Quarterhill (QTRH) Q3 2024 earnings summary

Executive summary

• Q3 revenue increased 12% year-over-year to $38 million, driven by strong enforcement operations and new contracts in multiple regions, with the tolling unit expanding mandates and bid activity.

• Strategic actions included integrating ITS businesses, selling non-core assets, optimizing costs, and enhancing technical capabilities.

• A $3.8 million dividend was received from WiLAN, and a share purchase agreement was signed to divest the Chinese joint venture, expected to generate $8 million in net cash.

• Reserves of $4 million were taken for two tolling contracts, impacting revenue and margins but expected to resolve legacy contract issues.

• Net loss from continuing operations was ($4.1) million for Q3 2024, or ($0.04) per diluted share.

Financial highlights

• Q3 2024 revenue was $38 million, up 12% year-over-year; year-to-date revenue reached $114.4 million, up 13%.

• Adjusted EBITDA for Q3 was -$2.8 million (vs. +$1.4 million last year); year-to-date Adjusted EBITDA was -$0.9 million (vs. +$0.5 million last year).

• Gross margin in Q3 was 13% (vs. 23% last year); year-to-date gross margin was 17% (vs. 21% last year).

• Excluding the $4 million reserve, Q3 revenue would have been $41 million and gross margin 24%.

• Revenue backlog at quarter end was $475 million, providing strong visibility for future periods.

Outlook and guidance

• Expectation to return to positive Adjusted EBITDA in Q4 2024 and grow top line and margins into 2025.

• EBITDA margin targeted at mid to high single digits in Q4, aiming for 10% or above in 2025.

• Revenue growth anticipated in high single digits to low double digits for 2025, with a significant portion of backlog to be realized next year.

• Positive cash from operations expected in Q4, with cash balances projected to grow by year-end.

• Strategic focus on advanced technology, AI, and machine learning to drive future growth in ITS.