Name: AUTOSCOPE TECHNOLOGIES CORP Q2 2022 Earnings Call
Start: 2022-08-11T00:00:00.000Z

Executive Summary

Q2 2022 revenue was $2.82M, down 25.6% YoY, with diluted EPS of $0.01; gross margin fell to 71% as royalties decreased on component shortages while product sales rose on Echo adoption .
Mix shift was pronounced: royalties declined to $1.39M (from $2.48M YoY) while product sales increased to $1.43M (+10% YoY), lifting product gross margin to 50% versus 44% in Q2 2021 .
Management lowered full‑year gross margin outlook versus recent years due to ongoing supply chain constraints and inflation not offset by price increases; quarterly dividend of $0.12 was declared for payment on Aug 31, 2022 .
Street consensus (S&P Global) was unavailable for Q2 2022; vs‑estimate comparisons cannot be shown.
Near‑term stock catalysts: lower margin outlook and royalty pressure from Autoscope Vision components; offset by improving Echo product adoption, lower operating expenses, and continued capital returns via dividends .

What Went Well and What Went Wrong

RTMS Echo adoption drove product sales to $1.43M (+10% YoY) and lifted product gross margin to 50% (vs 44% YoY) .
Operating expenses declined 10% YoY to $1.85M in Q2, aided by higher capitalized software development, supporting non‑GAAP operating income of $395K in the quarter .
Management emphasized strong direct product demand and supply chain actions: “pleased with the rebound of our direct product sales due to expanding market acceptance of our Echo product line” and efforts to secure Vision components .

Royalties fell to $1.39M (from $2.48M YoY) as component shortages and higher alternative parts costs slowed production and delayed fulfillment, compressing royalty gross margin to 92% (from 96% YoY) .
Consolidated gross margin declined to 71% (−7pp YoY), and net income fell to $74K (from $752K YoY), reflecting lower royalty mix and supply chain inflation .
Management lowered gross margin outlook for the remainder of 2022, stating inflationary pressures will not be recovered through previously announced price increases .

Metric	Q4 2021	Q1 2022	Q2 2022
Revenue ($USD Millions)	$3.203	$2.752	$2.819
Diluted EPS ($USD)	-$0.04	$0.00	$0.01
Gross Margin %	72%	78%	71%
Product Sales ($USD Millions)	$1.437	$0.934	$1.432
Royalties ($USD Millions)	$1.766	$1.818	$1.387
Income from Operations ($USD Millions)	$0.250	$0.021	$0.145
Net Income ($USD Millions)	-$0.201	$0.017	$0.074

Segment breakdown (Q2 2022 vs prior year):

Segment	Q2 2021 Revenue ($M)	Q2 2022 Revenue ($M)	Q2 2021 Gross Profit ($M)	Q2 2022 Gross Profit ($M)
Intersection	$2.637	$1.456	$2.437	$1.305
Highway	$1.151	$1.363	$0.524	$0.690
Total	$3.788	$2.819	$2.961	$1.995

KPIs and operating metrics:

KPI	Q4 2021	Q1 2022	Q2 2022
Non‑GAAP Operating Income ($USD Thousands)	$517	$270	$395
Operating Expenses ($USD Millions)	$2.064	$2.115	$1.850
Capitalized Software (Quarter) ($USD Thousands)	$307	$313	$221
Cash & Cash Equivalents ($USD Millions)	$8.229	$4.407	$1.933

Metric	Period	Previous Guidance	Current Guidance	Change
Gross Margin Outlook	FY 2022	“Slightly lower than recent years due to supply chain inflation exceeding scheduled product price increases” (Q1 commentary)	“Lower than in recent years due to continuing supply chain component issues and inflationary pressures that will not be recovered through previously announced price increases”	Lowered
Quarterly Dividend per Share	Q2 2022	$0.12 per share approved May 10, 2022 (paid May 30)	$0.12 per share approved Aug 9, payable Aug 31, record Aug 25	Maintained

Note: The company furnished a press release and 10‑Q; no call transcript was furnished as an exhibit for Q2 2022 .

Topic	Previous Mentions (Q4 2021 and Q1 2022)	Current Period (Q2 2022)	Trend
Supply chain & inflation	Q4: labor shortages and component delays impacting product sales; price increases planned . Q1: “gross margins will be slightly lower” as supply chain inflation > price increases .	Management: gross margins will be lower than recent years; inflation not recovered via price increases; component shortages slowed royalties .	Worsening margin outlook
Product performance (Echo)	Q4: product sales +34% YoY; recovery noted . Q1: pipeline “highest level in years” .	Echo adoption increased product sales (+10% YoY) and lifted product GM to 50% .	Improving adoption/mix
R&D execution	Capitalized software increased (Q4 $307K; FY $485K) . Q1: continued investment and capitalized $313K .	Continued investment; $221K capitalized in Q2; focus on launching new video detection product line .	Ongoing investment
Capital allocation	Dividend policy initiated/continued; cash balance $8.23M at YE 2021 . Q1: dividend paid; cash declined with investing/dividends .	Dividend declared ($0.12); cash down to $1.93M as company bought $4.3M securities and paid $1.3M dividends YTD .	Continued returns; lower cash

“Our results for the quarter reflect the challenging operating environment… global supply chain disruptions led to component shortages and reduced royalties… pleased with the rebound of our direct product sales due to expanding market acceptance of our Echo product line.” — Andrew Berger, CEO .
“For the remainder of the year, ISS gross margins will be lower than in recent years due to continuing supply chain component issues and inflationary pressures… we remain focused on launching our new video detection product line… continued investment in critical components… continued cost management.” — Andrew Berger .
Prior quarter tone: “Product revenues are poised for a rebound… pipeline at highest level in years… gross margins will be slightly lower than recent years due to supply chain inflation exceeding scheduled product price increases.” — Andrew Berger (Q1) .

No earnings call transcript was furnished in company filings for Q2 2022; management commentary comes from the press release and 10‑Q .
No additional Q&A clarifications available; margin and supply chain outlook were directly addressed in prepared remarks .

Wall Street consensus (S&P Global) for Q2 2022 was unavailable at the time of research; vs‑estimate comparisons are not presented.
Given limited micro‑cap coverage and unavailable Street figures, investors should anchor on management’s margin outlook and mix trends until coverage resumes .

Royalty‑driven Vision business pressure is the core earnings headwind near term; component shortages and higher alternative input costs compressed royalties and overall gross margin .
Echo adoption and improving product gross margin are positives; Highway segment revenue grew YoY, partly offsetting Intersection declines .
Management’s lowered gross margin outlook signals continued near‑term margin compression; expect muted EPS until supply chain normalizes .
OpEx discipline and capitalized software support non‑GAAP operating income; however, lower royalties and mix shift cap overall profitability .
Cash declined to $1.93M as the company purchased $4.3M in securities and paid $1.3M in dividends YTD; dividend continuity at $0.12/share underscores shareholder return focus .
Segment view: Intersection (video) revenue fell sharply YoY; Highway (radar) improved, a helpful buffer if Echo momentum persists .
Actionable: Favorable risk/reward if Echo ramps and Vision components normalize; watch royalties, product GM, and any updates on supply chain recovery or pricing power in upcoming quarters .