SuperCom Q3 2026 Earnings Call - Revenue Up 21% But FX and Margin Squeeze Steal the Headline as SafeGenie Opens a New Front

Moderator/Operator, SuperCom: Ladies and gentlemen, good morning and welcome to SuperCom’s third quarter 2026 financial results and corporate update conference call. Participants of this call are advised that the audio of this conference call is being broadcast live over the internet. Joining me from SuperCom’s leadership team is Ordan Trabelsi, SuperCom’s President and Chief Executive Officer. I would like to remind you that during this call, SuperCom management may be making forward-looking statements, including statements that address SuperCom’s expectations for future performance or operational results. Forward-looking statements involve risks, uncertainties, and other factors that may cause SuperCom’s actual results to differ materially from those statements. For more information about these risks, uncertainties, and factors, please refer to the risk factors described in SuperCom’s most recently filed periodic reports on Form 20-F and Form 6-K, and SuperCom’s press release that accompanies this call, particularly the cautionary statements in it.

Today’s conference call includes EBITDA and non-GAAP financial measures that SuperCom believes can be useful in evaluating its performance. You should not consider this additional information in isolation or as a substitute for results prepared in accordance with GAAP. For a reconciliation of this non-GAAP financial measure to net income, a comparable GAAP financial measure, please see the reconciliation table located in SuperCom’s earnings press release that accompanies this call. Reconciliations for other non-GAAP financial measures and comparable GAAP financial measures are available there as well. The content of this call contains time-sensitive information that is accurate only as of today, November 12, 2026. Except as required by law, SuperCom disclaims any obligation to publicly update or revise any information to reflect events or circumstances that occur after this call. It is now my pleasure to turn the call over to SuperCom’s President and CEO, Ordan Trabelsi.

Ordan Trabelsi, President and Chief Executive Officer, SuperCom: Thank you. We are pleased to report continued growth in the third quarter of 2026. Revenue increased approximately 21% and EBITDA increased approximately 17% compared with the third quarter of 2025. For the first nine months of the year, EBITDA increased approximately 37% to $9.9 million. Our results over the last several quarters demonstrate the operating leverage and scalability of our business model. We provide proprietary electronic monitoring and public safety technology to local and national governments worldwide, and our performance reflects operational efficiencies, expansion into new markets, and deeper penetration in the markets we already serve. In the U.S., we now secured more than 50 new electronic monitoring contracts and expanded into 21 new states since mid-2024. Our profitability and stronger balance sheet also allow us to continue investing in our technology.

I would also like to discuss SafeGenie, a cybersecurity product suite we introduced in October for the real-time monitoring and control of autonomous AI agents. I will now turn to our third quarter financial results. Revenue increased approximately 21% to $7.5 million, compared with $6.2 million in the third quarter of 2025. Gross profit was $2.7 million, compared with $3.8 million in the prior year end period, and gross margin was 49.8% or 50%, compared with 60.8%. Operating loss was $0.3 million, compared with operating income of $0.6 million in the third quarter of 2025, primarily due to a $1.3 million foreign exchange loss. Non-GAAP operating income was $2.2 million. Foreign currency loss reflected an approximately 10% year-over-year increase in the average value of the shekel and the US dollar. I remind you that most of our operational costs for SuperCom Ltd. are in shekel.

GAAP net income was $0.1 million, compared with $0.7 million in the prior year period. Non-GAAP net income was $1.9 million, in line with the third quarter of 2025. EBITDA increased approximately 17% to $2.6 million, compared with $2.2 million, and EBITDA margin was 34.4%, compared with 34.6%. GAAP earnings per share were $0.01, compared with $0.14, and non-GAAP earnings per share were $0.3, compared with $0.39. For the first nine months of 2026, revenue increased approximately 14% to $23.2 million, and EBITDA increased approximately 37% to $9.9 million, compared with $20.4 million and $7.2 million, respectively, in the first nine months of 2025. Gross margin for the period was 57.8%. Excluding the extraordinary financial gains of $4.1 million reported in the first half of 2025, non-GAAP net income increased approximately 45% to $7.5 million, compared with $5.2 million.

We’ve also contributed to strengthen our capital structure. Over the past few years, we have reduced our net debt from close to $35 million to approximately $7 million. Our outstanding long-term debt carries a blended interest rate of approximately 6%, with no cash payments due until the end of 2028, flexibility to invest in our growth. Cash and cash equivalents total approximately $12.9 million as of September 30, 2026, compared with $7.4 million as of June 30, 2026, and $9.8 million at the end of 2025. In July, we raised gross proceeds of approximately $7.5 million through a registered direct offering of ordinary shares, strengthening our financial flexibility to continue executing on our pipeline. During the third quarter, we continued to deploy capital strategically to support customer onboarding, installations, and technology integration across our new contracts in the U.S. and Europe.

Finally, our book value of equity totaled $55.6 million as of September 30, 2026, compared with $47.8 million as of June 30, 2026. Let’s talk a little about SafeGenie and agentic AI. Before discussing our EM business more, I want to address SafeGenie, which we introduced in October. SafeGenie is a cybersecurity product suite for the real-time monitoring and control of autonomous AI agents. SafeGenie builds on technology and customer base of Safend, our wholly owned cybersecurity subsidiary. Electronic monitoring remains primary growth driver, while SafeGenie allows us to build on technology and customer relationships already within SuperCom. Safend’s kernel-level endpoint security technology has been deployed across millions of endpoints for thousands of customers, including government agencies, defense organizations, and enterprises. AI agents are spreading rapidly across enterprises. They can research group data and complete multi-step tasks across business systems without constant human direction.

The independence could also make an agent a potential insider threat, operating with employees’ access at machine speed and around the clock. Traditional security is built around people, devices, and approved applications, not autonomous software capable of choosing its next action in a statistical fashion. Current forecasts spending on securing AI will grow from approximately $2.8 billion in 2026 to almost $7.9 billion by 2028, averaging growth of approximately 55% a year. SafeGenie evaluates each action an AI agent attempts and either allows, flags, or blocks in real time. This can help prevent unauthorized actions and sensitive data leakage before they occur. Because enforcement occurs at the kernel-level on the device, SafeGenie can protect supported endpoints online or offline, including when AI agents run locally. Each decision follows the organization’s own policy rather than AI model judgment. It should also secure conventional generative AI use, including prompt protection.

Our cybersecurity engineers develop patent-pending methods to address security challenges specific to agentic AI. Safend’s current level of technology and longstanding relationships with government, defense, and enterprise customers provide an established foundation for SafeGenie. The initial rollout will focus on integrating SafeGenie with Safend infrastructure and operating at Safend’s existing customers directly and through Safend distribution channels across the U.S., Europe, and Asia. We then plan to offer SafeGenie to our government customers and additional enterprises. SafeGenie will be offered as a separate subscription alongside existing Safend licenses and maintenance agreements. This structure provides a potential new recurring revenue stream from Safend’s established customer base. Since introducing SafeGenie, we have received requests for demos from channel partners and customers. We are preparing initial versions for deployment with several existing customers. Margin performance.

Next, I want to discuss the operating leverage in our model and the factors that affect our margins. Many of our recent wins have displaced providers that have had these programs for decades. In Slovenia, Germany, Israel, and Norway, the prior providers have supported the programs for approximately 20 to 25 years. Winning against such established incumbents demonstrates the strength of our technology and our ability to meet the requirements of national electronic monitoring programs. At the outset of a new program, we incur upfront costs associated with onboarding, training, development, and deployment. As the program matures and additional monitoring units are deployed, those initial costs are spread across a larger recurring revenue base, increasing the contribution from each additional unit and creating operating leverage. For larger European programs, device revenue may be recognized upfront and recorded as a receivable, which is collected over the life of the program.

As those receivables are collected, cash flow improves even though the related revenue was recognized earlier. Over the life of the program, the recurring revenue base expands while initial deployment costs subside, improving the program’s margin profile. To support further margin expansion, we have taken several operational steps. First, we have consolidated and centralized operations in Europe, including logistics, equipment handling, and shipments out of one hub in Romania. We are also taking on more IT and support responsibilities directly, reducing our reliance on local partners and improving our margins. We have established our own 24/7 support capabilities across multiple projects. We are also using AI. Everybody hears me, yeah? I have a comment here. Moderator?

Moderator/Operator, SuperCom: Yes, we can hear you.

Ordan Trabelsi, President and Chief Executive Officer, SuperCom: Yeah. Okay, great. I had a comment here internally that they couldn’t hear. We’re also using AI in development, deployment of projects, and customer support. It’s already automated certain tasks, accelerated development, reduced costs in deployments and customer operations, and on all departments of our business. Technology is a key factor in European national tenders, which often use rigorous technology-based evaluations. Our wins across all five Nordic countries, operating against long-serving incumbents, demonstrate how our platform performs in competitive evaluations and provide relevant references for future tenders. I’ll now turn to our margin expansion strategy, which focuses on entering new markets and expanding within the markets we already serve. Our electronic monitoring business grew at a compound annual rate of approximately 30% over the four-year period ended in 2025, while our EBITDA grew at a compound annual rate of approximately 47% over the same period.

The higher EBITDA growth rate reflects the operational efficiencies we have built into the business and the leverage in our model as we scale. As a reminder, our European revenue includes some larger multi-year national contracts where revenue recognition can fluctuate meaningfully based on program-specific ordering cycles. In these programs, when a customer places a significant device order, the device value is typically recognized upfront and recorded as a receivable that is collected over the life of the program. As a result, quarters with large orders can show a step-up in revenue, while the related cash comes in steadily over time. Romania represented a significant portion of our European revenue in prior periods, but ordering activity temporarily moderated amid political uncertainty. As our European contract base has grown, Romania now presents a smaller share of our revenue.

The program remains active, but temporary decline in Romania masked strong growth across the rest of the electronic monitoring business. Excluding the impact of Romania, our underlying revenue would have grown approximately 40% between 2024 and 2025. In Europe, we have won more than 20 national projects and maintain a presence across all five Nordic countries. We believe there is room to expand further within these markets. Several European opportunities are expected to come up for bid over the next 24 months, including Italy. England remains a significant opportunity valued at more than 150 million British pounds. When we previously competed for the contract, we were in a different position as a company. At that time, we had a smaller market capitalization, a heavier debt load, and a less developed reference base than we have today.

Many of the markets we’re competing, particularly in Nordic countries, award contracts through objective, technology-based evaluation process rather than incumbent relationships. Our ability to win in these environments, often as an outside bidder, with no prior local presence, reflects the strength of our technology. We believe we are now better positioned to compete for this U.K. contract and others like it. As we diversify globally, the U.S. remains a high-growth market for us. Our strategy is to enter additional states and build a deeper presence within each one. To date, we have won more than 50 new electronic monitoring contracts in the U.S. since mid-2024 and expanded into 21 new states, with access to additional states through 18 regional service providers partnerships. We’re also seeing contract sizes increase over time, from small initial deployments to more recent wins of 100-250 simultaneous units and more.

Many of our U.S. wins have involved agencies and service providers transitioning from incumbent vendor and legacy systems to SuperCom’s PureSecurity platform. Every one of our five Texas contracts to date has involved replacing an incumbent provider. Our third Utah contract displaced a provider that had served the county for more than a decade, and our latest wins in New York and Indiana were also full incumbent displacements. These incumbent displacements reflect the performance of our platform and our ability to support government agencies directly, as well as regional service providers across different program structures. Our third Utah contract came through a recommendation from an existing SuperCom customer in another county, followed by a new agency-owned trial. The referral shows that satisfied customers are helping create new opportunities for us. Our technology also serves agencies launching electronic monitoring for the first time.

In Illinois, our 20th new state, a county sheriff’s office started PureOne as a platform for its newly established work release program. Of the 22 states where we currently operate, we’ve deployed into multiple counties in 11 of them we serve. Our U.S. presence is now supported by Leaders in Community Alternatives, our wholly owned subsidiary in California. LCA provides reentry and probation services that complement our core electronic monitoring technology. In June 2025, LCA secured a five-year reentry services contract valued at $2.5 million. Since acquiring LCA, SuperCom has secured more than $35 million in new contracts in California. These services allow us to address additional compliance and rehabilitation needs alongside our monitoring technology. Pipeline. To now their pipeline. In Sweden, in June, we announced that we had signed and launched a new national electronic monitoring project with Sweden’s Prison and Probation Service.

The total project value is estimated to range from $17 million, reflecting the previously announced base case scenario, to the $75 million budget published by the customer. The published budget reflects the potential for expansion through a higher number of active offenders and the general of capabilities such as alcohol monitoring, our PureOne GPS solution, and the PureOfficer mobile device. The contract allows the program to expand to as many as 6,000 active offenders, roughly six times the scale of the program we launched with the customer in 2019. Since our call, we’ve announced new U.S. contract wins in Texas, Utah, Illinois, Indiana, and New York. In Texas, we won a contract with the Juvenile Probation Agency in August. Sorry, I lost my voice in recent days. In October, we won two more contracts covering the adult and juvenile probation programs in a single county.

That brings us to five Texas contracts since entering the state in December 2025. All five displaced incumbent providers, and the three most recent awards followed multi-week live unit evaluations against competing solutions. In Utah, we secured our third contract in the state with the sheriff’s agency, displacing an incumbent of more than 10 years. Illinois became our 20th new U.S. state since mid-2024, where our first contract supports a county sheriff’s newly established work release program. Training and deployment began in October. In Indiana, our 21st new state, secured a direct contract with the Community Corrections Agency, covering both adult and juvenile programs. The agency selected PureOne after a field evaluation, fully displacing its incumbent provider. In New York, we secured our seventh contract in the state since mid-2024 with an adult probation parole agency. Also fully displaced incumbent, rollout is scheduled to begin this month.

This is an inherent lag between contract signing and revenue recognition. For some contracts, full deployment can take six months or more as customers replace existing units. In both Europe and the U.S., the customer ordering patterns can affect the timing and revenue recognition. Our U.S. electronic monitoring technology annualized recurring revenue run rate increased significantly, as per the PR. Many markets in the U.S. and Europe remain open to us. Our greater scale and financial stability allow us to pursue larger and more complex operations and opportunities. We are also evaluating select opportunities in Latin America, Asia Pacific, and other international markets. Electronic monitoring is not developed in many of these regions, but SuperCom has deployed solutions in more than 40 countries, giving us experience we can now draw on as these markets develop.

I am very pleased with the growth and profitability we have delivered over recent quarters. We continue to expand our electronic monitoring footprint across the U.S. and Europe. With SafeGenie, we have also extended our technology into one of the fastest-growing areas of cybersecurity and some of the biggest threats we are facing today with AI. With a stronger balance sheet, a larger customer base, and an expanding pipeline, we believe SuperCom is in its strongest position to date. I thank our employees around the world for their continued dedication and execution, as well as our customers and shareholders for their ongoing trust and support. This concludes our prepared remarks, and I will turn the call back to the operator for questions.

Moderator/Operator, SuperCom: Ladies and gentlemen, if you wish to ask a question on today’s call, you will need to press star, then the number 1 on your telephone. If you are using a speakerphone, please pick up your handset before entering your request and speaking on the call. If your question has been answered and you wish to withdraw your request, you may do so by pressing the pound key. Again, press star one on your telephone keypad to ask a question. One moment, please, for our first question. Our first questioner is Matthew Galinko with Maxim.

Matthew Galinko, Analyst, Maxim: Hey, thank you for taking my question. Can we go to the SafeGenie product for a moment? I know you have covered it in some detail, but I am hoping you could give us a little bit more on what is the realistic outcome, or what would be a successful outcome in your view, following launch? We see material revenue in 2027, and how does that look geographically? Do you expect it to be a pretty global product, or where do you anticipate demand initially coming from? Thanks.

Ordan Trabelsi, President and Chief Executive Officer, SuperCom: We have between 500,000 and 1 million endpoints at Safend, and the revenue is roughly $1 million. These products of AI security, they charge between $50 to $250 a year, so it’s roughly 50 times or more, up to 50 times what we’re currently getting from Safend, just for the existing customer base, the potential. That’s just the potential, of course. Doesn’t mean we’re going to convert everyone to this product, but there’s a huge potential there with our existing customer base, and we have initial versions that are close to be ready to deploy to our customers and our service providers, and that’s the current status of that.

The next versions will come afterwards, and here we’re deploying our unique capabilities or patent-pending methods to help secure autonomous AI agents on endpoints, and we’re starting with the endpoint customer base of Safend, which has been developed together with this technology for over 20 years.

Matthew Galinko, Analyst, Maxim: Great. Thank you. I was hoping maybe you could maybe give us an update on, maybe compare the pipeline you’re seeing in Europe versus the U.S. at this point, now that you’ve been in really in the market for a few quarters now in the U.S., you’re seeing traction, and you also have these pretty big opportunities in Europe on the horizon. How are you thinking about the respective pipelines and kind of where your mix goes depending on where you win?

Ordan Trabelsi, President and Chief Executive Officer, SuperCom: It’s a great question, and we grew our sales team one or two years ago, where it was basically management and a few bid managers. We developed a team of five people in the U.S., sales team, and in Europe, we have, I think, roughly three or four people. So we have an actual sales team now together with management and other personnel, and we have a very big pipeline. Just in Europe, the upcoming opportunity in England is over GBP 150 million, and there’s other opportunities that are very exciting in Europe. In the U.S., as we’re aware, it’s much larger than in Europe, and our sales team, which are all veterans in the States pretty much, are deploying our unique solutions, and we’re getting great traction, and we’re displacing incumbents left and right.

We have over 50 contract wins since mid-2024, and we expect the number of wins to continue and also the size of wins in the U.S. In Europe, we are at a larger scale. We started those projects at $100,000, $200,000. We went up to $1 million, $3 million, $5 million, $7 million, $33 million, and now up to $75 million. So, on both markets, we are effectively growing up the ladder and growing our customer base. There are other markets that we started looking into, like Asia Pacific, Latin America, Middle East, other regions where our technology could provide great service. There are some of our newer electronic monitoring, but we have experience working with new markets as well. Romania, for example, was a customer that never had electronic monitoring before. It was first with us. I think Croatia was as well, and a few other ones.

We are excited also to educate customers for the first time on electronic monitoring, and also go to existing customers, like what we saw in Sweden or Norway or Israel, that have been doing electronic monitoring for over 20, 25 years, but show them that we can do it in a better way, with better technology that is still proven across many, many different projects around the world. So we plan to do both.

Matthew Galinko, Analyst, Maxim: Great. Thank you. Maybe just one last one. Looking into 2027, and kind of as you are growing that earned revenue in the U.S., do you expect there to be value in adding to the sales team there? Or to your point, I think you said you are getting kind of word-of-mouth type marketing on the ground there. So, do you need more capacity on the ground, or do you think that the channel is working as it should?

Ordan Trabelsi, President and Chief Executive Officer, SuperCom: Again on that? Sorry, I did not hear you for a second. It broke out. On that last question.

Matthew Galinko, Analyst, Maxim: Yeah, looking at 2027, particularly in the U.S. market, do you see an opportunity to grow the sales team to help further accelerate that business or sustain the momentum, or is the existing headcount sufficient for continuing the growth in the U.S.?

Ordan Trabelsi, President and Chief Executive Officer, SuperCom: Right now, it’s sufficient. We saw an increase in expenses accordingly, and we think the team could do much more than what we’re seeing today. We developed new platforms with AI agents that are searching and crawling nonstop around the world for opportunities. There’s many opportunities. They’re scraping them, they’re finding all the information, they’re comparing it, they’re doing great work, and there’s a lot of work for the sales team to do currently. There’s not low-hanging fruit because most opportunities that we pursue, we win. In Europe, it was over 65% win rate. In the U.S., in many different locations like New York, all the recent projects were wins. In Texas, we just had a fifth one. So, we’re actually doing very, very well, and it’s spreading. The expansion in the U.S. is going great.

I’m very excited for it to actually improve as the salespeople get more familiar with the products and more products into customers’ hands, and the network effect starts to take place.

Matthew Galinko, Analyst, Maxim: Got it. Thank you.

Moderator/Operator, SuperCom: With no further questions in the queue, at this time, I will pass the call back to Ordan for closing remarks.

Ordan Trabelsi, President and Chief Executive Officer, SuperCom: Thank you, operator. I want to thank all of you for participating in today’s call and for your interest in SuperCom. We look forward to updating you through our filings, six-K releases, press releases, and next conference call. Thank you very much, and have a great day.

Moderator/Operator, SuperCom: I want to thank all of you for participating in today’s call and for your interest in SuperCom. We look forward to sharing our progress on our next conference calls, filings, and press releases. Thanks, and have a good day.