AUTOSCOPE TECHNOLOGIES CORP (AATC)·Q4 2021 Earnings Summary

Executive Summary

• Q4 revenue increased 11% YoY to $3.20M, but declined 2% QoQ as mix shifted toward lower-margin product sales; gross margin contracted 500 bps YoY to 72% and 1,000 bps QoQ from 82% .
• EPS swung to a loss of $(0.04) vs $0.07 in Q4’20 and $0.11 in Q3’21, driven by higher tax expense ($0.45M) and lower gross margin; GAAP operating income was $0.25M and non-GAAP operating income was $0.52M .
• Management highlighted a recovery in product sales and increased video royalties from new pedestrian detection, but expects labor shortages and supply chain component delays to persist into 2022 while focusing on OpEx control .
• Street estimates were unavailable via S&P Global at the time of analysis; investors will focus on supply chain normalization, RTMS Echo adoption trajectory, and 2022 product launches as catalysts .

What Went Well and What Went Wrong

What Went Well

• Product sales grew 34% YoY to $1.44M as highway market demand recovered in the quarter .
• Video product royalties benefited from the release of new pedestrian detection capabilities, supporting full-year royalty growth to $8.5M .
• Non-GAAP operating income improved to $0.52M in Q4 (vs $0.11M in Q4’20), reflecting operating cost discipline and capitalized software development .
• Management quote: “We are pleased with the recovery of ISS product sales during the last quarter… Video product royalties for the year have increased due to the release of new pedestrian detection capabilities… we expect labor shortages and supply chain component delays to continue throughout the year and remain focused on controlling operating expenses.” — Andrew Berger, CEO .

What Went Wrong

• Gross margin fell to 72% (vs 77% in Q4’20; 82% in Q3’21) as revenue mix shifted toward lower-margin product sales; product gross margin was 45% (vs 46% in Q4’20) .
• Tax expense rose to $0.45M (vs $(0.50)M benefit in Q4’20), contributing to the EPS swing to $(0.04) despite positive operating income .
• QoQ revenue slipped 2% to $3.20M (vs $3.27M in Q3), and OpEx increased sequentially to $2.06M (vs $1.98M in Q3), reflecting higher R&D despite prior-quarter cost alignment actions .

Financial Results

Segment revenue mix and trends:

KPIs and balance sheet snapshots:

Non-GAAP definition note: Non-GAAP operating income excludes amortization of intangible assets and depreciation (and, for certain periods, other nonrecurring items), and is provided to facilitate comparison of operating trends; it is not a substitute for GAAP .

Guidance Changes

Earnings Call Themes & Trends

No Q4 2021 earnings call transcript was found in the document set. Trends below synthesize management commentary across Q2, Q3, and Q4 press releases.

Management Commentary

• “We are pleased with the recovery of ISS product sales during the last quarter, which have been hampered by labor shortages in highway construction and supply chain component delays. Video product royalties for the year have increased due to the release of new pedestrian detection capabilities… we expect labor shortages and supply chain component delays to continue throughout the year and remain focused on controlling operating expenses.” — Andrew Berger, CEO .
• “We are very pleased with progress made in the ISS royalty business during the last quarter, which was driven in part by the introduction of pedestrian detection within our Autoscope Vision product line earlier in the year… We expect labor shortages in the highway market to continue into the fourth quarter of 2021.” — Andrew Berger, CEO (Q3) .
• “Through deployment of deep learning… the Autoscope Vision platform now detects pedestrians… The resultant data enables real-time activation of pedestrian calls and provide insights into the behaviors of vulnerable road users.” — Chad Stelzig, CEO, Image Sensing Systems (Q2) .
• “Within our highway segment we have experienced faster than anticipated adoption of our RTMS Echo product… central to achieving our organic growth objectives.” — Chad Stelzig (Q2) .

Q&A Highlights

• No Q4 2021 earnings call transcript was available in our document set; therefore, no Q&A highlights to report [No transcript found via ListDocuments for earnings-call-transcript in the period].

Estimates Context

• S&P Global consensus for Q4 2021 revenue and EPS was unavailable due to API request limit at the time of analysis; as a result, we cannot quantify Street beats/misses for this quarter [SPGI error: “Daily Request Limit… Exceeded”].
• Given the mix shift toward product sales and higher tax expense, internal expectations for EPS would likely have trended below prior-year levels, even with modest revenue growth; any estimate revisions will depend on supply chain normalization timing and 2022 product launch cadence .

Key Takeaways for Investors

• Mix shift matters: Higher product sales drove revenue growth but compressed margins (72% vs 77% YoY; 45% product GM), contributing to an EPS loss despite positive operating income .
• Tax dynamics were a notable swing factor: $0.45M expense vs a $(0.50)M benefit in Q4’20 materially impacted bottom-line results .
• Structural royalty support: Video royalties benefited from AI-enabled pedestrian detection on Autoscope Vision, underpinning higher-quality revenue streams .
• Execution vs constraints: Management is investing in new products for 2022 while expecting labor and component headwinds to persist; OpEx control remains a priority .
• Product cycle watch: RTMS Echo adoption and 2022 product introductions are key to sustaining growth as the company transitions from legacy platforms .
• Liquidity stable: Cash of $8.23M provides flexibility to navigate supply constraints and continue R&D investment .
• Dividend cadence was demonstrated in 2H21 ($0.12 in Aug and Nov); no update was provided with Q4 results .