Vislink Technologies, Inc. (VISL)·Q3 2018 Earnings Summary

Executive Summary

• Q3 2018 revenue was $8.33M, down sequentially from Q2 ($9.4M) and Q1 ($9.7M), with gross margin at 49.2%; adjusted EBITDA turned slightly positive at $0.07M and adjusted net loss improved to $0.52M as rightsizing actions took hold .
• Management executed $8.2M annualized cost savings (labor and non-labor) and is tracking an additional $1.3M, positioning the business to grow on a profitable basis; breakeven revenue per quarter reduced ~from $15M to ~$10M given ~50% margins .
• Operational headwinds included a defective sole-sourced component that caused returns and delayed payments, plus ~$1M of Q3 orders shifted to Q4; inventory reduction policy also trimmed short-term revenue to strengthen cash flow .
• Cash ended Q3 at $1.2M; the press release cites an additional $1.0M deposit on Oct 5 (not in Q3 cash), while the call references receipt on Aug 5—investors should note this timing discrepancy .
• No formal numerical guidance was provided; management emphasized a renewed focus on profitability, cash discipline, backlog execution in Q4, and strategic M&A aligned to streaming/services .

What Went Well and What Went Wrong

What Went Well

• Adjusted EBITDA of $0.07M and adjusted net loss of $0.52M reflect early benefits from cost actions; CEO: “we made significant progress toward our goal of reaching profitability” .
• Cost program largely completed: 65 positions eliminated; $7.3M labor savings + $0.9M non-labor savings achieved (total $8.2M), with ~$1.3M more expected from facility consolidation, materially lowering the breakeven level .
• Product/partnership momentum: TSM-2020 launched (airborne video downlink), strategic partnership with Cogent, first public display of Panasonic collaboration with ultra-low latency upgrade, new Advent SATCOM products, and official supplier designation for Volvo Ocean Race—supporting future growth vectors across broadcast and public safety .

What Went Wrong

• Revenue slipped to $8.33M due to eliminated low-value sales and operational issues; gross margin declined sequentially (49.2% vs. 52.4% in Q2) .
• Supplier defect in a sole-sourced board caused customer returns and delayed payments; ~$1M of expected shipments slid from Q3 to Q4, impacting cash conversion and top-line timing .
• Liquidity tight at quarter-end ($1.2M), with a subsequent $1.0M deposit noted; investors should be mindful of working capital management and timing differences between release and call references .

Financial Results

Sequential Performance (Q1 → Q2 → Q3 2018)

Notes: Q2 net loss and EBITDA were presented in the call’s non-GAAP discussion; Q1 includes both GAAP and adjusted non-GAAP figures as provided .

Year-over-Year (Q3 2017 vs. Q3 2018)

Balance Sheet and Working Capital KPIs

Guidance Changes

Management did not issue numerical guidance ranges in Q3 materials; emphasis remained on profitability, cash flow, backlog execution, and strategic alignment .

Earnings Call Themes & Trends

Management Commentary

• “In the third quarter, we made significant progress toward our goal of reaching profitability…steps to right-size our business resulted in reductions in our revenues due to eliminating low-value sales, but better position us for stable growth” — Roger Branton, CEO .
• “Total completed, labor and non-labor annual savings increased to $8.2 million…we continue to track an additional $1.3 million…Consolidation of the Colchester site is expected to be completed in December 2018” .
• “One issue…a critical supplier…shipped defective boards…resulted in some customer returns and delayed payments…we have moved to another more qualified U.S. supplier” .
• “We reduced our inventory from $16 million in Q2 to roughly $14 million in Q3, thereby increasing our cash flow” .
• “We have a quality backlog to deliver in Q4…actively recruiting senior staff…complete our global growth strategy taking us into 2019 and beyond” .

Q&A Highlights

• The available transcript in our source contains prepared remarks and concluding handoff to Q&A but does not include the Q&A content itself; key clarifications on supplier defects, order slippage (~$1M to Q4), inventory policy changes, tighter payment terms, and breakeven math were provided in management’s prepared section .
• Prior quarter commentary indicated cyclicality and the impact of missing a single large contract YoY, reinforcing caution around quarterly lumpiness .
• Management reiterated the primacy of achieving profitability and cash flow, even at the expense of short-term top-line, which frames near-term execution priorities .

Estimates Context

• Wall Street consensus (S&P Global) for Q3 2018 EPS and revenue was not retrievable due to data access limits; therefore, estimate comparisons are unavailable at this time. Values were intended to be retrieved from S&P Global but were unavailable.
• Given no formal guidance and unavailable consensus data, near-term estimate revisions will likely center on lower revenue trajectory, slightly better margins from cost actions, and improving adjusted EBITDA profile as operational issues normalize .

Financial Details and KPIs

Key Takeaways for Investors

• Rightsizing is translating into improved adjusted results despite revenue pressure; watch for sustained positive adjusted EBITDA and margin stability around ~50% as a proof point for breakeven claims .
• Operational hiccups appear addressed (supplier switch); the ~$1M order shift and stricter “book-and-ship” policy suggest more disciplined cash conversion, albeit with near-term revenue volatility .
• Liquidity remains tight; monitor cash, AR collections, and inventory reduction trajectory to ensure working capital improvements persist into Q4 .
• Product and partnership cadence (TSM‑2020, Panasonic demo, Advent SATCOM, Volvo Ocean Race) supports the broadcast/public safety thesis; execution converting this into backlog and shipments is the near-term catalyst .
• With no formal guidance and unavailable consensus data, the narrative is driven by operational delivery in Q4 backlog, cash discipline, and any strategic M&A updates focused on streaming/services adjacencies .
• Note and reconcile minor disclosure timing discrepancies (e.g., the additional $1M deposit date) as part of diligence when tracking cash flows .
• Trading implication: headlines on adjusted EBITDA turning positive and cost actions completed could support sentiment; however, top-line variability and liquidity constraints argue for caution until Q4 execution confirms backlog conversion and improved cash metrics .