have a significant impact. The SentryBay Technologies, which is a competitor of ours, trading on the London Exchange, who is losing shares in Europe trades at 150% premium to SuperCom. And a lot of these other players are getting higher multiples than we have.

The story is still new. We believe more investors are catching on to the story and the valuation is still undervalued. And as I said in the past, the companies have reached out to us on various occasions and the Board assesses it. And when it's an appropriate value that we think reflects the right returns for our investors, we will consider those further. But we think that the market cap has grown significantly and more market players are catching on to the SuperCom story and what we're doing there. And sooner or later, I think the multiples will align more with the industry standards.

One last question because we have to wrap up. Someone asked, how sustainable is the current pace of U.S. Electronic Monitoring growth?

We're just starting in the -- we're still at the early stages with smaller counties that are growing. There's much larger counties and the state projects. And so there's a very big opportunity in the U.S. and the growth could still be very substantial. And the U.S. revenues are higher margin than Europe when it's on the cloud, running a recurring revenue. So we're still very excited about the opportunities in the U.S. market. We grew our sales teams there. We have veterans from the industry and technology is just doing great. So we're very excited about the next steps, and we'll keep you guys posted.

And with that, I think we're running out of time here. So I have to say thank you to everyone. Thanks again for joining our presentation. Follow us for more updates through our press releases, our quarterly calls and our website at supercom.com. Thanks again, and good luck at the rest of the conference.

Thank you. That concludes SuperCom Inc.'s presentation. You may now disconnect.

Ladies and gentlemen, good morning, and welcome to SuperCom's Second Quarter 2026 Financial Results Update Conference Call. [Operator Instructions] Participants of this call are advised that the audio of this conference call is being broadcast live over the internet. Joining me from SuperCom's leaders team is Ordan Trabelsi, SuperCom's President and Chief Executive Officer.

I'd like to remind you that during this call, SuperCom management may be making forward-looking statements, including statements that address SuperCom's expectations for future performance or operational results. Forward-looking statements involve risks, uncertainties and other factors that may cause SuperCom's actual results to differ materially from those statements. For more information about these risks, uncertainties and factors, please refer to the risk factors described in SuperCom's most recently filed periodic reports on Form 20-F and Form 6-K and SuperCom's press release that accompanies this call, particularly the cautionary statements in it. Today's conference call includes EBITDA, a non-GAAP financial measure that SuperCom believes can be useful in evaluating its performance. You should not consider this additional information in isolation or as a substitute for results prepared in accordance with GAAP. For a reconciliation of this non-GAAP financial measure to net loss, a comparable GAAP financial measure, please see the reconciliation table located in SuperCom's earnings press release that accompanies this call. Reconciliations for other non-GAAP financial measures and comparable GAAP financial measures are available there as well. The content of this call contains time-sensitive information that is accurate only as of today, August 13, 2026. Except as required by law, SuperCom disclaims any obligation to publicly update or revise any information to reflect events or circumstances that occur after this call.

It is now my pleasure to turn the call over to SuperCom's President and CEO or Ordan Trabelsi.

Hello, everyone. We're pleased to report another record quarter for SuperCom. In the second quarter of 2026, we achieved more than 8-year records for revenue, gross profit and EBITDA, marking our ninth record quarter of the last 10 since the company turnaround began in 2021. These results build on the progress we have delivered over the past several quarters and demonstrate the increasing scale and build an operating leverage of our business model. As we expand the delivery of our proprietary electronic monitoring and public safety technologies to local and national governments around the world, we are seeing continued improvement across our key financial and operational metrics. This performance is being driven by greater operational efficiency, continued investing in our technology and our strategy of simultaneously expanding both into new markets and within the markets we already serve. Combined with our significantly strengthened balance sheet, these advancements provide us with a strong foundation to continue scaling the business.

I'll now turn to our financial results for the second quarter of 2026. Revenue increased 13.3% to $8.1 million compared with $7.1 million in the second quarter of 2025. Gross profit increased 60% to $4.9 million. Gross margin also expanded by approximately 90 basis points to 60%. Operating income was $900,000 compared to $1.1 million in the prior year period, and this was largely impacted by the Israeli foreign currency headwinds. During the second quarter, our Israel operations experienced foreign currency headwinds from approximately 17% year-over-year increases in average Israeli currency to the U.S. currency exchange rate, the shekel to the dollar. Despite these pressures, we sustained GAAP net income levels at roughly $1.1 million for the quarter, similar to the same quarter in the prior year period.

On a non-GAAP basis, net income increased to $2.9 million compared with $300,000 in the prior year period. EBITDA increased by 55.6% to $4 million this quarter compared to $2.5 million in the second quarter of 2025, representing our highest quarterly EBITDA in more than a decade. GAAP earnings per share were approximately $0.20 and non-GAAP earnings per share were $0.52. We've also made substantial progress to start their balance sheet. Over the past several years, we've reduced our net debt from close to $35 million to under $10 million. Our outstanding long-term debt now carries a blended interest rate of approximately 6%, with no cash payments due until the end of 2028. This structure provides us with greater flexibility to invest in growth.

Cash and cash equivalents totaled approximately $7.4 million as of June 30, 2026, compared to $9.8 million at the end of June 30 -- sorry, at the end of 2025. During the quarter, we strategically deployed capital to support working capital needs and accelerate customer onboarding, installations and technology integration across new contracts in the United States and Europe. Subsequent to quarter end, in early July, we raised approximately $7.5 million in gross proceeds from a common shares only registered direct offering with a few institutional investors. This additional capital further strengthens our financial position and provides us with increased flexibility to support new deployments and continue executing against our growing pipeline. Finally, our book value of equity totaled approximately $48 million as of June 30, an increase of 28% from approximately $37 million at June 30, 2025.

Next, I would like to spend some time discussing the operating leverage in our business and the factors contributing to our profitability and margin expansion. The economics of our programs improve as they mature. At the outset of a new program, we incur upfront costs associated with onboarding, training, development and deployment. As additional monitoring units are deployed, those initial costs are spread across a larger recurring revenue base. This increases the contribution from each incremental unit and creates meaningful operating leverage. As more of our customer relationships mature, we are seeing the benefits of this dynamic reflected in our gross margins. We've also taken several important steps to improve our operational efficiencies.

In Europe, we have consolidated logistics, equipment handling and shipments through a centralized hub in Romania. At the same time, we have brought more IT and customer support responsibilities in-house from our subcontractors. This has reduced our reliance on local partners, and we have established our own 24-hour support capabilities across multiple projects. These initiatives give us greater control over the customer experience while also improving the efficiency of our operations and building our customer support network. We also continue to incorporate AI capabilities into our operational processes. AI has already helped accelerate development, introduce automation and improve efficiency across deployment and customer support activities. We believe these are still in the early ages of AI adoption. As we continue to introduce new products, technologies and automation, we see the potential to further reduce the labor, support and administrative requirements associated with operating and scale in of our programs.

The centralized deployer model we have developed in the United States provides another important operational advantage and leverage economies of scale. Our cloud-based platform, integrated inventory management and 24-hour support capabilities allow us to serve programs throughout the country with a unified infrastructure, one shared language and a common operating environment directly reducing project costs. European national programs offer require country-specific infrastructure, local language customization and more decentralized support. And while our experience enables us to manage that complexity effectively, the more standardized U.S. model allows us to launch and support new country and state level programs more efficiently and cost effectively. As our U.S. presence expands, we believe this model can support faster deployments and attractive margin potential or even more attractive than it is today.

Underlying all of these efforts is the strength of our technology. Many European national programs are awarded through rigorous technology-based evaluation processes. In markets including Sweden, Germany, Israel and Norway, we have displaced incumbent providers that have supported these programs for approximately 20 to 25 years. Our win across all five Nordic countries often against long-standing incumbents, provide compelling validation of the performance, reliability and capabilities of our technology as well as our ability to meet the demanding requirements of national electronic monitoring programs.

I'll now turn to our growth and diversification strategy, which remains focused on expanding both into new markets within -- and within the markets where we are currently established. Over the 4-year period until December 31, 2025, revenue from our electronic monitoring business grew at a compound annual rate of approximately 30% per year, while EBITDA grew at a compound annual rate of approximately 47%. This performance reflects the continued expansion of our recurring revenue base and increasing operating leverage in our business.

In Europe, our results can fluctuate between periods because our revenue increase -- includes several large multiyear national programs with each customer's ordering cycle potentially affecting the timing of revenue recognition. Romania, for example, represented a significant portion of our European revenue in prior periods, but order activity temporarily moderated amidst political uncertainty and as our EMEA contract base has grown, Romania as a similar contract represents less of our revenue, blend. The Romanian program remains actively though and important to note, the temporary decline in Romania masked strong growth across the rest of our electronic monitoring business. Excluding the impact of Romania has declined our underlying revenue would have grown approximately 40% between 2024 and 2025. Until today, we have secured more than 20 wins across Europe national electronic monitoring programs and maintain a presence of all five Nordic countries. These accomplishments give us a strong regional foundation, but we have continued to see meaningful opportunities to expand further within our existing markets and in new ones.

Several specific Europe and opportunities are expected to come to market over the next 18 to 24 months, including the opportunity in Italy, among others. We've also discussed the opportunity in England previously, which remains a substantial opportunity for SuperCom, valued over GBP 150 million. We competed for this opportunity historically and came in second place, when SuperCom had a less developed reference base and significantly more leverage [indiscernible] sheet. Since then, we have strengthened our financial position, expanded our European presence and establish a broader record of successfully executing national electronic monitoring programs and make us a more viable candidates to secure the England program win. There can be no assurance regarding the outcome of any individual procurement. However, our success in markets that rely mostly on objective, technology-based evaluation processes, for example, across the Nordic region gives us confidence that our technology with our technology, we're better positioned today to compete for this and other large national opportunities.

The United States remains another important driver for our growth. Our strategy is not only to enter additional states, but also to expand into more counties, agencies and programs within each state where we already have a established presence. Since mid-2024, we have secured more than 45 new U.S. electronic monitoring contracts and entered 19 new states with access to additional markets for our 18 regional service -- 18 new regional service provider partnerships. We're also seeing the scale of our contracts increase over time from smaller initial deployments to more recent awards involving approximately 100 to 150 simultaneous units. We are building our references and moving up in project sizes similar to the pattern we experienced when we started our European expansion, only this time, it's faster. Many of these wins have involved agencies and service providers transition from incumbent vendors and legacy systems to our pure security platform.

We have seen this pattern in markets, including Alabama, Utah and Virginia, where customers have selected our technology to modernize their electronic monitoring programs. These wins demonstrate the reliability, flexibility and scalability of our platform. They also highlight the versatility of our operating model, which enables us to serve government agencies directly while also supporting regional service providers across a variety of program structures. We currently operate in 22 states and in 12 of those, we've already expanded into multiple counties. As we build our reputation and establish successful reference programs in each state, we believe there is significant opportunity to deepen our presence in those markets.

Our U.S. platform is also supported by leaders in community alternatives, our wholly owned subsidiary in California. LCA provides reentry and rehabilitation services that complement our core electronic models and technology and broaden the range of outcomes we can support our customers. LCA recently secured a 5-year reentry services contract valued up to $2.5 million. And since we acquired LCA, SuperCom has secured more than $35 million in new contracts in California alone. Together, our electronic monitoring technology and complementary service capabilities allow us to support customers across a broader range of monitoring, compliance and reallocation needs.

Turning now to our pipeline. We continue to see robust and growing range of opportunities across key markets. One of the most significant developments during the quarter was our expansion into our expansion [indiscernible]. In June, we announced that we have signed and launched a new national electronic monitoring project with the Swedish Prison and Probation Service. The total estimated project value ranges from $17 million, reflecting the previously announced base case scenario to the $75 million budget published by the customer. That published budget reflects the potential for expansion through a higher number of active offenders and the addition of capabilities such as alcohol monitoring, our Pure GPS Solution -- our PureOne GPS solution and the pure Office Mobile Device Solutions.

The program is expected to expand to as many as 6,000 active offenders, representing approximately 6x the number from the program we first launched with this customer in 2019, where we displaced the incumbent of 25 years with more capabilities and more features this time around. Revenue recognized under the contract will ultimately depend on actual usage levels and this loop with the capabilities deployed. We're also continuing to build momentum in the United States. Contract wins in Michigan, [indiscernible], Ohio, New York and Kansas demonstrate increased demand for our technology and the continued expansion of our national footprint. It's important to remember that there's an inherent lag between the signing of a contract and recognize the associated revenue in the U.S. where everything is usually charged on a recurring per unit per day model.

In some cases, full deployment can take 6 months or longer, particularly when a customer was transition of an incumbent provider and replace the existing monitoring units with our technology. In both Europe and the United States, deployment schedules and customer ordering patterns can affect timing of revenue recognition from period to period. Despite this timing dynamic, the recurring revenue base associated with the U.S. electronic commodity tech continues to grow. Our U.S. EM technology annualized recurring revenues has been accelerating, reflecting growth of approximately 290% July 2025 to July 26. This progression provides an encouraging indication of how our recent contract wins are beginning to translate into recurring revenue. We continue to see substantial room for expansion. Many markets in both the United States and Europe that we have not entered yet. And as we increase our scale, strengthen our financial position and build a broader record of successful deployments, we believe we will qualify to pursue an expanding range spending range of opportunities.

In summary, I'm extremely pleased with the progress we delivered during the second quarter and with consistent growth and profitability, we have sustained over the past several quarters as well as securing highly valuable new contracts such as the national projects announced in Sweden and Norway. We achieved record revenue, gross profit and EBITDA, while continuing to invest in new deployments, advancing our technology and expand our presence across the United States and Europe. We're also seeing increasing operating leverage as our progress and our recurring revenue base grows.

We believe SuperCom is stronger today than at any point in its history. We have an exceptional global team, a significantly improved balance sheet, proven and differentiated technology and a growing range of opportunities to expand both into new markets and within the markets we already serve and the record revenue and EBITDA numbers at this point.

As we look ahead, we remain focused on executing our pipeline, supporting our customers and building our position as a global leader in electronic monitoring and public safety technology market.

This concludes our prepared remarks, and I'll turn the call back to the operator for questions.

[Operator Instructions] And our first question today is coming from Matthew Galinko with Maxim Group.

Congratulations on another strong quarter. Can you maybe touch on -- sure, we could obviously see the momentum, I think, in the U.S. market in terms of expanding your territory and appreciate the metrics you provided on growth rates. At what point, I guess, do you expect that to -- I mean, I guess, maybe firstly, do you expect that to accelerate as you, to your point, move into higher scale deployments in the U.S. market. So like as you move into hire [indiscernible] count, or monitor accounts do you anticipate that, that number could actually accelerate from the current rate of growth?

The number has been accelerating this year. I think in the last quarter, we announced up to 180%. Now we're at 290% year-over-year ARR. At some point, naturally, as the numbers get larger and larger, the acceleration will stop and the growth will continue, though. In the U.S. market, we started with smaller county projects. I'm sorry, there we go. [ Can't tell ] of Tel Aviv. There is smaller county project, and they've been growing in size, and now we're at a level of roughly $100 million to $250 million. Of course, there's much larger projects in the U.S. and some of our projects in Europe, as we discussed Sweden was 1,000 units and expected to reach 6,000 this time around. Romania was 15,000 units. So we deployed much larger projects in Europe. But originally, in Europe, it was also 50 units or 100 units, and we scaled project or projects, and that's what we're doing in the U.S. We're just doing it much faster this time around. So in the last two years, we expanded into 19 new states and it took us much longer [indiscernible] presence in Europe.

Got it. Well, very good. I think you touched on Romania headwinds, but is it reasonable -- can you maybe characterize where that opportunity is today as far as maybe expansion of scope, or is there potential to bring orders back from Romania, or how does that look today?

So Romania is still an active customer of ours like many of customers of ours when we start the program, if the relationship is good and deployment as successful as it was, they can order at the planned rate or faster than planned, and that's what we saw there. And so those initial [indiscernible]. At some point, there were elections and those elections happened twice and something slowed down a little bit, and you saw a decline of revenues in Romania in 2025, which masked an underlying growth of 40% for revenues that year from the rest of the business if you avoid that decline. But Romania is still active, and there's expansion opportunities just like any of our contracts, and we're only -- we started with 2022. Many of these contracts provide for examples of Israel, Sweden, Norway are over 20, 25 years with the same incumbent provider. So once you start a relationship with them, and you're doing well as we believe we're doing there, there's more expansion, more opportunities, and we're excited about the path ahead.

All right. Last question for me. Your gross margin has been very strong, I think, for the last couple of quarters. Can you point to any predominantly kind of the revenue mix and where you are in the contract cycle or are in the implementation of AI and efficiency contributing to that gross margin? And I guess how sustainable are we kind of in the 55% to 60% range.

So we touched on some of this also in the past. We are taking -- so out of the -- in the projects in Europe, there's different deployments in different regions with local subcontractors and local languages. We've been taking a lot of that in-house and that lowers the cost that we're shipping out to subcontractors so that improves margins. The U.S. market where we're having more revenue has higher margins in Europe because it's all centralized on the cloud and in English, but also the existing projects that we have in Europe are reaching a later stage, maturing -- and the more the project matures, the more you're just adding additional units at a very high gross margin compared to the initial deployment where you have a lot of installations and hardware and security and training and adaptations. And so when you're in later-stage projects and as your projects mature, gross margins are naturally higher. And we still have opportunity in the business to grow margins more, especially when revenues are higher because there's significant operating leverage in this business model. AI also that we described, and I'm talking about AI not in the products, just a separate things on AI, just from our operations, a Lot of the things are kind of more automated, more seamless, and that's improving everything in terms of inventory management, other process that we have to do, and it's helping us pay a lot of efficiencies. And we think that's just the beginning. We think there's much more that can be done, and we won't give a spoiler. But over time, we'll have more updates along the way as those things go.

Your next question is coming from Greg Mesniaeff from Kingswood.

Two questions. First one is kind of a general. On the newer contracts that you've announced recently, what's the typical duration period of the contract? And how is it structured? Is there a percentage of the contract that's earmarked for service and support? And is that option optional, or is that included in the overall contract? And also, what kind of cybersecurity guarantees are you required to provide given the sensitive nature of some of this data and the fact that you're dealing with more enforcement and governments.

I'll start with the latter, just because it's a little interesting to remind, but -- we have ISO 27001 and other certifications, but also SuperCom in our history, we have cybersecurity capabilities. We used to do penetration testing that advise, various organizations on this. We have cybersecurity software as part of our operations. So we're very and auditable here are from cybersecurity in their past experience and in SuperCom. So while we're deploying our technology, big focus is cybersecurity, and we're handling very sensitive data. The projects we did in the history of SuperCom before electronic monitoring was in identification was the full sense of the country of all the citizens and all their taxes, their criminal rates and their passports. And so we have a lot of experience in that department. And of course, that it lays over to what we're doing with electronic monitoring. So especially on-premise deployments that we see in Europe. Cybersecurity is a big part of it, and I think we're able to show very strong capabilities and it helps us score the highest in the technology portion of the bids. Now in terms of the -- and they provide the penetration test, and they do the cybersecurity audience. In Europe, the national projects, there are several levels of evaluation and those evaluations besides testing our products and the accuracy of the location tracking and the reliability and the consistency they're also assessing the cybersecurity capabilities. That was the second one. The first question was around the contracts. I don't know if you're asking about Europe or the U.S., so I'll speak in general about the two models. In the U.S., it's actually quite mature the market in a more homogeneous fashion. And usually, the projects are priced at per unit per day for active offender being tracked, and that's how you -- and the revenue recognition is consistent. That's throughout our customers in the U.S., whether it's direct agency customer or through a service provider. But in the U.S., we don't have subcontractors that we have to -- that was to put some of the costs to -- so we received in at a higher margin. And it's all recurring per unit per day. Also the cash payments are consistently per month. In Europe, you have some projects that are purchased, whether acquiring the equipment and other ones that are still leased, but they have a large deployment because you're doing it on-premise deployment where you're buying servers and installing the firewalls in the infrastructure and connecting into their database into their census and providing the deployment work that could take us as like three weeks for initial stages, like we did in Romania, and it could take much longer up to a year. And in Europe, we get paid for that portion, of course. And then we have the deployment revenues as well as after ongoing revenues of maintenance and deployment of additional units. And that's what we're seeing in our European customers and each one is a little bit different. It's not homogenous to one kind of conscious model like it is in the U.S. Everyone has the way that they like to do it, and we conform to many different customers in many different structures, and it's all fine by us.

And what is typically the renewal period of the newer contracts, particularly in the U.S.?

So you say renewal period, what do you mean...

I mean after say 2 or 3 years, the contract is renegotiated.

Okay. So typically, the contracts are 3 to 5 years. the initial term. It could be three years, two expansions or it could be five years with some expansions, but then it goes up for rebid and if the customer likes you, and they believe in you, then you have a good chance of winning again, if you put out a strong bid, which is why some of the vendors that we displaced were there for 20, 25 years in Europe, a lot of these countries that we're displacing the incumbent technology provider. These are legacy providers that have been there for a while. They've been there for 10 years, 15 years, and sometimes we give notes to that. But it's usually much more than 3 to 5 years. If you haven't done anything wrong, and you're doing well. It typically renews for more and more. That's what's interesting about this market. It's a little bit hard to penetrate into new contracts, into new regions or once you're there, it's very sticky. And we feel great about what we've achieved, and we had over 20 national wins and over 45 new contracts in the U.S. It was hard to get those, and each of those provides us a moat and long-term relationship that we believe will go on for many years with each of these customers that we have a strong deployment with.

Great. And just one quick follow-up, Ordan. Are you capitalizing any of the new customer onboarding costs?

The new customer onboarding costs. Some of the projects are recognized as revenue percentage completion, not exactly capitalized at the cost, but for some components, you could look at it indirectly as that. But it is sometimes a milestone progression together with cost progression for revenues for these projects. And that depends on ASC 606, and how the different projects are categorized and classified.

Your next question is coming from Jack Juliano from [indiscernible] Capital Management.

Congrats on the results. Just two quick questions from us. Firstly, in terms of opportunities outside of Europe and the Americas, we noticed that you hired two directors of sales are actively hiring two directors of sales in APAC and LatAm. And so could you potentially tell us about the opportunities you're seeing there and then the time lines on those as well?

Okay. Interesting, you saw those we have higher on care portion of our website. So we believe that there are interesting markets outside of U.S. and Europe as well. And at SuperCom, we have over 38 years of experience serving over 40 nations around the world, different type of government, large-scale government deployments and that we think we're well positioned to expand there as well. The technology has been tested and has been successful time and time again in different regions of Europe in different areas of the U.S. the same, let's say, physical and technological requirements apply to other regions of the world. It's more just getting them up to speed with the process of running an electronic monitoring programs. And we've done this as well. In Croatia, we launched a brand-new program. In Romania, it's a brand-new program. They haven't done this before. So we think we can be great partners for a lot of these countries outside the U.S. and Europe, and we're seeing opportunities come up, and we thought the time to capitalize on that as well. So yes, we have been looking for directors of sales in those two regions for LatAm and Asia Pacific. And Asia Pacific specifically, there's actually developed electronic monitoring market that we haven't yet accessed, and our initial focus will be there in Australia and New Zealand. There are many different programs. They have a lot of experience doing that there. Some of the same players that we're displacing in Europe and the U.S. are over there, and we look forward to competing against them there as well.

It sounds great. And secondly, I know there's a lot of focus on the U.S., but when it comes to Europe, there's a lot of opportunities there as well. And so maybe if you can walk us through what you're seeing in terms of other opportunities outside of Italy and U.K., which you mentioned on your previous call. If there's other opportunities outside of that, it would be great to hear about those as well.

So to say, there are many opportunities in Europe. And in the past, we had over 65% win rate in Europe recently, the last few programs that we've been on, we won [indiscernible] at 3. So sometimes that win rate is even as high as 100% over a prolonged period of time. And there's some opportunities. We talked about Italy, we talked about England. England is not just the national opportunity, which is over GBP 150 million pounds. There's also other small ones in different regions of the whole market that we're looking to enter. And there's other ones in Europe. We don't always want to give the heads up to competition. So we try to keep it limited on exactly the names we're sharing and where we plan to to bid and expand to. But I think we've done an amazing job the team here has done an amazing job at winning contracts in Europe and new regions where we haven't had any past experience or relationships, and we've overcome all the hurdles to come in as a brand-new provider and display the comments that they've had for a very long period of time, even over 20 years in many of these. So we're still excited about the European projects and also they're much larger in size than the projects in the U.S. We think a lot of our growth will continue to come from Europe. But at the same time, you see that in the U.S. market, things are starting to ramp up quickly, and we're having great references and great feedback from service providers who are not just aware of one technology because typically, the service provider sees all the technology in the industry. And if they choose to take our technology on and displace to others. And these are savvy. They know -- they work with the technology a lot. It's not -- they're not necessarily government officials, which might know one technology or the other. We think it's really good feedback and a good testament to where we're going in the U.S. So the U.S. market is 6x bigger than Europe, and it's, I think, going to be a nice part of our future growth potential. But meanwhile, as that grows, the European market is doing great for us, and we expect to have continued wins and expansion there as well.

Your next question is coming from Sean Westroff from Deep Sale Capital.

A good quarter here. Just wanted to touch on Sweden a little bit. Kind of wondering on contract ramp, I know it's like you guys have a 9-year contract there. Is it going to be very front-loaded in '26 and '27 kind of similar to what we saw in Romania, or do you think it's going to be more spread out? Like how is that looking?

So we can, at this point, express exactly how it's going to be on a specific program, but we have shared that many times when the program's launch, there's the initial plan, and the customer likes what we're doing and they end up ordering and deploying it much faster. And we have the experience to do so. We deploy many many contracts, probably more than any other vendor in Europe. We're deploying many contracts at a very high -- very fast pace with new technology deployments and new cycles, and so we're very well versed to support their, let's say, growing needs of speed and acceleration. So we're ready to deploy as fast as needed. And as in many contracts in the past, we've seen that we've seen the deployments be much faster than originally anticipated. And here, when you talk about Sweden, no, it's not just -- so there do you have a program there that deploying a new one, but they also look to add on things like alcohol and other capabilities and things that we -- we're also very ready to deploy. We're doing -- in many of our countries, we have multiple programs, 3, 4, 5 different programs. So that's very easy for us to add those modules. And then the amount accounts that they're looking to grow significantly, we have the capacity to support that as well. So we can't say exactly how fast it will be, but we know we can support it.

And the fact that you guys already have a deployment there, does that mean it's a little faster and a little cheaper for you guys to deploy this additional larger contract there?

That's a good question. By the standard competitive process, they can't give an advantage to one vendor over other even if they're an incumbent. But naturally, as you can expect, when you have experience in the country and you build a [indiscernible] reputation and you understand how things work, you can plan better and do things at a much faster and more effective fashion.

Great. That makes sense. Great, just wanted to touch then on the U.S. growth. So in the press release, you noted the 171% recurring revenue growth. Can you just talk about what's driving that? Is that mainly contracts you won kind of from last year ramping, or is that some of these larger contracts that you won more recently like the Arizona state coming into play, or is it just kind of a mix of everything?

It's a little bit of a mix. I'd say that the initial projects when we started mid-2024 were much smaller in size, and they're growing. As we continue to move forward, our sales have been focused on larger and larger contracts, and we're able to win them, and then we take the references from narrows and go to larger ones. And also the contracts that we have, we're growing the amount of units. And sometimes it could be, let's say, a service provider that has 1,000 units, and they'll start us off with 100 or 150 units because they like the technology, but then they see it's working really well, and they could give more units and more units. And sometimes it's just a contract that the whole size, county contract was 100 units, and that's bigger than what we had in the past. So we're actively -- we still have a lot to deploy with the contracts we currently have announced. They're not at full capacity at all. Those are scaling up. We expect them to scale up more than the numbers that we disclosed, and there's -- we expect more contracts, of course. But the numbers we have now is just the buildings based on what has already been deployed, and that's part of the active unit per unit per day recurring revenue charges.

[Operator Instructions] And there are no further questions in queue at this time, and this does conclude our question-and-answer session. At this time, I will pass the call back to Ordan for closing remarks.

Thank you, operator. And I want to thank all of you for participating in today's conference call and for your continued interest in SuperCom. We look forward to sharing our progress on our next conference call filings and press releases. Thank you very much, and have a great day.

Thank you. This does conclude today's conference call. You may disconnect at this time, and have a wonderful day. Thank you once again for your participation.

Ladies and gentlemen, good morning, and welcome to SuperCom's First Quarter 2026 Financial Results and Corporate Update Conference Call. [Operator Instructions] Participants of this call are advised that the audio of this conference call is being broadcast live over the Internet and is also being recorded for playback purposes. Joining me from SuperCom's leadership team is Ordan Trabelsi, SuperCom's President and Chief Executive Officer.

I'd like to remind you that during this call, SuperCom management may be making forward-looking statements, including statements that address SuperCom's expectations for future performance or operational results. Forward-looking statements involve risks, uncertainties and other factors that may cause SuperCom's actual results to differ materially from those statements. For more information about these risks, uncertainties and factors, please refer to the risk factors described in SuperCom's most recently filed periodic reports on Form 20-F and Form 6-K and SuperCom's press release that accompanies this call, particularly the cautionary statements in it.

Today's conference call includes EBITDA and non-GAAP financial measures that SuperCom believes can be useful in evaluating its performance. You should not consider this additional information in isolation or as a substitute for results prepared in accordance with GAAP. For a reconciliation of this non-GAAP financial measure to net loss, a comparable GAAP financial measure, please see the reconciliation table located in SuperCom's earnings press release that accompanies this call. Reconciliations for other non-GAAP financial measures and comparable GAAP financial measures are available there as well. The content of this call contains time-sensitive information that is accurate only as of today, May 14, 2026. Except as required by law, SuperCom disclaims any obligation to publicly update or revise any information to reflect events or circumstances that occur after this call.

It is now my pleasure to turn the call over to SuperCom's President and CEO, Ordan Trabelsi.

Thank you, operator, and thank you, everyone, for joining today. Since we just had an earnings conference call 2 weeks ago, we're going to keep today's call shorter with a brief overview of the business financials and then open it up for Q&A. For those of you who are new to SuperCom, we provide electronic monitoring and public safety technology to local and national governments around the world.

For over 3 decades, we have partnered with national governments across the globe to deliver secure, scalable and innovative technology solutions. In recent years, our focus has shifted sharply towards criminal justice, where we leverage our proprietary PureSecurity product suite, where we invested over $45 million for offender electronic monitoring, including domestic violence prevention technology and alcohol detention through lightweight ankle braces with extraordinarily long battery life and other connected monitoring devices and capabilities.

Two weeks ago, we reported our financials for fiscal year 2025, which reflected the completion of a very successful 4-year transformation, representing a compounded annual growth rate in revenues of approximately 30% in our electronic monitoring business and a CAGR of approximately 47% in company EBITDA, reaching an annual 2025 EBITDA level of $9.4 million from $2 million in 2021. We also reduced our debt in this period by approximately 45% and lowered our blended interest rate from double digits to slightly below 6% as well as increased our cash and short-term deposit balance to over $12 million.

Entering 2026, we are pleased to begin with record gross profit, record operating income and record EBITDA of $3.3 million for the first quarter of the year, reflecting continued execution across our business and the scalability of our recurring revenue model. We continue expanding in Europe with 2 new national contracts, including a $17 million national contract for Sweden's Ministry of Justice. And at the same time, our U.S. electronic monitoring technology annualized recurring revenue or ARR run rate has expanded by over 180% year-over-year from May 2025, reflecting the accelerated impact of a rapid deployment and expanding customer footprint across the United States.

Year-over-year financial highlights from our Q1 report compared to the same period last year are summarized as follows: Revenue increased 8% to $7.6 million from $7.05 million. Gross profit increased 8% to $4.8 million from $4.5 million, an over 10-year record. Gross margin remained robust at slightly above 63%. Operating income increased to $1.23 million from $1.21 million, another over 10-year record. Excluding the extraordinary financial gains of $4.1 million recorded in Q1 2025, our GAAP net income surged to $1.33 million in Q1 '26 from $0.1 million in Q1 2025. These gains are related to conversions of debt to equity and negotiated premium prices of up to $43 per share done in Q1 2025.

Excluding the extraordinary financial gains of $4.1 million recorded in Q1 '25, again, non-GAAP net income surged 155% to $2.78 million in Q1 '26 from $1.1 million in Q1 '25. EBITDA increased 32% to $3.34 million from $2.53 million, another over 10-year record. GAAP EPS was roughly $0.24. Non-GAAP EPS was $0.61. Cash and cash equivalents increased to roughly $11 million and book value of equity increased to $45.6 million from $43.5 million at the end of 2025.

As you've noticed, significant improvements in profitability. I want to give a brief -- some more color on the -- what's driving this profitability. Beyond the clear benefits from economies of scale and operating leverage, our improvements in profitability are being driven also by the following: Firstly, consolidation activities in Europe. As you know, our projects in Europe are in many different countries. And historically, we team up with a local partner who would handle the training, the language, the on-country presence, the deployment on on-premise services and others. And we continue to consolidate and centralize our operations in Europe.

We established a central European hub in Romania for logistics, equipment handling, shipments and RMA. We're also expanding our scope by taking over more IT and more support responsibilities directly, reducing our reliance on local partners and improving our margins. We now provide also our own 24/7 multi-sphere technology support across projects, centralizing these functions is significantly improving margins across contracts.

We're also leveraging AI to accelerate development, introduce new automations, improve operational efficiency and reduce costs across development and customer operations. Our new products and technology advances can reduce costs dramatically given improved architectures requiring less labor in replacement, support and other processes that overhead the cost for our business.

And our expansion to the U.S. The expansion in the U.S. market is in itself an improvement to profitability because everything is centralized to the cloud in English and usually consisting of simple product mix as opposed to Europe, which has a lot of different products, project deployment and language complexities in the national projects. As we enter and grow U.S. electronic monitoring technology revenues, more profitability is expected to improve.

Our U.S. growth and expansion was one of the central developments in recent years. Since mid-2024, we have signed more than 40 new electronic monitoring contracts, entered 16 new states and built 17 new service provider partnerships. There is an inherent lag between the contract signing and revenue recognition. In some of these contracts, it takes up to 6 months or more to fully deploy since they have to swap out their existing units and this could take time. Sometimes they just swap out organically to avoid the installer overhead such that every new offender is put on SuperCom technology and as existing offenders end their monitoring terms, the incumbent provider's tech is returned and replaced by SuperCom's technology for the next offender with the same unit.

Hence, when we announced new projects in 2024, or 2025, there's a lag until you see it. And in 2026 in Q1, we've seen this nice growth in ARR, which continues to improve as the months go by in the year. We're experiencing acceleration in our expansion numbers here. Our SuperCom electronic monitoring technology quarterly recurring revenues for the first quarter in the U.S. increased approximately 88% for the whole first quarter, while as of May 2026, the annualized recurring revenue run rate grew by over 180% compared to May of 2025.

As you may have noticed, the majority of our revenues are still coming from the EMEA region, Europe, Israel. And a lot of our projects there are from the over 15 national project wins that we have announced in recent years. They provide a strong base for continued growth. And with an active and growing pipeline of meaningful opportunities, customer relationships are very sticky. And our expansion, we displaced very long-term incumbents such as a 25-year incumbent in Sweden and over 20-year incumbents in Israel and Germany and also successfully entered brand-new EM countries like Romania, where we won the country's first electronic monitoring contract with an initial value of over $33 million in 2022.

In Sweden, we recently won national project with initial value of over $17 million with substantial opportunity for expansion beyond that. This brings us over $25 million in aggregate initial value of contracts we won in Sweden in electronic monitoring. Several years back, we started off with projects of $100,000 in Lithuania and Latvia. And since then, we've been growing in scale to $3.6 million in Finland, another $7 million in Sweden, another $17 million in Sweden, $33 million in Romania. As we grow up the ladder, we hope to win larger and larger opportunities. And we know that in the market, there are many out there, including an opportunity that we're expecting to come up in Italy for expected over $20 million and opportunity over GBP 150 million expected to come out as the initial RFP sometime in 2027.

With that, I'd like to turn the call over to operator for any questions from our participants at this time.

[Operator Instructions] The first question today will be from Matthew Galinko from Maxim Group.

Maybe firstly, can you expand a little bit on what the competitive environment looks like today and winning clearly a lot in the U.S. and Europe. So are you seeing anybody new? Or can you go over what's supporting your ability to win these greenfield opportunities and displace the incumbents?

Matthew, great question. We just announced 4 new county wins, contracts in New York. We displaced 3 incumbents. These are established industry veterans. There's still roughly 10 players in the industry globally. There's high barriers to entry. You can't enter if you haven't shown experience and references for 5, 10 years in the industry. So that keeps the industry kind of barrier even though it continues to grow.

We displaced 3 different incumbents. And usually, we score much higher in technology. In Europe, we were doing this on a national level with long-term evaluation processes, which took months and months. And in the U.S., a lot of it is through live demos and trials. They take our equipment, they run it, they compare it to what they have. And as you saw, we had 100% conversion in these 4 opportunities that we faced in New York and many others around the U.S., we have very high conversion rates. And we believe it's because of our technology and our good track record.

In New York, for example, we had an initial county give very strong references to these 4 new counties. So we're doing good work, good deployments. Those references are coming to new customers, and that together with the trial demos and the technology capabilities are helping us to win new projects in the U.S. and in Europe. And I remind you that in Europe, we had over 65% win rate in RFPs. In the U.S., in a lot of these direct counties, we're even seeing higher numbers than that. And it's still early on. We'll see how this rolls out for the rest of our expansion into the U.S. market.

And then I think you shared a 180% growth rate in ARR for the U.S. market. Can you just mention whether that includes or excludes services delivered by LCA? Or is that purely from the new initiative in the U.S.

So it's a great question. And in the U.S., as you might remember, we have a lot of our revenues coming from California from our LCA business. What's new in the recent year, 1.5 years is us providing our PureSecurity technology to customers in the U.S. and these increases in ARR numbers are of that technology. So SuperCom's ARR technology and SuperCom's electronic monitoring technology, they are not the recurring revenues at LCA, which have been running for many years, which include a lot of services as well. This is only for EM technology.

Okay. I appreciate that. That's helpful. And then maybe one last question for me, and then I'll jump back in the queue. You highlighted a couple of the large European national programs that are coming up for bid. Can you talk about how SuperCom is maybe positioned differently from the last time these programs were up for bid? And do you think you have a stronger chance of winning them this time around?

It's a great question. So in England, the project is very large. As I said before, we're expecting it to come out next year, a very large budget. In the past, we competed for this, and we didn't win first place, even though we did do well on a lot of the scoring. Some of the things that we dealt with was our weak balance sheet and financial position and low references.

So back then, we had less references and also other vendors tried to point to the fact that the company had maybe only a few million dollars of cash, a market cap of $4 million, a lot of debt, high interest rates and the stability of the company was that question. Today, our balance sheet is much stronger. We have a much larger reference base. The company is much more stable. We have a lot of cash on hand. I think they'll make it much easier this time around with that England opportunity.

And there's many other ones, like we said, Italy and other countries we haven't entered yet. But as we continue to deploy more projects in Europe, we not only continue to deploy more projects in those regions like we saw in Sweden, it's the first contract already, but we also increase our opportunity and our capability to win other projects in other regions in Europe, similarly, as we're going to be seeing in the U.S. as well.

[Operator Instructions] And the next question is coming from Greg Mesniaeff from Kingswood Capital.

Two quick questions. Can you share with us the percentage of your revenues in the first quarter that came from the U.S. and how that has trended versus last year?

I don't have the exact percentages, but it's been similar to what you see on the annual report. The U.S. is still much smaller than Europe because of the project size, but the numbers coming from the SuperCom technology are growing very fast, and that -- if that growth continues, of course, the U.S. will be much more substantial. And we expect over time, the U.S. to actually grow past Europe because the market in the U.S. is $1.8 billion by 2028 compared to $300 million in Europe.

Great. And can you give us an update on the Romania situation?

Can you elaborate when you say on the Romania situation?

Well, you had quite a bit of business there. And is that still continuing at the same run rate? Or has it slowed down temporarily? Or like what's the...

Okay. Great. Great. So we won the Romania project in 2022 over $33 million. And like in many projects, when we do good work, the deployment is faster than originally expected, and they deployed relatively fast and ordered a lot of units. Last year, there was a decline from that specific customer, and we described that without that decline, the growth last year would have been approximately 40% for the business because of everything else that was happening.

Romania this year continues to work. We're getting new orders right now, and we'll see what size those orders will come out for the year. But it's still active customers of ours and satisfied customer. The ordering levels can move around based on their own needs. But like we've seen with any other customers that we -- either we displaced or that we have for many years, once you have a customer, they stay if you're doing a good job, they stay with you for a very long time and continue to order more units and add more programs and more capabilities. So right now, we have been receiving orders from Romania, and we're supplying them as we speak. We're working on supplying those orders.

And Ordan, when you get follow-on orders, I'm assuming the margin profile is better. Is that right?

Yes, it's a great point. As we progress -- within any project, as we progress further and further, the margins are better. And a lot of the projects we have today are later stage, and that's why you're seeing improved profitability in general. But at the beginning, you have a lot of training and installations and development and adjustments and slowly in the server farms and then afterwards, just additional units with high contribution margins. And that's why it's so interesting in the U.S. market because in a way, it's one deployment on the cloud in English. And even those different counties and different regions, it's all on the same platform and has a higher gross margin, and it's all charged per unit per day. And in essence, it's easier to track in a consistent manner. It's much more diversified. And so we're very excited about the expansion to the U.S.

And that does conclude our Q&A session today. At this time, I will pass the call back to Ordan for closing remarks.

Okay. Please pause. We just got a couple of more questions in. The next question is coming from Song Lim from Sapience Investments.

Given the AI, how AI has been impacting the tech industry, could you give us more color on how that impacted your company and your industry?

Right. So we did -- I did share on the prepared remarks that we're using AI also in our ongoing operations and development, logistics and our processes to help improve profitability. But also, we've been integrating AI into our technology offerings, and that's at various stages in its life cycle. We gave one update a couple of years back, and we plan to give another update on this. But that's also something that through our offerings, we plan to also leverage the power of AI for some meaningful things, and we'll give future updates on that.

And I noticed that I only have annual figures for your free cash flow or your cash flow numbers. Could you -- but not on a quarterly basis. And I've realized that in the past couple of financial years, free cash flow has been negative, and I think operating cash flow as well. Could you give us more color on that with cash flows going forward?

Yes. Regarding cash flows, we -- it depends on the mix of projects. You see, when we have projects like Romania producing the majority of the revenues because of the nature of purchase there, higher cash flows, but margins are lower than other projects like in the U.S. where it's recurring revenue and you're manufacturing more and receiving cash over time. So there's a mix. And based on the revenue mix, you'll see a shift in cash use and profitability margins.

[Operator Instructions] And there are no other questions at this time. At this time, I'll hand the call back to Ordan for closing remarks.

Thank you, operator. I want to thank all of you also for participating in today's call and for your interest in SuperCom. We look forward to sharing our progress on our next conference call, filings and press releases. Thank you very much, and have a good day.

Thank you. This does conclude today's conference. You may disconnect your lines at this time. Have a wonderful day. Thank you for your participation.

Ladies and gentlemen, good morning, and welcome to SuperCom's Fourth Quarter and Year-End 2025 Financial Results and Corporate Update Conference Call. [Operator Instructions] Participants of this call are advised that the audio of this conference call is being broadcast live over the Internet and is also being recorded for playback purposes. Joining me from SuperCom's leadership team, is Mr. Ordan Trabelsi, SuperCom's President and Chief Executive Officer.

I'd like to remind you that during this call, SuperCom's management may be making forward-looking statements, including statements that address SuperCom's expectations for future performance or operational results. Forward-looking statements involve risks, uncertainties and other factors that may cause SuperCom's actual results to differ materially from those statements.

For more information about these risks, uncertainties and factors, please refer to the risk factors described in SuperCom's most recently filed periodic report on Form 20-F and Form 6-K, and SuperCom's press release that accompanies this call, particularly the cautionary statements in it.

Today's conference call include EBITDA, a non-GAAP financial measure, but SuperCom believes can be useful in evaluating its performance. You should consider this additional information in isolation or as a substitute for results prepared in accordance with GAAP. For a reconciliation of this non-GAAP financial measure to net loss, a comparable GAAP financial measure, please see the reconciliation table located in SuperCom's earnings press release that accompanies this call.

Reconciliations for other non-GAAP financial measures and comparable GAAP financial measures are available there as well. The content of this call contains time-sensitive information that is accurate only as of today, April 28, 2026, except required by law, SuperCom disclaims any obligation to publicly update or revise any information to reflect events or circumstances that occur after this call.

It is now my pleasure to turn the floor over to SuperCom's President and Chief Executive Officer, Mr. Ordan Trabelsi. Sir, the floor is yours.

Thank you, operator, and good morning, everyone. Thank you for joining us today. Earlier this morning, we issued a press release with our financial results for the fourth quarter and full fiscal year of 2025, along with our 2025 annual report filed on Form 20-F. You can find copies on the Investor Relations section of our website at supercom.com.

Before getting into our results, I want to provide a brief overview for those new to SuperCom and then walk through what was a record year across the business. At SuperCom, we provide electronic monitoring and public safety technology for local and national governments around the world. For over 3 decades, we have partnered with national governments across the globe to deliver secure, scalable and innovative platforms.

In recent years, our focus has shifted sharply towards criminal justice, where we leverage our proprietary pure security product suite for offender electronic monitoring, including domestic violence prevention technology, lightweight and crates with extraordinary long battery life and other connected monitoring embedded devices. Our strategy rests on 3 core pillars. Firstly, our innovative technology. We have invested over $45 million in our electronic monitoring platforms and our proprietary solutions consistently outperform in competitive tenders.

In Europe, we achieved a win rate above 65%, in competitive tenders. And in our recent U.S. expansion, we're experiencing very high win rates as well. Our platform supports GPS tracking, house arrest, domestic violence prevention, alcohol monitoring and Rehabilitation Services, among other programs. We issued 119 patents and they help differentiate our technology from global competitors.

Secondly, on a global presence, our strategic focus is electronic market projected to reach $2.3 billion by 2028. The U.S. and Europe represent the core markets we're actively pursuing. We currently hold active contracts across 3 continents and as a result of our 85 government project wins to deploy our proprietary technology. And thirdly, our outstanding service. Our reputation as a trusted partner grows with each new deployment. Some of our government customers have been acquired by displacing the former incumbent who was with them for more than 20 years. often starting with a single program and expanding into multiple solutions over time.

In December, on top of other new sales execs with industry experience that we brought on to the team, we welcomed Ron Haddad to lead our international sales partnership development. Ron brings direct industry competitive experience from 3M, nice and converse with track record building long-term government sales partnerships that drive sustained revenue growth and market expansion. 2025 was defining a year we broke many new records for top line and profitability.

Over the past few years, leading to this, our revenue has grown at a compounded annual rate of approximately 23% over the last 3 to 4 years. And our annual EBITDA reached $9.4 million in 2025, representing approximately 34% EBITDA margin. In 2025, we continue that progress, delivering record full year results. record revenues, record EBITDA, record net income. We expanded gross margins and a series of landmark contract wins across Europe and the U.S.

Many of these new contracts have led to follow-on contracts with the same customers demonstrating SuperCom's strength as an incumbent and the durability of our customer relationships. This record year for new contracts helped SuperCom to become diversify and grow revenue despite geopolitical uncertainty in some operating regions. As our contract base continues to diversify, we believe we are positioned for continued and more meaningful expansion into more regions and larger contracts.

So with the U.S. U.S. growth was 1 of the central developments in 2025 and early 2026. Since mid-2024 when we began our U.S. expansion rapidly. We have signed more than 35 new electronic monitoring contracts, entered 16 new states and built 17 new service provider partnerships. Rather than walk through each state individually. I want to organize our U.S. progress around 5 themes and capture the structure of this expansion.

Firstly, new state entry, we entered 6 new states as we said, since mid-2024, including Alabama, Arizona, Louisiana, Maryland, Misora, Nebraska, New York, North Carolina, Ohio, South Dakota, Tennessee, Texas, New tall Virginia, is Virginia and Wisconsin. In many of these states, we replaced this incumbent vendors. Taxes were notable late 2025 when our first contract was signed in December 2025, with a second 1 following within weeks in January 2026, both Juvenile provision agencies and both displace incumbents. Louisiana secured in February 2026, marked our 16 new state and 17th service provider partnership.

Secondly, we're looking at density in existing states. Beyond entering new states, we have been deepening our presence in states we've already entered. Wisconsin has seen 3 county level deployments since September 2025 through a Midwest regional service partnership using Pier 1 and Pier Shield technologies. Alabama added 2 new contracts in November 2025 on top of an earlier direct agency contract. Kentucky added a fourth contract in March 2026 through a direct county agency. North Carolina followed an initial December 2025 Tier 1 deployment with the third North Carolina contract in January 2026.

In addition to the statewide procurement vehicle we won earlier in 2025 from North Carolina Share Association. Thirdly, incumbent displacement. Many of these wins have come by replacing established incumbent providers, validating the competitive strength of our pure security platform. our Texas, Kentucky, Alabama and Missouri wins, among many others, displaced incumbents. We have built 17 new service provider partnerships since mid-2024. These partnerships help us reach local agencies and county level customers more efficiently together with local providers who have known and worked with these customers for many years. And these providers -- it's important to note our experts in electronic monitoring field, they've tried most of the technology, if not all, and then choosing to put on our technology and to displace their incumbents as another strong validation to the capabilities and advantages that we provide to the industry.

In the U.S., we are moving up the customer ladder. We started the U.S. expansion of resellers in very small county tier. throughout 2025, we operate increase on the at the county level, slowly growing to larger and larger county and larger programs. A nice breakthrough moment came in November 2025. And when we secured our first state-level Department of Correction contract in the United States awarded under Arizona's statewide Behavioral Health Services. The DOC and state agency tier represents a step-up from the regional and county level wins have built our U.S. presence.

Implementation began in January 2026, and we expect this contract to serve as strategic reference point for state-level pursuits across the country. Beyond these 5 themes, our only owned subsidiary, LCA, was awarded reentry services contract in Northern California valued up to $2.5 million for over 5 years. Since the acquisition of LCA, our California presence has accumulated more than $35 million in total wins. The framework we described to you over the past year is unfolding as expected.

On the international side, we continue to deliver expansion of existing programs and entry into new geographies. In January 2026, we secured a national EM contract in the Western European country, marks on the tenth nation globally to adopt our domestic violence monitoring solution, proprietary solution that we have introduced to the market to help towards our goal to assist in eradicating domestic filings. The contract is structured as a multiyear framework with a term of at least 3 years and began deployment in Q1 2026.

The partner has indicated plans to transition its entire EM program portfolio to our proprietary solutions and technology. In March 2026, we were awarded the Swedish Prison and Probation Service national contract valued at a whopping $17 million, this represents 6x the scale of original 219 deployments with the same customer, and they've shared their expectation to grow the program significantly. The word came through a long -- year-long competitive valuation involving 5 companies, including a 25-year former incumbent. And once it could stand still period which it has, it's becoming 1 of the largest deployments in our company's modern history.

Our European contract history shows how the scale of our program has increased over time. We started in ethane and Latvia with projects valued at only a few hundred thousand dollars. We grew to Denmark with 1,000 units, Finland, $3.6 million, then our first contract in Sweden back in 2018 and 2019, valued at $7 million only. We want Romania of over $33 million in 2022, a program with 15,000 offenders, which serves as a great reference for us for additional large programs. And now we achieved our fourth award in Sweden, a new $17 million contract with potential for substantial growth beyond that as we add additional programs.

Several large EU contracts are up for award in the upcoming 24 months, and we're actually pursuing them. Our deployment with Israel Prison Service continues to advance after displacing a 20-year incumbent here as well. The national EM contract covers all EM programs, including home detention, GPS tracking, among other programs. One of the structural change goals for our business is the increased diversification of our revenue base as we grow to more and more customers to more geographies around the world. This goal will become more attainable.

In 2025, our largest customer presented approximately 25% of revenue. Despite this decline in concentration from our largest customer of recent years, total revenue still grew as new contracts and growth from other customers offset the prior year's contribution from and add incremental growth on top, underlying growth, excluding the impact of this customer decline is approximately 40% year-over-year. And I'll explain that again shortly in the financials.

This is diversification we are working toward. There is an outcome of our U.S. expansion and broader European wins. We expect to see further contract activations and continued diversification through coming years. The new customers and projects in the U.S.A. during 2025, we're still at early stages. We -- but we expect them to grow in size and need to more contracts of various sizes through strong networking effects and referrals as our momentum continues.

Turning briefly to our capital structure and corporate actions in 2025 and 2026. The company reduced its long-term debt by approximately 45% since the start of 2024. And mainly through premium price share issuances, including a $4.3 million reduction at $43 a share, enhancing its ability to capitalize on growth opportunities. amended debt terms also improved the company's debt annual interest rates from double digits to a blended annual rate below 6%.

In January 2025, we completed our 6 million registered offering at common only registered offering at $11 per share. Net processes were used for working capital, R&D and potential acquisitions as part of our general strategy. Over the course of 2025, we also executed a meaningful restructuring of our debt as described, including the conversions into shares at premiums.

Shareholders' equity has grown substantially to $43.5 million at the end of 2025 from $11.7 million at the end of 2024, reflecting both improved profitability and strengthen the balance sheet. Looking to the rest of our financials. For the full year ended December 31, 2025. revenue of $27.9 million compared to $27.6 million in fiscal 2024, demonstrating stability and modest growth despite geopolitical headwinds in certain operating regions. It's interesting to note, while revenue has only increased 1% year-over-year. This period reflects a lower contribution from our largest customer. Excluding this impact, the underlying revenue growth was approximately 40% year-over-year. So essentially, the decline from that customer was made up for and more by other customers that are growing and new ones that joined.

Gross margin expanded to 55% from 48.4% in 2024, reflecting the continued shift towards higher-margin recurring revenue contracts and the impact of technology investments on cost reduction. EBITDA in 2025 reached $9.4 million compared to $6.3 million in 2024, a 49% year-over-year improvement and a record number for us. Other expenses of $2.7 million for the full year compared to $2 million in 2024, an increase of approximately 34%. This is primarily attributable to provision for doubtful accounts, mainly related to long overdue receivables from African government customers from our legacy business of e-government, which amounted to roughly $1.8 million in bad debt expense in 2025 versus $1.2 million in 2024.

Doubtful accounts related to our current main markets in the United States and Europe remain extremely low as the payments and collections are doing very well in these markets. GAAP net income for the year was $3.7 million a record for us compared to $661,000 in the prior year. Non-GAAP net income was $11.2 million, and non-GAAP EPS was $2.47, which -- also a nice achievement that shows our improvements in our profitability. To put these results in context, when we began executing our current strategy in 2021, revenues were $12.3 million and the company carried a GAAP net loss of approximately $6.7 million.

Over the 4 years since we have more than doubled revenues to record levels, which is our strongest GAAP profitability since to lead to record net income, record non-GAAP net income and record EBITDA levels and build a contract base spanning 3 continents with the growing momentum in many different regions.

For the first quarter, the financial results, fourth quarter ended December 31, 2025, our revenue was $7.5 million compared to $6.3 million in Q4 2024, representing 18% year-over-year growth. gross profit of $2.9 million, representing a gross margin of 39%. And this reflects some of the volatility we have in gross margin between the quarters as we described many times in the past, the mix of revenues depends on many different contracts that are consolidated for the quarterly results, and there could be fluctuations between quarters. Just better to look at these things on an annual basis. and got net loss of $2.3 million compared to a net loss of $1.9 million, over $4 million of this was impacted by onetime expenses, including bad debt expense of $1.9 million related to legacy eGov operations in Africa and approximately $1 million expense related to the change of fair value in warrant derivatives.

In this quarter, EBITDA was $2.2 million compared to $1.6 million in the previous year period, and non-GAAP EPS was $0.36. As we look ahead to 2026, we're encouraged by the momentum we are carrying into the new year. We've already secured over 6 new North American contracts in the first 4 months of 2026. Our $17 million national content Sweden, the new 1 that we just described for March is expected to begin contributing to revenue as deployments progress. And combined with the continued ramp of our existing North American and European contracts under recurring revenue daily unit models. We believe we are repositioned for continued revenue growth and expansion in coming years.

Our growth strategy across 2026 rest on 5 drivers. Win versus win large-scale national contracts in Europe, our pipeline in Europe remains active. The 17 million Sweden is now secured, and that's just the first stage. We believe there's substantial upside from adding new programs into this program into this contract. Several large EU contracts are up for award over the next 24 months, and our 65% win rate gives us confidence in ability -- are to convert more opportunities into projects.

We're expanding our U.S. footprint by entering through direct bids and partnerships. We have these 17 service provider partnerships. They help bring us into local new opportunities. as well as direct bids with accounting agencies of various sizes, and we're also looking at the state level. The Arizona DC win validates that our platform competes at the state and federal tier. We have a clear playbook for moving from resellers to small counties to large county projects to state and federal projects over time.

We're also looking at acquisitions, some inorganic growth complements. A lot of these service providers have a great presence and have great relationships with a lot of these counties after we were to acquire 1 of these we can replace their equipment costs by other vendor equipment with our equipment that drives a very strong growth to their operating profit and also gives us a good presence for additional top line growth. The LC acquisition is 1 example of the strategy. where we continue to actively evaluate U.S. acquisition opportunities that fit some more profiles?

We're enhancing our proactive sales efforts and streamline cycles as more contracts moved past deployment, our recurring revenue base compounds. Our sales organization is positioned to convert pipeline into revenue. And we have new industry experts, salespeople from the industry that are helping us get more demos out there and more projects to close. And lastly, we continue to innovate with every new project, we add additional features, additional capabilities that we take to us with us to other projects. Our domestic violence solutions are a clear example of how product innovation creates entirely new market revenue streams.

We expect to continue adding capabilities to support additional program types and customer needs. Underlining all the structural market opportunity, the global electronic market is projected to reach $2.3 billion by 2028. The prison systems in the United States and across developed world to face high operating costs and meaningful capacity constraints. And electronic monitoring offer substantial cost advantage relative to interation while supporting public safety objectives such as reducing incarceration.

As governments seek smarter, more cost-effective alternatives, we believe SuperCom is well positioned to compete. We will provide further updates on our progress throughout the year.

In closing, 2025 was a defining year for SuperCom, record full year results, a substantially strengthened balance sheet and the most aggressive global expansion in our company's modern history. We delivered 1 of our largest electronic motion contract wins since the transformation started in 2021. Our first day level Department of Corrections contract in the United States and entered new U.S. states at a faster pace than any prior moment. We entered 2026 with more contracts, a broader U.S. footprint, deeper international activity and a stronger foundation than any prior point in our moderate history. The opportunity in front of us is meaningful, and our team has demonstrated the ability to execute against it.

We are grateful for the continued trust of our government partners, our employees and our shareholders. And with that, I'd like to open the call to questions. Operator, please go ahead.

[Operator Instructions] Our first question is coming from Matthew Galinko with Maxim Group.

Congrats on the great results. Given the trend we've seen towards sort of against euro skeptic politicians in Europe, I'm curious how that influences the big picture for your opportunities in Europe that helpful for getting more countries into the EM pipeline? I'm just curious if you have any big picture thoughts on that.

Yes. I was just a little -- you're just a little mogul. You said the trend we've seen and then I didn't hear that you broke out the trend we're seeing in Europe around?

Fewer euro or EU skeptic politicians.

We're seeing -- I can't answer specifics where we're seeing a lot of activity in Europe. And there's -- as we did share for Sweden, they believe that there's going to be a lot of potential growth in crime because of various political and other advances that have happened in recent years, and they expect their program to grow 6x6 in the coming years and to add additional programs. We started with a $17 million win, and we can expect something on top of that. But the general trend that you're describing shouldn't impact us except for what I described here.

Okay. And then I guess, secondly, as far as state level programs, go for the U.S., what are your opportunities? What does that look like in 2026? Do you think that's sustainable and that you'll add to the signal that you signed or is it still more scattered as far as being able to move up market in the U.S.

In the U.S. just like we did in Europe, we started with very small counties, and we already have a lot of contracts over 35 and now and actually we're growing in size. We have the smaller ones and a bit larger and medium and we had the first TOC contract in Arizona, and we're bidding on others on the state level and also some -- there's some large county opportunities like L.A. County, Cook County and others. These are tens of millions of dollars and programs. So there's great opportunities in the U.S., and we're bidding kind of saying it's scattered away, but in areas that we think are more strategic with low-hanging fruit.

Great. And then last question would just be on the debt. Obviously, you've done a great job at bringing that down. Anything you could say about plans to continue managing that in 2026? Or it'll just be opportunistic when you can.

I think we have the relationship with our debt holders, and we're able to pay down meaningful parts of the debt and we have right now in the latest amendment until end of 2028 to pay down the debt without any -- all the interest is picked -- that being said, we hope to opportunistically pay down the debt and lower the balance over time, and we work with them to do that in various specific periods of time where it makes sense.

Our next question is coming from Greg Mesniaeff with Kingswood Capital.

Thank you. Question on your recent wins in the U.S. Arden, how much does price negotiation enter into the equation? I mean, is that really what drives the displacement of legacy vendors? Or is it a combination of price aggressive pricing and feature richness of the product.

Greg, great question. In most of the wins that we had in the U.S., we displaced an incumbent vendor, as you might be aware. And we typically try to come in with similar prices. We offer newer, more innovative technology with better capabilities, much longer battery life, lighter weight, more accurate tracking and try to match prices not to come in aggressively. and it's been very successful in that fashion.

Would you say that that's been a template that you can then bring to other regions of the world as well -- realized in Europe.

Template in terms of -- we come in with a similar pricing and we offer a better solution at that price, better accuracy, better features, more innovation.

So it sounds like competitive pricing is sort of a starter, but what really clinches the deal at the end of the day is the feature richness.

We don't come in with special pricing. The pricing in the industry, we can see what the prices are, especially if we're working with a reseller, he tells us what he's paying, and we can give them at a similar price a much better solution, more innovative and better technology. We don't need to come in with a lower price to win the projects because of our technology. In Europe as well, we had the processes in Europe are national government processes. There's the valuation of technology is very lengthy and stringent, and they look into the capabilities and they like what we have to offer so much so they're able to displace their incumbents for 15 years, 20 years, 25 years.

Prices are scored, of course, and you don't want to come in with the highest price of the competition. But if you have a similar price and you have much better technology, that's enough to win. that didn't focus on.

[Operator Instructions] Our next question is coming from Brendan McCarthy with Sidoti & Company.

Congrats on the strong results. Just wanted to look at the pipeline across Europe and the U.S. which pipeline looks relatively more attractive heading into 2026.

So in Europe, we're later stage. We started projects, as I noted, with sort of $100,000 in size. I mean grew to several million and the $7 million and $17 million and over $33 million. We're in the stage now in Europe that we can bid on practically any size, we have great references there. And so naturally, the pipeline is larger in Europe.

That being said, the opportunity in the U.S. is 6x the size of Europe. The margins are much higher. Everything is recurring revenue per unit per day. Everything that central on the cloud, everything is in English. So it's -- and it's much more diversified. So we're, of course, very interested in the U.S. market, and we're expanding into it as well. And we think over time, that will be a larger part of our business. But at this point, since we have a lot of experience in Europe and we're very well entrenched in Europe, the pipeline in Europe is larger.

Got it. That makes sense.

In terms of value, at least, the number of opportunities in the U.S. are more than Europe, but the total value in Europe is still larger.

Understood. And then from a competitive standpoint, does 1 market tend to carry like a more favorable competitive bidding process because I'm curious as to how many competitive bidders that are during each procurement process.

It's interesting. This market is very highly barrier. We see 10 players around the world, whether max of the M10 players in Europe or in the U.S., and we've had a very successful record in winning these RFPs in Europe and in the U.S. We're doing very well as well. Some of these are through direct contracts with service providers and some of them are to 4P processes, and we're able to score highly on these bids, whether they're very, very technical with long evaluations as you've seen in Europe or if they're shorter? And what I mean shorter is sometimes a service provider will ask you to send the technology, they'll demo it, they'll try it out. very quickly, they could see that it's much different and hopefully, much better than what they've tried to date, and that's how we can bring on these contracts relatively fast to the U.S.

[Operator Instructions] At this time, as we have no further questions in queue, I'd like to hand it back to management for any closing remarks.

I want to thank you all for participating in today's call and for your interest in SuperCom. We look forward to sharing our progress on our next conference call, filings and press releases. Thank you very much, and have a good day.

Thank you, ladies and gentlemen. This does conclude today's call. You may disconnect your lines at this time, and have a wonderful day, and we thank you for your participation.

Ladies and gentlemen, good morning, and welcome to SuperCom's Third Quarter 2025 Financial Results and Corporate Update Conference Call. [Operator Instructions]

Participants of this call are advised that the audio of this conference call is being broadcast live over the internet and is also being recorded for playback purposes.

Joining me from SuperCom's leadership team is Ordan Trabelsi, SuperCom's President and Chief Executive Officer.

I'd like to remind you that during this call, SuperCom management may be making forward-looking statements, including statements that address SuperCom's expectations for future performance or operational results. Forward-looking statements involve risks, uncertainties and other factors that may cause SuperCom's actual results to differ materially from those statements.

For more information about these risks, uncertainties and factors, please refer to the risk factors described in SuperCom's most recently filed periodic reports on Form 20-F and Form 6-K and SuperCom's press release that accompanies this call, particularly the cautionary statements in it.

Today's conference call includes EBITDA, a non-GAAP financial measure that SuperCom believes can be useful in evaluating its performance. You should not consider this additional information in isolation or as a substitute for results prepared in accordance with GAAP.

For a reconciliation of this non-GAAP financial measure to net loss, a comparable GAAP financial measure, please see the reconciliation

[Audio Gap]

'25. Except as required by law, SuperCom disclaims any obligation to publicly update or revise any information to reflect events or circumstances that occur after this call.

It is now my pleasure to turn the call over to SuperCom's President and CEO, Ordan Trabelsi.

Thank you, operator, and good morning, everyone. Thank you for joining us today.

Earlier this morning, we released our financial results for the third quarter ended September 30, 2025. You can find a copy of the press release in the Investor Relations section of our website at SuperCom.com.

We continue to deliver strong operational performance and strategic momentum across key markets, building our record-breaking -- building on top of our record-breaking first half of the year. Since mid-2024, we have secured over 30 new electronic monitoring contracts in the U.S. alone, including entry into 12 new states and 14 partnerships with regional service providers.

These wins reflect growing demand for advanced scalable EM solutions and validate our ability to rapidly expand our U.S. footprint. Importantly, many of these new partnerships involve replacing incumbent vendors, a recurring theme that speaks to the strength of our PureSecurity platform and the trust it continues to earn from agencies seeking modernization.

We've seen this in states like Virginia, Utah and Alabama, where multiple agencies have transitioned from legacy systems to SuperCom's technology within a short time span.

In Alabama, for example, we recently launched our third and fourth deployments in less than a year. In Utah, a second sheriff agency selected our platform to overhaul its GPS tracking program after evaluating competing technologies.

And in Virginia, another service provider fully transitioned its GPS operations to SuperCom, marking our second reseller partnership in that state this year. These examples illustrate a growing trend as agencies seek more reliable, flexible and cost-effective solutions they increasingly turn to SuperCom for both technology and long-term partnership.

Our ability to serve both direct government agency contracts and third-party service providers gives us the versatility to operate effectively in varied regions and support distinct program structures.

In addition to these wins, our U.S. presence is reinforced by the continued success of leaders in community alternatives, LCA, our wholly owned subsidiary in California, which recently secured a 5-year reentry services contract valued at up to $2.5 million.

LCA remains an important part of our integrated offering, supporting rehabilitation and compliance outcomes alongside our core EM technology. Since our acquisition of LCA, we've secured over $35 million in new contracts in California alone.

While our progress in the U.S. has been substantial, we've also continued to expand our presence internationally. We strengthened our presence in Europe with an award of a $7 million national electronic monitoring project in Germany, Europe's largest economy.

This milestone marks a strategic foothold in a highly advanced public safety market, achieved by displacing a vendor that had served the German government for more than 20 years. We see this award as a clear validation of our competitive edge and execution capabilities on a global stage.

Our leadership in domestic violence, electronic monitoring continues to grow. We now support 9 nations with domestic violence programs across the U.S., Europe and other regions. Governments increasingly rely on our PureTrack and PureShield technologies to support victim protection and offender accountability.

Beyond new market entry, we're also seeing our proven track record lead to deeper engagement in existing territories. A key growth pattern for SuperCom has been our ability to enter new countries as a single project and expand into multiple programs as trust and performance are established.

In Europe, we've seen this in countries such as Sweden and Latvia, where initial deployment has evolved into broader national coverage. We're now seeing a similar pattern play out in the U.S., where we have entered states like Utah, Kentucky and Virginia and more with pilot or regional projects and have since expanded into additional counties and service areas.

This repeatable expansion model remains a key driver of our long-term growth strategy.

Our ability to replicate our expansion model efficiently also ties into how we operate at scale, especially in the U.S. A core operational advantage for us in the U.S. is our cloud-based centralized platform as well as integrated inventory management and 24/7 support.

This centralization enables us to support nationwide deployments efficiently from a unified infrastructure in one language. In contrast, European projects often require country-specific servers, local language customizations and decentralized support models, which introduce additional complexity, local partner support and increased costs.

As a result, we can launch new programs in the U.S. more rapidly and cost-effectively, whether at the county level or statewide, enabling faster time to revenue and higher margin potential. This operational advantage supports not only organic growth, but also potential expansion through other means.

In parallel, we continue to evaluate strategic acquisition opportunities in the U.S. market. Targeting established local service providers can help us accelerate our market penetration, enhance vertical integration and unlock operational synergies.

A proven example is our acquisition of LCA in 2016, which, as I said earlier, has contributed to over $35 million in project wins in California alone. And as we scale, we see meaningful potential to replicate this success in additional regions in the U.S.

Alongside these expansion strategies, we remain focused on addressing the core challenges facing modern justice systems. Our solutions directly address some of the most pressing challenges facing criminal justice systems worldwide, including high recidivism rates, prison overcrowding and excessive costs and unsafe communities at the end.

By providing modern scalable alternatives to incarceration, our technology helps governments improve supervision, enhance public safety and reduce the long-term burden on public safety and correctional systems.

Tackling these systematic challenges requires continuous innovation and that's where our technology leadership plays a central role.

Our sustained investment in innovation has been key to our success. Over the years, we invested more than $45 million in R&D for electronic monitoring solutions alone, enabling us to develop one of the most advanced and versatile electronic monitoring platforms in the world.

This ongoing commitment to innovation is powered by our stellar research and development team, a group of highly skilled electrical engineers, software developers, product managers, QA personnel and other domain experts who continue to push the boundaries of what's possible in public safety technology.

Their contributions are a core reason why SuperCom continues to win competitive tenders globally, often displacing long-standing legacy providers.

As our capabilities advance, so does our ability to capture share in a rapidly growing market. The electronic monitoring market is projected to reach $2.3 billion by 2028, with approximately 95% of that opportunity concentrated in the U.S. and Europe.

Notably, the U.S. market is estimated to be more than 6x the size of the European market, making it particularly attractive driver for long-term growth. As more jurisdictions adopt electronic monitoring as a core public safety strategy, SuperCom is well positioned to capture this growing demand through our proven solutions and expanding footprint.

I'll now turn to the financials, reviewing our performance for the third year -- third quarter and first 9 months of 2025 compared to the same period last year in 2024. In the third quarter '25, we achieved continued profitability and margin expansion, driven by operational efficiencies and improved cost structures.

While revenue for the quarter came in at $6.2 million compared to $6.9 million in Q3 of last year, we delivered significantly improved profitability across all key metrics. Gross profit actually increased this quarter to $3.8 million with gross margins expanding to 60.8%, up from 45.6% a year ago.

This marks one of the highest quarterly gross margins in our history, driven by disciplined cost management, operational automation and reduced reliance on third-party service providers. It also reflects a favorable revenue mix with a growing share of higher margin international project phases and U.S. programs also contributing to the results.

As we continue to bring more work in-house and streamline deployment and adoption processes, we're seeing operating leverage as well as margin expansion. Operating income surged to $640,000 this quarter, up from around $30,000 in Q3 of last year, with operating margins increasing to 10.3%.

EBITDA doubled to $2.2 million from $1.1 million in Q3 2024, reflecting EBITDA margins of 34.6%. Net income reached $700,000, a turnaround from a net loss of $400,000 in the prior year and non-GAAP net income surged to $1.9 million, up from $35,000 -- $350,000 last year. Non-GAAP EPS came at $0.39 compared to $0.17 in the third quarter of 2024.

And now let's have a look at the 9-month performance of 2025 compared to the same period of 2024. Revenue was $20.4 million compared to $21.3 million in the first 9 months of '24, reflecting a modest decrease due to revenue mix and timing of contract launches.

However, despite the lower top line, we delivered strong improvements in margin and profitability. Gross profit actually increased to $12.5 million, up from $10.7 million with gross margins expanding to 61% compared to 50.1% last year.

Operating income nearly tripled to $3 million, with operating margin improving to 14.7%, up from 5.3% last year. EBITDA reached $7.2 million, a 56% increase from $4.6 million in the prior year, reflecting an EBITDA margin of 35.4% and net income more than doubled to $6 million from $2.5 million in the first 9 months of 2024, supported by our improved cost structure, disciplined execution and the positive impact of certain nonoperational financial gains recorded during the period.

Non-GAAP net income increased to $9.3 million with net margin more than doubling to 45.7%. And non-GAAP EPS for the period was $2.17.

We also made progress in strengthening our balance sheet. In the past 2 years alone, we reduced our net debt by nearly $25 million. This was achieved also through a combination of strategic debt-to-equity exchanges executed at premiums of up to 100% or more above market price and amendments to our senior debt agreement, which extended maturity to December 2028 and lowered the interest rate significantly.

In parallel, we raised over $16 million in gross proceeds, including $6 million through a registered direct offering completed at the beginning of 2025 and an additional $10.2 million for warrant exercises. These steps in unison contributed to a stronger cash position and enhance our financial flexibility to support future growth opportunities, including new project deployments, continued investment in technology and potential M&A activity.

As of September 30, 2025, working capital stood at $41.8 million, up from $26.1 million just a year ago. Book value tripled -- book value of equity tripled to $40.8 million, up from $13.3 million a year ago and cash and cash equivalents surged by 111% to $13.1 million, up from $6.2 million a year ago.

While current margins reflect a favorable mix of projects and contracts, they're not yet at a steady-state level. That said, we believe our progress in streamlining operations, automating processes and improvement in launch execution is sustainable and positions us for long-term margin resilience and expansion as we scale.

Before closing, I'd like to highlight the broader transformation that continues to define SuperCom's trajectory. Since implementing our new strategic road map in 2021, we've consistently strengthened the business across revenue growth, profitability and balance sheet health.

We find the results even more compelling when viewed over a multiyear horizon. Revenue more than doubled from a 5-year consistent decline, reaching $11.8 million in 2020 to 4 years of continued growth, reaching $27.6 million in 2024.

As of the first 9 months of 2025, we reached $20.4 million in revenue, reflecting continued scale relative to previous years. Gross profit grew by 140% from $5.6 million in 2020 to $13.4 million in 2024 and gross profit for the first 9 months of 2025 reached $12.5 million, closely aligned with the 2024 full year figure.

GAAP net income turned from a loss of $7.9 million in 2020 to $660,000 profit in 2024 and has since surged to $6 million in the first 9 months of 2025. Non-GAAP net income improved by over $10 million, turning from a loss of $1.7 million to a $6.3 million profit and stands at $9.3 million year-to-date in 2025.

EBITDA has improved from $2.8 million in 2020 to $6.3 million in all of 2024 and has already reached $7.2 million in the first 9 months of 2025. These improvements were achieved while navigating macroeconomic headwinds, a global pandemic, supply chain disruptions, rising interest rates, a regional war and they underscore the strength of our operating model, technology differentiation and long-term execution strategy.

Furthermore, they underscore the essential role of our solutions, which is resilient through market cycles. And as we continue to scale, we believe this foundation positions us well for long-term value creation.

In closing, we are proud of our execution this quarter and trust our customers to continue to place in us. I'd also like to thank our global team for their dedication and performance. Their expertise, commitment and hard work continue to drive our success.

And as we look ahead, we remain focused on leveraging our momentum to expand strategically, deepen customer relationships and continue delivering innovative solutions that improve public safety outcomes around the world.

With that, I'll turn the call over to operator to open for questions. Operator?

[Operator Instructions] Your first question for today is from Matt Galinko with Maxim Group.

I'd like to start with the market opportunity in Germany. It sounds like a nice, I think, first step into that market. Is there opportunity to expand there? And what would the process look like to expand within that market?

Great question. And we announced the win in Germany just a couple of months ago and it's a great win in a very lucrative market. The project already that we won has 4 different types of projects in it, including alcohol monitoring, GPS monitoring, domestic violence and house arrest.

And like we've seen in many other nations in Europe, once we enter with a initial project and we do good work and that's what we typically do, we have an impeccable record for our deployments, we end up winning more projects and expanding the existing ones.

So while it's our first one in Germany and it's valued at a budget of $7 million, just like we've seen in the past, we expect this to potentially grow in numbers and to grow in scale as we add additional capabilities from our ongoing growing product offering.

Great. Second question is, I think you mentioned a service provider in the U.S. that completely switched their GPS tracking over to SuperCom products. Can you maybe expand a little bit on is that a repeatable opportunity? And how do you see that sort of engagement with the service provider versus M&A like with an LCA?

Great question. And we actually had 14 service providers just this year that signed on. And the model in the U.S. is so fragmented. It's not like in Europe, but it's just a national project.

There's many different counties and each have their own programs, multiple programs in each county. And what's beautiful is that there's these service providers who have become mini experts in the field and they've tried all the technology.

And then we come to them, we show them our technology and they're able to quickly evaluate just how much more advanced and superior it is in many aspects to what they've tried. So in many of these service providers, they actually completely replaced the technology they have with our technology.

Sometimes it's all immediately, sometimes it's in process, but they swap out from live offenders, they bring them back in to swap the technology because the advantage is so significant that we want to go through that.

Now when you go directly to an agency and some of the larger agencies have the personnel in-house to run these programs, they know how to put the bracelet on, to write the report, they run the technology, then we sell directly to that agency.

When it's a service provider, they aggregate 5, 10, 20 or more agencies. And so that's an advantageous angle as well. Both of them are valuable. Both have great strategies for expansion and both have been working very well for us.

Great. And final question for me before I jump back in the queue. It looks like your debt position declined by about $2 million in the third quarter. I know you mentioned historically doing those debt-to-equity swaps, but I'm curious if you can talk about if there was another one in the third quarter.

So as we discussed in the past, we strategically with our lenders have been doing conversions of debt to equity. It's small ones. And then in aggregate, they become meaningful to the company as you've seen over the last few years.

And we typically do them at a premium and that helps reduce our debt balance as described. And you see that as well in the numbers as you follow the quarters.

And one thing I wanted to add about your question with the service providers. Another thing that's unique in the U.S. that we're doing because we're already in 9 countries around the world with our domestic violence solution and we have a very small bracelet with long battery life, it becomes very effective to put on people and ensure that after someone hits his wife, for example, he doesn't come anywhere close to the victim.

And our technology does a great job in that. And many other vendors have struggled with this. In the U.S., of course, like any other place, there is domestic violence. And the fact that we can offer this with such a high level of experience and seamlessness allows our service providers to add a whole new solution to everything they're offering today.

So that's also something else that helps us with the service providers, together with the normal GPS and house arrest that you've been asking.

Your next question is from Greg Mesniaeff with Kingswood Capital Partners.

A couple of questions. When you kind of analyze your revenue number of $6.2 million, if you break that down by geography, how does that compare to a year ago? It seems to me and correct me if I'm wrong, that your U.S. business has been quite strong. And it appears to me that the softness has come from other geographies in the world. Can you kind of give us some color on that?

Yes. It's a great question. In Europe, most of our revenues are still from Europe and other geographies outside the U.S. and that's where our focus was originally. We won over 15 national programs around the world with our PureSecurity Suite.

And these projects are multiyear projects and they have various phases, some phases more deployment and then scaling and then afterwards, additional add-ons and changes and so forth.

So there are many different projects that are running at the same time around the world and we need to -- when we report the financials, we aggregate the revenues from each of them. And that can mix differently in different quarters.

It's not a consistent monotonous growth or monotonous decline. It's just one quarter, there would be more of this project and less of the other one. So the volatility that you would see between the quarters, a lot of that comes from those projects.

In the U.S. market, which is newer for us, we have a strong base in California that we've been running for years. And then over the last 12 months, we've signed over 30 new contracts. And some of them start small, some of them start at a medium size, but they typically continue to grow and add more and more units.

And what's beautiful about the U.S. market is that almost everything is recurring revenue per unit per day. Now the majority of our business is recurring revenue, but there's still components that are not, especially in Europe.

In the U.S. market, those numbers will grow and grow. And over time, because the U.S. market is 6x that of Europe, we expect more recurring revenue to be the prevailing part of our revenues and we've got more consistency upon the quarters together with improved margins.

So we continue to grow in Europe and around the world, but the U.S. is becoming and will become in the future based on our expectations and plans, a more consistent and predictable element for our total revenues and our financials.

Great, Ordan. And if I could expand on that just a bit. As you win contracts in the U.S., what are typically their time spans compared to similar wins in, say, Europe? And you had mentioned that the U.S. opportunities have been much more recurring in nature, which is a good thing.

But if you could just kind of give us some idea of how long -- what's the typical length of one of these contracts? And also, what is the renewal rate that you've been seeing on them as a -- on a percentage basis?

Okay. Great questions. And let me try to structure it in a way. First of all, in the European market, these are national projects with long bid cycle and with a competitive process for RFPs and that could take from 4 months to 24 months or even more sometimes to win these.

And usually, the projects are structured at a 5-year span, 9-year span, something like that, between 5 and 10 years. And typically, the incumbent vendor wins it over and over again. I mean, when we displaced the incumbent vendor in Sweden, they were there for 24 years.

Since then we won 2 more projects in Sweden. When we displaced the incumbent vendor in Israel, they were there for over 20 years. When we displaced the incumbent vendor in Germany right now, they were there for over 20 years. So even though the initial contract is for 5 years or 10 years, you typically see the incumbent winning again and again.

Now for someone to come and displace them, you have to have a significant value proposition that's more advantageous than what they have today. And that's exactly what we've been doing with SuperCom in Europe. We've been coming in, displacing long-term incumbents, showing that there's a better way to do things with newer technology and that's helped us enter the market and then expand.

And naturally, once you win 1 project or 2, you have a easier time winning the next projects. So in Europe, when there's projects coming out in countries where we already exist, we have a much higher likelihood to win them than it was originally. And originally, we had in our expansion, roughly a 65% win rate in Europe. Now that's the European market.

In the U.S. market, you have a mix. You also have -- of course, there's these large RFPs like for ICE and you have it for some state-level contracts. And some counties are very large. Some county projects in the U.S. are $30 million, $40 million, $50 million alone.

But there's also many smaller counties and many smaller programs. And then you could start with them, especially if it's with a service provider, it's not a government RFP, it's a private company at the end and they sign a contract with you. And the idea is they continue running with you indefinitely.

The contract just continues to renew and they run with you for many years just like in Europe because once they're comfortable with you and they've worked with you and they like the technology, then there have to be a big change for them to teach everyone brand new technology.

So in the U.S., it's faster to deploy, especially with the smaller programs. We're able to deploy them faster. They might even start with less units and then grow the amount of units, whether different from in Europe where you start with a large amount pretty quickly on.

And over the years, because we've been deploying so many programs, we have such a high win rate and we've been expanding so fast, we've reached very fast deployment rates. Some of our projects in Europe, we deploy within a few weeks and we're able to manufacture very fast and deploy very fast and do it with an impeccable record of doing it seamlessly without causing issues, whereas some other vendors take a much longer time for the deployment. That's one of our advantages.

But in the U.S. market, almost everything is recurring. We usually charge per unit per day. So it'd be $4, $5, $3.5, depends what services are included. And you just -- they like their technology, they start with you and then you see the numbers.

Right now, we're doing the U.S. with over 30 contracts in over 12 different states because we're just putting the seeds in different states. And you can see that after we do a deployment, shortly afterwards, there's another deployment in the same state.

And then in some states, already a third and fourth deployment. And I think that speaks to the satisfaction of the customers and to the work that we're doing there. So there's a mix and it's a little bit different between Europe and the U.S.

But in the U.S., as the projects grow in size, just like they did in Europe, then you also see the RFPs and the larger project sizes. But we'll -- hopefully, as we do continuously, the speed of the deployment will continue to improve as we get better and better at doing more deployments.

Okay. Great. So is it fair to say that as more and more of your revenues come from the U.S., your revenue volatility should decrease over time?

Yes. That's a great statement. And also, over time, the margins should expand. So predictability, margin expansion. As I said in the prepared remarks, everything in the U.S. is on the cloud.

Everything is in English. We have inventory managers centralized, a 24/7 monitoring center that's centralized. As you can imagine, that's much more simple than having a server farm in Sweden and another one in Denmark and another one in Finland, another one in Germany with local partners in different languages and different inventory management systems in different -- so.

The U.S. has a lot of advantages in that remark and we're very excited that we're able to expand so effectively into the U.S. market with our technology.

Your next question is a follow-up question from Matt Galinko.

Just wanted to touch on operating expenses for a moment. It looks like R&D has been steady for a pretty long time as well as sales and marketing has been pretty level. I'm just wondering, as you continue expanding in U.S. market, should we expect to see operating expenses pick up at all to help support that effort?

Or if you put more spending into boots on the ground in the U.S., would that help to accelerate kind of your uptake into the U.S. market?

Good question, and it depends on how much growth you're talking about. The beauty in this market and in our industry is that the contribution margin of each additional bracelet into an existing region is extremely high.

It's just that there's fixed costs from running these operations in server farm, on the cloud, with inventory management with the 24/7 support. And so now that we're in the U.S. market, we have a good hold.

Adding additional units doesn't require a lot of additional costs. Our sales team is still fairly small and maybe there could be some expansion to it. But we won most of these projects around the world based on our technology.

We come technology first, less leveraging some relationships that other vendors might have. We come with new technology that works and that's been resilient and successful in many other projects around the world and that's how we enter these new markets. There could be some expansion, but minimal to our operating expenses in order to achieve the continued plan that we're seeing.

And in terms of research and development, we're doing very well. We already put over $45 million in technology. We're far ahead than most of our vendors in almost all aspects and we continue to invest to make sure that we are ahead of them.

And even if a competitor comes with a brand new technology that they spent tens of millions of dollars on, it's still going to take them 5 to 6 years to get that operational to the level that a large contract will take it. They want to see it first run in smaller projects for a year or 2 and then another project, another project and only afterwards, they'll take it on for larger projects.

And we're already in the large projects. Some of our projects like Romania, over 15,000 units. So we're in a very good place with our technology. We continue with every new project to add more capabilities. We continue to add more seamless integration.

We're able to bring a lot of the things that are service that our local partners do. We're able to bring a lot of that in-house. We're able to bring all the technology that third-party vendors have developed in-house.

We're able to optimize to make the promise more seamless to have lower cost and also to make things much more efficient as we continue to deploy and improve our product offering.

[Operator Instructions] Your next question for today is from John Mason with Aegis [ Co ].

I guess in terms of the -- sorry, can you hear me?

Yes. Yes.

Okay. Great. In terms of the revenue year-over-year, I know you've been winning all these contracts in the U.S. Like when do you expect to sort of return to growth year-over-year on a quarterly basis as those contracts sort of start to flow in?

And I know you mentioned that they're essentially fees at this point. But I guess, one, when do you expect that to inflect? And then I guess, b), is it essentially that there's turnover on the European markets or like lower usage? Like what is causing that kind of year-over-year decline? And I have a second question, sorry, but...

Okay. Good question. Good question. So we don't really -- we're not really losing customers essentially. As I said, many of these customers stay for a very long period of time. And as you see, we continue to announce more wins in the same region, either with the same government or with sister agencies in the same government.

So it's not that we're losing customers, it's that some projects that are not recurring have phases where they're more heavy, more deployments, more expansion, more work. And then there's phases that require less work.

And then until they again purchase more equipment and more expansion and more capabilities and more units. In the U.S. market, that's less of a metric because everything is pretty much recurring per unit per day and that helps you just consistently grow, just like with any Software-as-a-Service model.

We lease our equipment, but a lot of it is software on the cloud and that's the model that's prevailing in the U.S. As I said, the U.S. is 6x the size of Europe. So over time, we expect that our financials look very much in that way.

Currently, there's still some volatility and it's because the mix of different projects at different stages that some have recurring revenue and some have purchases and other one-time items and that can create naturally some volatility.

Now we don't give specifically guidance. And I said that some of them are seeds, but some of the projects in the U.S. are also larger. It's just that any project that's in a new territory and all of these are brand new, we see as a seed that can grow into many different plants or very large trees.

Just like when we started in Europe, the projects in Lithuania have $100,000 a lot, we have $100,000. And now we're talking about projects that are $7 million, $33 million and there's others that we're bidding on that are also fairly large.

So it's just a process. We entered the U.S. just a year ago. We've been doing great and we've won many different projects and we're winning against incumbents that are in the U.S. market for a very long period of time and have very strong relationships and we're still able to come in brand new with our technology and displace them.

And I think that speaks monuments to the potential that we'll see going forward. And so over time, we hope that everyone will see the benefits of our progress.

Great. And then last question, I guess, I think there's been quite a buildup of accounts receivable or trade receivable on the balance sheet. And I know, obviously, it's a testament to the increased book value growth.

But I guess what -- how do you see the cadence of release of that, right? I think it's been a pretty big drag on free cash flow. I think you've reported operating cash flow on like a semiannual basis. But I would love to know kind of how you expect that to flow through and when you expect to see that free cash flow.

Yes. Good question. It's not -- and I don't know if you followed SuperCom historically, but there was a period of time where we were working in Africa and South America. And over there, collections are sometimes delayed and it was more of a matter to look at here.

We actually don't experience that in the U.S. market and the European market. Things are timely. If we do see expansion to our AR, it's because sometimes you have percentage of completion in these projects and the amount of time and effort to recognize revenues is different from the time when you get paid.

So there's a misalignment in timing with the percentage of completion projects, which is mainly coming from the, again, the long multiyear project deployments at a national scale in the European market.

We don't see a issue there. If they're paying on time, we don't have any -- we haven't had to have bad debt or anything of that sort in a significant manner like we had in Africa and -- sorry, South America. And when you look at the bad debt that's done on an annual basis, that's typically from the eGov business, from all debt from those regions, not from the electronic monitoring business in the U.S. and Europe.

And one of the reasons why we expanded and shifted into this market was because of the very good collectability and predictability with these customers.

Your next question for today is from [ A.J. Hoffman ], a private investor.

Congratulations on everything. I may have missed this earlier, but did you state a win rate so far for all these contracts are getting in the U.S. for the ones where the bids have closed? Is it as high as Europe? Is it lower? And -- yes.

It's a good question. We haven't yet assessed. In the U.S., we've been doing very well. It's probably higher than Europe, but we haven't assessed it because we're still looking at such a large variety of projects in different sizes.

So we're going to wait till we have more consistent flow and size of projects before we start to do analysis. But so far, as you see, we're announcing many wins in many new states with many new resellers with direct agencies and we have very good feedback from our customers.

And as far as scalability in the United States, have you guys calculated what your -- let's say, after you launch everything, after you put everything on the ground and you're expanding inside of that state, maybe to different municipalities and at that point, all you're doing is adding just bracelets to the equation, what is the breakeven for putting that bracelet on somebody to recouping the cost of that bracelet?

Like is it 1 quarter? Is it a year to recoup your costs? Can you break that down for us so we can kind of understand the longevity of these contracts versus when the ROI is complete on actually assigning the bracelet to somebody?

Yes, it's a great question. And I'd love to share that with you. But for competitive reasons, we don't share that specific number. As you can imagine, there's 10 other players in the industry and everyone is trying to understand the cost structure and the exact prices per bracelet that the competition and all the customers as well.

So we -- at a aggregate level, you can see from our financials, when there's a new project, large one, there's cash that's outlaid to manufacture them. And then over the lease, we bring it back.

But the margins, especially the additional contribution margins for additional bracelets are high. And over time, we expect to see margin expansion in our business as we continue to have the same cost leverage for higher revenues. Yes.

I can appreciate that response. Final question. There have been rumors circulating that you guys have been approached for a buyout. I take it with a grain of salt, but is getting bought out something that you guys are considering?

I don't know where these rumors come from, but I'll share and I've shared before that we've been approached by a variety of strategic or financial firms to acquire us. Our decision of the Board, as always, will be what is best for the shareholders.

So I can't get any specifics on that, but I have shared that that is a situation that has occurred to us. And it's natural considering our performance in the market. We're a very high competitive rate. We're expanding very nicely in our technology, I believe, is highly coveted by other players and it could perform very well to help disrupt the criminal justice industry.

At this time, I will pass the call back to Ordan for closing remarks.

I want to thank you all for participating in today's call and for your interest in SuperCom. Please contact us directly if you have any additional questions. We look forward to sharing our progress with you on our next conference call, filings and press releases. Thank you very much, and have a good day.

This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.