Executive Summary

Q1 2022 revenue was $2.75M, down 7.6% year over year and sequentially lower vs Q4 2021; diluted EPS was $0.00 as net income fell to $17K amid higher operating expenses and the prior-year PPP loan forgiveness benefit rolling off .
Gross margin improved to 78% (from 72% in Q4 2021 and 76% in Q1 2021) on a higher royalty mix; product gross margin was 45% and royalties gross margin 94% .
Management flagged supply chain inflation and guided gross margins “slightly lower than recent years” for the remainder of 2022; product revenues are “poised for a rebound” given the strongest sales pipeline in years .
Additional Q1 context: Image Sensing Systems introduced Autoscope IntelliSight (AI-driven video detection) in Europe on March 29, 2022, reinforcing product momentum and Smart City positioning .

What Went Well and What Went Wrong

What Went Well

Mix-driven margin strength: Total gross margin rose to 78% (vs 76% in Q1 2021, 72% in Q4 2021) as royalty revenue held steady at $1.8M, supporting a 94% royalty gross margin .
Strategic pipeline and inventory action: “Product revenues are poised for a rebound as our sales pipeline is at the highest level in years... we have invested increased sums into inventories to help ensure supply chain stability” — Andrew Berger, Chairman & CEO .
Product platform advances: Autoscope IntelliSight introduced for Europe; AI- and ML-based detection platform enhances vehicle/bicycle/pedestrian detection and real-time data, supporting Smart City connectivity .

What Went Wrong

Top-line softness and timing: Product sales declined 20% YoY to $0.93M due to shipment timing; total revenue fell to $2.75M (vs $2.98M in Q1 2021) .
Higher operating expenses: OpEx increased 14% YoY to $2.12M on higher stock-based compensation and resumed travel, compressing operating income to $21K .
Tough YoY EPS comp: Net income fell to $17K and diluted EPS to $0.00, lapping prior-year PPP loan forgiveness that boosted Q1 2021 other income by $931K .

Financial Results

Metric	Q3 2021	Q4 2021	Q1 2022
Revenue ($USD Millions)	$3.272	$3.203	$2.752
Diluted EPS ($USD)	$0.11	$(0.04)	$0.00
Gross Margin (%)	82%	72%	78%
Operating Expenses ($USD Millions)	$1.978	$2.064	$2.115
Net Income ($USD Millions)	$0.613	$(0.201)	$0.017
Income from Operations ($USD Millions)	$0.709	$0.250	$0.021
Non-GAAP Operating Income ($USD Millions)	$0.941	$0.517	$0.270

Segment and Revenue Mix

Metric	Q3 2021	Q4 2021	Q1 2022
Autoscope Video Product Sales ($USD Millions)	$0.210	N/A	$0.164
RTMS Radar Product Sales ($USD Millions)	$0.595	N/A	$0.770
Product Sales Total ($USD Millions)	$0.805	$1.437	$0.934
Royalties ($USD Millions)	$2.467	$1.766	$1.818
Royalties Gross Margin (%)	96%	N/A	94%
Product Sales Gross Margin (%)	40%	45%	45%

KPIs and Balance Sheet Highlights

Metric	Q3 2021	Q4 2021	Q1 2022
Cash and Equivalents ($USD Millions)	$8.502	$8.229	$4.407
Operating Cash Flow ($USD Millions)	N/A	N/A	$(0.045)
Capitalized Software Development ($USD Millions)	N/A	$0.307	$0.313
Dividends Paid ($USD Millions)	N/A	N/A	$0.645
Inventories ($USD Millions)	$1.485	$1.429	$1.366

Actuals vs Wall Street Consensus (Q1 2022)

Metric	Actual	Consensus (S&P Global)	Surprise
Revenue ($USD Millions)	$2.752	N/A	N/A
Diluted EPS ($USD)	$0.00	N/A	N/A

Consensus unavailable via S&P Global for AATC’s Q1 2022; no estimates retrieved due to data access limitations.

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Gross Margin	FY 2022	None disclosed	“Slightly lower than recent years due to supply chain inflation exceeding scheduled product price increases”	Lowered (directional)
Product Revenues	FY 2022	None disclosed	“Poised for a rebound” with strongest pipeline in years	Improving (directional)
Inventory Strategy	FY 2022	None disclosed	Increased inventory investment to ensure supply chain stability	Proactive increase

No numeric ranges provided; guidance is directional commentary from management.

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3 2021)	Previous Mentions (Q4 2021)	Current Period (Q1 2022)	Trend
Supply Chain & Labor	Labor shortages delayed radar sales; expected to continue near term	Component delays to continue; controlling OpEx	Inflationary pressure; gross margins to be slightly lower; inventory increased to stabilize supply	Headwinds evolving from delays to inflation; mitigated by inventory actions
Product Performance (RTMS/Video)	RTMS Echo adoption expected to accelerate	Product sales +34% YoY; product GM 45%	Product sales down 20% YoY on shipment timing; rebound expected	Near-term timing issues; medium-term momentum
AI/Technology Initiatives	—	—	IntelliSight AI/ML video platform launched in Europe (traffic detection, Smart City-ready)	Strengthening innovation narrative
R&D & Software Capitalization	—	$307K capitalized in Q4 2021	$313K capitalized; stock-based comp lifted OpEx	Continued investment in software
Regional Trends	—	—	European IntelliSight rollout	Expanding international presence

Note: No Q1 2022 earnings call transcript was found; themes reflect press release commentary and related product announcements.

Management Commentary

“First-quarter royalty revenue for Image Sensing Systems was steady while product sales were hampered by timing of shipments. Product revenues are poised for a rebound as our sales pipeline is at the highest level in years. For the remainder of the year, gross margins will be slightly lower than the recent years due to supply chain inflation exceeding scheduled product price increases.” — Andrew Berger, Chairman & CEO .
“We have received high demand for trial and testing of [new products]... to help ensure stability of our supply chain we have invested increased sums into inventories.” — Andrew Berger .
Prior quarter context: “We are pleased with the recovery of ISS product sales during the last quarter... we expect labor shortages and supply chain component delays to continue throughout the year and remain focused on controlling operating expenses.” — Andrew Berger (Q4 2021) .
Prior quarter context: “ISS third quarter product sales were negatively impacted by labor shortages... we adjusted operating expenses to align with sales while continuing to invest in new products.” — Andrew Berger (Q3 2021) .

Q&A Highlights

An earnings call transcript for Q1 2022 was not available in our document sources; therefore, Q&A themes and clarifications cannot be provided from primary transcripts. Management’s press release comments indicate expected product rebound, margin pressure from inflation, and proactive inventory strategy .

Estimates Context

Wall Street consensus (S&P Global) for Q1 2022 EPS and revenue was unavailable for AATC at the time of analysis; comparisons to estimates cannot be made. This limits near-term “beat/miss” framing for micro-cap coverage gaps.

Key Takeaways for Investors

Revenue softness was primarily due to shipment timing; the royalty base remained stable, supporting improved total gross margin to 78% despite product sales declines .
Operating expenses increased on stock-based compensation and travel, compressing operating income and EPS; absent PPP forgiveness, YoY EPS comps were tougher .
Management expects inflation to pressure gross margins vs recent years, but is mitigating with inventory investment and pricing actions; watch mix (royalties vs product) as a key driver of margin variability .
Product momentum supported by Autoscope IntelliSight’s AI launch in Europe; Smart City alignment and multi-modal detection should bolster pipeline conversion in 2022 .
Near-term trading: stock moves likely keying on margin commentary and evidence of the forecasted product rebound; monitor quarterly product sales cadence and backlog conversion .
Medium-term thesis: stable royalty stream plus AI-led product innovation can sustain margins and growth through cycle; execution hinges on supply chain normalization and disciplined OpEx .

Sources: Q1 2022 8‑K and press release (May 16, 2022) ; Q4 2021 8‑K and press release (Mar 22, 2022) ; Q3 2021 8‑K and press release (Nov 15, 2021) ; IntelliSight launch (Mar 29, 2022) .

AUTOSCOPE TECHNOLOGIES CORP (AATC)·Q1 2022 Earnings Summary