[Management View]
Gross margin for Q2 2025 was 59.1%, up 9.5 percentage points YoY. Operating income rose sharply by 187% compared to the previous year, with operating margin nearly tripling to 15.1%. Management emphasized the scalability of their electronic monitoring technology and strong market penetration strategies, with new deployments consolidating multi-year contract growth in the US, Europe, and Israel.

[Outlook]
Management provided performance guidance, projecting a $2.3 billion market for electronic monitoring by 2028, with the US and Europe composing 95% of demand. They confirmed active evaluation of US acquisition opportunities to accelerate expansion, referencing the historical LCA acquisition's impact.

[Financial Performance]
Revenue for Q2 2025 was $7.14 million, reflecting a modest decline compared to $7.5 million in Q2 2024. Gross profit was $4.2 million, up 12.7% YoY. Net income for the quarter was $1.1 million compared to $2.2 million in the same quarter last year, which included $1.8 million of nonrecurring financial income. Non-GAAP net income was $2.2 million, compared to $3.3 million in the same quarter last year. Non-GAAP EPS was 49¢, down from $1.81 in the prior year period. EBITDA increased by 56%, reaching $2.25 million this quarter.

[Q&A Highlights]
Question 1: Can we start with where the opportunity is for expansion with the contract in Israel? Is there just kind of a layering in of your devices on the existing system, or do you need sort of expansion in the use of monitoring in the country to kind of expand within that contract?
Answer: On our last quarterly results, we announced 1,200 units delivered, and now we have surpassed 1,500. The project encompasses all EM programs in Israel, including GPS tracking, house arrest, alcohol monitoring, and domestic violence. Growth within existing programs and potential expansion into new ones are expected.

Question 2: As you think about the opportunities you have in Europe versus the more fragmented US market, looking out over the next four to six quarters, is the balance more in the US, or are there national programs that you're competing for in Europe that could also land?
Answer: In Europe, we continue to bid on projects, some small scale and some very large. The US market is expected to reach six times the size of Europe, with higher margins and faster growth potential. The US market is fragmented, allowing for faster growth through county-by-county expansion.

Question 3: You touched on the possibility of acquiring local service providers like you did with LCA. Your balance sheet cash position is stronger than it's been in quite a few years. How close are you looking at M&A as a potential for accelerating US growth compared to adding more salespeople in the US to grow organically?
Answer: We are in good relations with many resellers and have signed nine for operations and deployment. We are also discussing acquisition opportunities, which offer top-line synergies, cost synergies, and faster expansion into more geographies.

Question 4: Your strong earnings were clearly a function of margin expansion more than revenue growth. Can you give us a little bit of color regarding what the opportunities are for even higher margin expansion? Is the strong margin expansion a function of geographic mix or first-time sales versus follow-on sales?
Answer: Margin expansion is driven by operational leverage, economies of scale, and maturing multi-year contracts. The US market inherently offers higher margins due to centralized, cloud-based deployments. While quarterly margins may fluctuate, the long-term trend is positive.

Question 5: Would you say that your visibility on margin expansion is better than your visibility on revenue growth? Or is it the other way around?
Answer: Both revenue growth and margin expansion visibility are improving as we expand into more locations and diversify our customer base. The mix of projects and their stages makes it challenging to predict exact outcomes, but the general trend is positive.

[Sentiment Analysis]
Analysts expressed positive sentiment regarding SuperCom's strong earnings and margin expansion. Management's tone was optimistic about future growth opportunities, particularly in the US market.

[Quarterly Comparison]
| Metric | Q2 2025 | Q2 2024 |
|-------------------------|---------------|---------------|
| Revenue | $7.14 million | $7.5 million |
| Gross Profit | $4.2 million | $3.7 million |
| Gross Margin | 59.1% | 49.6% |
| Operating Income | $1.1 million | $0.4 million |
| Operating Margin | 15.1% | 5.3% |
| Net Income | $1.1 million | $2.2 million |
| Non-GAAP Net Income | $2.2 million | $3.3 million |
| Non-GAAP EPS | 49¢ | $1.81 |
| EBITDA | $2.25 million | $1.6 million |
| Cash and Cash Equivalents| $15 million | $5.7 million |
| Working Capital | $40.8 million | $26.1 million |
| Book Value of Equity | $37.3 million | $13.8 million |

[Risks and Concerns]
Management noted quarterly volatility in margins depending on project mix. Risks include macroeconomic uncertainties and ongoing global challenges, including those in Israel.

[Final Takeaway]
SuperCom reported substantial operating profitability improvement and margin expansion in Q2 2025. Leadership highlighted robust progress in US contract wins, technology deployments, and cash generation. The company is well-positioned to lead in the electronic monitoring market, with strong growth potential in both the US and Europe. Management remains committed to expanding recurring revenue streams, leveraging recent cash position improvements, and selectively pursuing US M&A to accelerate growth.