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RH

REMARK HOLDINGS, INC. (MARK)·Q3 2023 Earnings Summary

Executive Summary

  • Q3 2023 was marked by a sharp revenue decline as China project completions slowed; revenue was $0.183M vs $2.812M in Q3 2022, while net loss narrowed to $7.2M ($0.39/share) and operating loss fell to $4.129M on lower G&A and cost of revenue. The company also completed ~$1.4M of projects that did not meet revenue-recognition criteria in the quarter .
  • Management emphasized an accelerated pivot away from China toward the U.S., U.K./Europe, Middle East, and South America, aided by channel partners (NVIDIA, PNY, Arrow, Intel) and pending cloud marketplace distribution with a top-3 cloud provider .
  • Operationally, Smart Campus deployments reached “more than 750” campuses, contributing ~$0.2M of Q3 revenue; operating loss decreased 39% YoY, driven by reductions in reserves, legal/professional fees, stock-based comp, and business development costs .
  • Potential near-term catalysts include large U.S. municipal safety/311 opportunities (including Clark County school weapons detection ~$30M) and a Brazil mobile recognition contract rollout, while liquidity remains tight (cash $0.270M) and notes payable remain high ($16.472M, past due) .

What Went Well and What Went Wrong

What Went Well

  • Operating loss decreased to $4.129M (from $6.727M YoY) as G&A fell via lower reserves for doubtful accounts, legal/professional fees, stock-based comp, and business development expense; net loss improved to $7.2M ($0.39/share) vs $8.9M ($0.85/share) YoY .
  • Strategic progress outside China: signed contracts in Brazil, Colombia, Malaysia, India; deepening partnerships with NVIDIA/PNY and sales-marketing collaboration with Arrow/Intel to geographically diversify and scale .
  • Smart Campus deployments expanded to more than 750 campuses, protecting >1.5M students and contributing approximately $0.2M in Q3 revenue .

Management quotes:

  • “We are on the right path… to successfully pivot our business to other parts of the world” .
  • “We expect to be able to announce an agreement… [adding] our AI computer vision solutions to one of the top cloud marketplaces” .

What Went Wrong

  • Revenue collapsed to $0.183M in Q3 (vs $2.812M YoY) as China project completions slowed due to lingering post–COVID recovery and rising U.S.–China political tensions; ~$1.4M of completed projects were not recognized in Q3 .
  • Liquidity risk: cash ~$0.270M, current liabilities ~$44.980M, including notes payable (past due) ~$16.472M and obligations to issue common stock ~$9.184M .
  • Dependence on project timing and revenue recognition criteria created volatility; despite completions, revenue did not reflect work done in the period .

Financial Results

Core Financials vs Prior Periods and YoY

MetricQ3 2022Q1 2023Q2 2023Q3 2023
Revenue ($USD Thousands)$2,812 $826 $3,167 $183
Operating Loss ($USD Thousands)$(6,727) $(3,043) $(3,959) $(4,129)
Net Loss ($USD Thousands)$(8,924) $(8,162) $(5,874) $(7,172)
Diluted EPS ($USD)$(0.85) $(0.63) $(0.42) $(0.39)

Segment/Project Revenue Contributions

Project/SegmentQ1 2023Q2 2023Q3 2023
Smart Campus (Education) Revenue ($USD Thousands)~$300 ~$700 ~$200
Smart Construction Revenue ($USD Thousands)—~$2,400 —
Smart Community Revenue ($USD Thousands)~$400 ——

KPIs and Balance Sheet Indicators

KPIQ1 2023Q2 2023Q3 2023
Smart Campus Installations (cumulative)650+ >700 >750
Cash ($USD Thousands)$364 $208 $270
Notes Payable, Current ($USD Thousands)$16,488 $16,480 $16,472 (past due)
Obligations to Issue Common Stock ($USD Thousands)$4,984 $5,597 $9,184
Weighted-Average Shares Outstanding (#)13,004,071 14,132,862 18,377,384

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
EBITDA breakevenExit Q4 2023“Goal remains to be EBITDA breakeven exiting the fourth quarter of 2023.” Not reiterated in Q3; focus on diversification and partner distribution Maintained (no explicit update)
Cloud marketplace SaaS distributionNear term“Launch our SaaS platform with a major cloud provider” (imminent) “Expect to announce… adding solutions to one of the top cloud marketplaces” shortly Timeline update; reaffirmed
International contract revenue contributionQ1 2024Not stated previouslyContracts in Brazil/Colombia/Malaysia/India should contribute “as early as the first quarter of 2024” New
Clark County schools safety solution2023–2024Pilot/early discussions referenced earlier “Expect… exciting opportunities, the $30 million opportunity” for gun/weapon detection Expanded pipeline visibility

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 2023)Previous Mentions (Q2 2023)Current Period (Q3 2023)Trend
Geographic diversificationExpanding into U.S./Europe; Middle East and LATAM plans; police-car mobile recognition in major South American city TAM outside China; partnerships to scale; Middle East (Saudi/NEOM) opportunity Pivot from China to U.S., U.K./Europe, Middle East, South America; signed contracts in multiple countries Accelerating outside China
Channel partnershipsSaaS initiative with top-3 cloud provider; partner WaitTime NVIDIA Metropolis; Intel collaboration; DSSL; WaitTime Deepened NVIDIA/PNY; Arrow/Intel sales-marketing collaboration; cloud marketplace pending Strengthening go-to-market
Public safety/311 AI agentIntroduced 311/911 agent; strong municipal interest City governance approvals; two major cities nearing finish line Smart Chat Agent released; 20 concurrent sessions; supports up to 40 languages Product maturation
China project executionSmart communities restarted; Smart Campus growth Stronger completions; Q2 revenue up YoY on construction/campus Completions slowed; ~$1.4M completed but not recognized Volatile; recognition timing
Regulatory/listing—Nasdaq compliance plan; extension to Oct 24, 2023 —No Q3 update noted
U.S. education safetyClark County pilots; top-5 district Continued focus $30M opportunity highlighted Pipeline visibility rising

Management Commentary

  • “We are… able to take that opportunity and scale to other cities… using the same technology platform… developed over the last 7 years.” (CEO) .
  • “We have already deepened our partnership relationships with both NVIDIA and PNY… [and] will be involved in the new product and future launches.” (CEO) .
  • “We are currently engaged in discussions with one of the top cloud computing companies… [expect] our AI computer vision solutions [to be] added to one of the top cloud marketplaces.” (CEO) .
  • “Operating loss decreased… due to decreases of $2.3M in reserve for doubtful accounts… $0.8M in legal and professional fees; $0.5M in stock-based compensation; and $0.3M in business development expense.” (VP Finance) .

Q&A Highlights

  • Q3 Q&A content was not available in the retrieved transcript; prepared remarks focused on diversification, partnerships, and municipal/public safety opportunities .

Estimates Context

  • Wall Street consensus estimates (S&P Global) for Q3 2023 could not be retrieved; therefore, comparisons vs consensus are unavailable. Values retrieved from S&P Global.

Key Takeaways for Investors

  • Revenue volatility is significant as China project execution and revenue recognition timing drive quarter-to-quarter results; Q3 revenue fell to $0.183M vs $2.812M YoY .
  • Cost discipline improved profitability metrics: operating loss down to $4.129M and EPS improved to $(0.39), reflecting meaningful G&A and cost reductions .
  • Liquidity remains a key risk: cash $0.270M with substantial current liabilities and past-due notes payable ($16.472M) and increasing obligations to issue common stock (~$9.184M) .
  • Strategic pivot appears credible: signed multi-country contracts, deepening with NVIDIA/PNY/Arrow/Intel, and a pending cloud marketplace listing to amplify distribution .
  • Public safety pipeline is a potential catalyst (Clark County ~$30M; migrant center/Department of Corrections deployments, 311 Smart Chat Agent); execution wins could be stock-moving .
  • Expect initial international contract revenue contributions “as early as Q1 2024,” creating a near-term inflection watchpoint .
  • With no formal numerical guidance in Q3 and consensus estimates unavailable, traders should focus on contract signings/launch milestones (cloud marketplace go-live, municipal awards) and liquidity actions.