Duos Technologies Group Inc (DUOT) 2023 Q1 法說會逐字稿

Good afternoon, and welcome to Duos Technologies' first-quarter 2023 earnings conference call. Joining us for today's call are Duos's CEO, Chuck Ferry, and CFO, Andrew Murphy. Following their remarks, we will open the call for your questions. Then, before we conclude today's call, I'll provide the necessary cautions regarding the forward-looking statements made by management during this call.

下午好，歡迎參加 Duos Technologies 2023 年第一季度收益電話會議。參加今天電話會議的有 Duos 首席執行官 Chuck Ferry 和首席財務官 Andrew Murphy。在他們發表講話後，我們將開始電話詢問您的問題。然後，在我們結束今天的電話會議之前，我將就管理層在本次電話會議期間發表的前瞻性聲明提供必要的警告。

Now I would like to turn the call over to Duos's CEO, Chuck Ferry. Sir, please proceed.

現在我想將電話轉給 Duos 的首席執行官 Chuck Ferry。先生，請繼續。

Welcome, everyone, and thank you for joining us. Earlier today, we issued a press release announcing our financial results for the first quarter as well as other operational highlights. A copy of the press release is available in the Investor Relations section of our website. I encourage all listeners to view that release as well as our 10-Q filing with the SEC to better understand some of the details we'll be discussing during our call. Now let's get started.

歡迎大家，感謝您加入我們。今天早些時候，我們發布了新聞稿，宣布第一季度的財務業績以及其他運營亮點。我們網站的投資者關係部分提供了新聞稿的副本。我鼓勵所有聽眾查看該新聞稿以及我們向 SEC 提交的 10-Q 文件，以更好地了解我們將在電話會議中討論的一些細節。現在讓我們開始吧。

We began the year building on the significant momentum we've generated over the past several quarters, which is on track to deliver on our financial and operational goals for 2023. In the first quarter, we increased revenues 84% to $2.64 million and gross margin 142% to $537,000.

我們以過去幾個季度產生的強勁勢頭為基礎，開始了新的一年，有望實現 2023 年的財務和運營目標。第一季度，我們的收入增加了 84%，達到 264 萬美元，毛利率也增加了142% 至 537,000 美元。

Additionally, over the last 12 months, we generated approximately $16.2 million in revenues, underscoring our ability to deliver long-term performance over a sustained period and outside of quarterly fluctuations. Growth during that time has come from a diversified pool of new customer contracts, add-on sales to existing agreements and an increasing stream of recurring revenues as we expand our customer base as well as the breadth of our artificial intelligence offerings.

此外，在過去 12 個月中，我們產生了約 1620 萬美元的收入，這突顯了我們在持續一段時間內且不受季度波動影響的情況下提供長期業績的能力。在此期間的增長來自於多元化的新客戶合同、現有協議的附加銷售以及隨著我們擴大客戶群以及人工智能產品的廣度而不斷增加的經常性收入。

By the end of this year, we expect to have more than 50 commercialized artificial intelligence use cases covering a wide range of railcar inspection points including several derailment-specific indicators along with newly developed AI, specific to passenger railcars.

到今年年底，我們預計將有超過 50 個商業化人工智能用例，涵蓋廣泛的軌道車檢查點，包括多個脫軌特定指標以及新開發的針對客運軌道車的人工智能。

We have also remained in active discussions with many congressional leaders, regulators, rail operators, and other major stakeholders in providing support and technical information for the Rail Safety Act, which is continuing to make its way through Congress. Current versions of the bill include our technology as one of several types of wayside detection systems. While our operational roadmap is not reliant on this bill passing, we have seen increased levels of interest from a wide range of rail operators and railcar owners who are looking to accelerate their technology investments to improve safety standards.

我們還與許多國會領導人、監管機構、鐵路運營商和其他主要利益相關者保持積極討論，為正在國會繼續審議的鐵路安全法案提供支持和技術信息。該法案的當前版本將我們的技術作為幾種路邊檢測系統之一。雖然我們的運營路線圖並不依賴於該法案的通過，但我們看到眾多鐵路運營商和鐵路車所有者的興趣日益濃厚，他們希望加快技術投資以提高安全標準。

Work on our subscription offering is moving at full speed ahead. With the initial sites for Duos-owned portals having been identified, this new offering and pricing model will dramatically increase our potential customer base while also expanding the margins and predictability of our revenues over the long term.

我們的訂閱服務工作正在全速推進。隨著 Duos 擁有的門戶網站的初始站點已經確定，這種新的產品和定價模式將極大地增加我們的潛在客戶群，同時也擴大我們長期收入的利潤和可預測性。

With our backlog at $9.4 million, we believe we have strong visibility into performance over the next -- over the coming quarters, as well as further confidence in our long-term growth outlook. Our mission remains focused on the long-term growth and profitability of the company, and we plan to build on our current momentum to guide a strong performance throughout the remainder of 2023.

憑藉 940 萬美元的積壓訂單，我們相信我們對未來幾個季度的業績有很強的預見性，並對我們的長期增長前景更有信心。我們的使命仍然專注於公司的長期增長和盈利能力，我們計劃在目前的勢頭基礎上，在 2023 年剩餘時間內實現強勁的業績。

With that overview complete, I will now turn the call over to our CFO, Andrew Murphy, to walk us through the financial results for the quarter as well as our outlook for the year before we dive into industry developments. Andrew?

概述完成後，我現在將把電話轉給我們的首席財務官安德魯·墨菲 (Andrew Murphy)，在我們深入了解行業發展之前，他將向我們介紹本季度的財務業績以及對一年的展望。安德魯？

Thank you, Chuck. I wanted to reiterate Chuck's sentiments on Duos's progress over the last several years. We're very happy to see our trailing 12-months revenue climb to $16.2 million, an 8% increase over full-year 2022 revenue and a 96% increase over the company's performance in 2021. We remain encouraged by the commercial opportunities that have begun to present themselves thanks to the diligence of our commercial team and some of the recent events around derailments and subsequent legislative activity.

謝謝你，查克。我想重申 Chuck 對過去幾年 Duo 進步的看法。我們很高興看到過去 12 個月的收入攀升至 1620 萬美元，比 2022 年全年收入增長 8%，比公司 2021 年業績增長 96%。我們仍然對已經開始的商業機會感到鼓舞感謝我們商業團隊的勤奮以及最近發生的一些有關脫軌事件和隨後的立法活動。

That said, as we look ahead, 2023 is not without its challenges. The primary challenge we anticipate is timing of contracts and revenue recognition. As such, we anticipate we will see a slowdown in the second quarter due to delays by customers before picking up again in the latter half of 2023. We currently do not anticipate that this will change our overall guidance, but the timing within quarters will be challenging to predict.

儘管如此，展望未來，2023 年並非沒有挑戰。我們預計的主要挑戰是合同的時間安排和收入確認。因此，我們預計，由於客戶的延誤，我們將在第二季度看到放緩，然後在 2023 年下半年再次回升。我們目前預計這不會改變我們的整體指導，但季度內的時間安排將是難以預測。

In spite of these challenges, we're continuing to see subscription opportunities present themselves, and the company will continue to focus on growing on its recurring revenue services and improve profitability and ensure long-term financial health of the organization.

儘管面臨這些挑戰，我們仍然看到訂閱機會不斷出現，公司將繼續專注於發展其經常性收入服務，提高盈利能力，並確保組織的長期財務健康。

Now let's get into our results for the first quarter. Total revenue for the quarter increased 84% to $2.64 million compared to $1.44 million in Q1 of 2022. Total revenue for Q1 represents an aggregate of approximately 1.8 million of technology systems revenue and approximately $838,000 (sic - see press release, "$816,000") in recurring services and consulting revenue. The increase in revenues was driven by progress in the manufacturing of two high-speed passenger railcar inspection portals for a transit customer and successful delivery of artificial intelligence detections models for a number of our freight customers.

現在讓我們來看看第一季度的業績。與 2022 年第一季度的 144 萬美元相比，該季度的總收入增長了 84%，達到 264 萬美元。第一季度的總收入總計約 180 萬美元的技術系統收入和約 838,000 美元（原文如此 - 請參閱新聞稿，“816,000 美元”）經常性服務和諮詢收入。收入增長的推動因素是為一家交通客戶製造兩個高速客運鐵路車檢查門戶的進展以及為我們的一些貨運客戶成功交付人工智能檢測模型。

Cost of revenues for the quarter increased 73% to $2.11 million compared to $1.22 million in Q1 2022. The increase in cost of revenues was driven by a similar increase in the cost of technology systems stemming from the manufacturing of the high-speed passenger railcar inspection portals.

與 2022 年第一季度的 122 萬美元相比，本季度的收入成本增長了 73%，達到 211 萬美元。收入成本的增長是由於高速客運鐵路車檢查製造所產生的技術系統成本的類似增長所致門戶網站。

Gross margin for the quarter increased 142% to $537,000 compared to $222,000 in Q1 of 2022. The improvement in gross margin was driven by higher revenues related to the high-speed RIPs, coupled with the additional algorithms deployed during the first quarter of 2023.

與 2022 年第一季度的 222,000 美元相比，本季度的毛利率增長了 142%，達到 537,000 美元。毛利率的改善是由於與高速 RIP 相關的收入增​​加以及 2023 年第一季度部署的額外算法推動的。

Operating expenses for the quarter decreased 5% (sic - see press release, "6%") to $2.72 million (sic - see press release, "$2.68 million") compared to $2.86 million in Q1 2022. There was an increase in sales and marketing costs related to additional investment in staff. And additionally, general and administrative costs decreased primarily due to a year-over-year reduction in non-cash employee compensation charges.

與 2022 年第一季度的 286 萬美元相比，本季度的運營費用下降 5%（原文如此 - 參見新聞稿，“6%”）至 272 萬美元（原文如此 - 參見新聞稿，“268 萬美元”）。營銷成本與對員工的額外投資有關。此外，一般和管理成本下降主要是由於非現金員工薪酬費用同比減少。

The net loss for the quarter totaled $2.18 million compared to a net loss of $2.64 million in Q1 of 2022. The improvement in the net loss was driven by the higher margins stemming from the passenger RIPS, increased services and little to no change in the operating expenses of the business.

本季度的淨虧損總計 218 萬美元，而 2022 年第一季度的淨虧損為 264 萬美元。淨虧損的改善是由於乘客 RIPS 帶來的利潤率提高、服務增加以及運營幾乎沒有變化而推動的。企業的開支。

Now let's discuss the balance sheet. We ended the quarter with approximately $4.3 million in cash and cash equivalents compared to $1.12 million at December 31, 2022. We have an additional $717,000 in receivables, bolstering our near-term liquidity position to approximately $5.1 million. We also have $1.5 million of inventory consisting primarily of long-lead items for two pending RIP installations. And as previously disclosed, we raised approximately $4 million during this quarter to support the build-out of our subscription RIP business.

現在我們來討論一下資產負債表。截至本季度末，我們的現金和現金等價物約為 430 萬美元，而截至 2022 年 12 月 31 日為 112 萬美元。我們還有 717,000 美元的應收賬款，使我們的近期流動性狀況達到約 510 萬美元。我們還有價值 150 萬美元的庫存，主要包括用於兩個待定 RIP 安裝的長周期產品。正如之前所披露的，我們在本季度籌集了約 400 萬美元，用於支持我們訂閱 RIP 業務的擴展。

In summary, our cash position is strong. And while we expect a near-term increase in spend and inventory levels to support our commercial efforts, we'll continue to monitor supply chain to reduce financial impacts where possible, while continuing to make thoughtful investments to improve our inventory and speed of installation. We are happy to report that our investment of inventory during late-2022 allows Duos to be staged to begin delivering freight-focused portals during 2023 as we've procured some of the key long-lead items for approximately two portals.

總而言之，我們的現金狀況強勁。雖然我們預計支出和庫存水平近期會增加以支持我們的商業努力，但我們將繼續監控供應鏈，以盡可能減少財務影響，同時繼續進行深思熟慮的投資，以提高我們的庫存和安裝速度。我們很高興地報告，我們在 2022 年末的庫存投資使 Duos 能夠在 2023 年開始交付以貨運為重點的門戶網站，因為我們已經為大約兩個門戶網站採購了一些關鍵的長期項目。

I'd now like to provide an update on our financial projections before turning the call back over to Chuck. At the end of 2022, contracts and backlog represented approximately $10.7 million revenue, of which approximately $2.6 million was recognized during the first quarter. Coupled with additional change orders on existing customers' projects, at the end of the first quarter, backlog stands at $9.4 million, of which approximately $7.7 million is expected to be recognized during the remainder of 2023. The balance of the contract backlog is comprised of multi-year service and software agreements as well as project revenues.

現在，我想在將電話轉回給查克之前提供有關我們財務預測的最新信息。截至 2022 年底，合同和積壓訂單收入約為 1070 萬美元，其中約 260 萬美元在第一季度確認。加上現有客戶項目的額外變更訂單，截至第一季度末，積壓訂單金額為 940 萬美元，其中約 770 萬美元預計將在 2023 年剩餘時間內得到確認。積壓合同餘額包括：多年服務和軟件協議以及項目收入。

Based on these commitments, committed contracts and near-term pending orders that are already performing or scheduled to be executed throughout the remainder of 2023, we are reiterating revenue [guidance] expectations for the fiscal year ended December 31, 2023. We expect total revenue for 2023 to range between $20 million and $21 million, representing an increase of 33% to 40% compared to 2022.

根據這些承諾、已經履行或計劃在 2023 年剩餘時間內執行的已承諾合同和近期待定訂單，我們重申截至 2023 年 12 月 31 日的財年的收入[指導]預期。我們預計總收入2023 年將在 2000 萬美元至 2100 萬美元之間，較 2022 年增長 33% 至 40%。

We expect our improvement in operating results to be reflected over the course of the full year in 2023. As a result of customer timing and other factors, we expect revenues in the second quarter to be similar or slightly lower compared to the first quarter of 2023 before ramping up more significantly in the latter half of the year.

我們預計運營業績的改善將在 2023 年全年得到體現。由於客戶時間安排和其他因素，我們預計第二季度的收入與 2023 年第一季度相似或略有下降下半年將出現更大幅度的增長。

That concludes my financial commentary. I'll now pass the call back over to Chuck.

我的財務評論到此結束。我現在將把電話轉回給查克。

Thanks, Andrew. I'll now provide some brief operational updates before getting into questions.

謝謝，安德魯。現在，在提出問題之前，我將提供一些簡短的操作更新。

Beginning with the macro industry view, as we noted during our last update, due to several widely publicized derailments in recent months, there has been a collective call to action on creating legislation to improve rail safety. Because of our cutting-edge technology, which in the bill is called a machine vision or camera wayside detection system, we've been asked to provide input by several legislators who are sponsors of the proposed Railway Safety Act.

從宏觀行業觀點開始，正如我們在上次更新中指出的那樣，由於近幾個月來幾起廣為人知的脫軌事件，人們集體呼籲採取行動，制定立法以改善鐵路安全。由於我們的尖端技術（在該法案中被稱為機器視覺或攝像頭路邊檢測系統），我們已被幾位立法者要求提供意見，他們是擬議的鐵路安全法案的發起人。

A portion of the bill -- of the draft bill includes language around the definition and use of wayside detection systems. A recent development is that the [Act] Senate Bill 576 has just been passed by the Committee and is now being prepared for an expected vote, hopefully, in the next few months. Our hope is that we will see a rail safety bill passed at some point.

該法案草案的一部分包括有關路邊檢測系統的定義和使用的語言。最近的進展是，委員會剛剛通過了參議院第 576 號法案，目前正在準備進行預期投票，希望在未來幾個月內進行。我們希望能夠在某個時候看到鐵路安全法案獲得通過。

We must also acknowledge that these developments can take time. It may be many more months before a bill is passed after which the FRA will need to write the regulations around it. To be clear, our growth goals are not dependent on these positive developments coming to fruition. That said, this impending legislation is certainly an inflection point for us and could potentially accelerate the demand for our technology.

我們還必須承認，這些進展可能需要時間。法案可能還需要幾個月的時間才能通過，之後法蘭克福機場將需要圍繞該法案製定法規。需要明確的是，我們的增長目標並不依賴於這些積極進展的實現。也就是說，這項即將到來的立法對我們來說無疑是一個轉折點，並且可能會加速對我們技術的需求。

Now, moving onto operational updates. As we've discussed on previous calls, one of the core components of our values has been a commitment to achieving operational and technical excellence. We believe this approach leads to higher customer satisfaction and improved new deal closure rates. Our ability to use data analytics to monitor and improve performance has been instrumental in our improved output.

現在，轉向操作更新。正如我們在之前的電話會議中所討論的，我們價值觀的核心組成部分之一是致力於實現卓越的運營和技術。我們相信這種方法可以提高客戶滿意度並提高新交易達成率。我們使用數據分析來監控和提高績效的能力對於提高產出發揮了重要作用。

In the first quarter, our RIPs performed over 1.7 million comprehensive railcar scans, of which more than 238,000 were unique railcars. This metric encompasses all of the railcar scanned at locations across the US, Canada, and Mexico, representing approximately 15% of the total freight car population in North America. We expect this number to continue growing as the number of RIPs and customers in our network expands.

第一季度，我們的 RIP 進行了超過 170 萬次全面的軌道車掃描，其中超過 238,000 輛是獨特的軌道車。該指標涵蓋了在美國、加拿大和墨西哥各地掃描的所有鐵路車，約佔北美貨運車總數的 15%。我們預計隨著我們網絡中 RIP 和客戶數量的擴大，這個數字將繼續增長。

We have also just completed an important technical test that verifies our ability to image, acquire, and analyze trains moving up to 125 miles an hour. The unique acquisition architecture designed to capture and store high-resolution images at high speed is a culmination of more than a year's worth of development effort across several disciplines, including hardware --

我們還剛剛完成了一項重要的技術測試，驗證了我們對時速高達 125 英里的列車進行成像、採集和分析的能力。旨在高速捕獲和存儲高分辨率圖像的獨特採集架構是跨多個學科（包括硬件）一年多開發努力的結晶——

One moment, please, while we're experiencing technical difficulties.

請稍等一下，我們正遇到技術困難。

One moment, please.

稍等一會兒。

Please go ahead.

請繼續。

Okay. Everybody, we apologize for the technical difficulties, but we are back and we'll continue with the earnings call.

好的。大家，我們對技術困難表示歉意，但我們回來了，我們將繼續召開財報電話會議。

Moving on to operational updates. As we've discussed on previous calls, one of the core components of our values has been a commitment to achieving operational and technical excellence. We believe this approach leads to higher customer satisfaction and improved deal closure rates. Our ability to use data analytics to monitor and improve performance has been instrumental in our improved output.

繼續進行操作更新。正如我們在之前的電話會議中所討論的，我們價值觀的核心組成部分之一是致力於實現卓越的運營和技術。我們相信這種方法可以提高客戶滿意度並提高交易完成率。我們使用數據分析來監控和提高績效的能力對於提高產出發揮了重要作用。

In the first quarter, our RIPS performed over 1.7 million comprehensive railcar scans, of which more than 238,000 were unique railcars. This metric encompasses all railcars scanned at all locations across the United States, Canada and Mexico, representing approximately 15% of the total freight car population in North America. We expect this number to continue growing as the number of RIPs and customers in our network expands.

第一季度，我們的 RIPS 執行了超過 170 萬次全面的軌道車掃描，其中超過 238,000 輛是獨特的軌道車。該指標涵蓋了在美國、加拿大和墨西哥所有地點掃描的所有鐵路車，約佔北美貨運車總數的 15%。我們預計隨著我們網絡中 RIP 和客戶數量的擴大，這個數字將繼續增長。

We have also just completed an important technical test that verifies our ability to image, acquire, and analyze trains moving at up to 125 miles an hour. The unique acquisition architecture designed to capture and store high-resolution images at high speed is a culmination of more than a year's worth of development effort across several disciplines, including hardware engineering, IT, and software.

我們還剛剛完成了一項重要的技術測試，驗證了我們對時速高達 125 英里的列車進行成像、採集和分析的能力。旨在高速捕獲和存儲高分辨率圖像的獨特採集架構是跨多個學科（包括硬件工程、IT 和軟件）一年多開發努力的結晶。

Within our AI operations, we have also continued to improve the software supporting our existing RIP solution. Our teams are actively working on the next set of technical upgrades, including an updated version of our Centraco software platform or user interface, which is expected to go live in Q3 of this year. Version 3.8 improves user-interface features, computing speed, storage, and more naturally aligns with mechanical car inspection workflow.

在我們的 AI 運營中，我們還繼續改進支持現有 RIP 解決方案的軟件。我們的團隊正在積極致力於下一組技術升級，包括 Centraco 軟件平台或用戶界面的更新版本，預計將於今年第三季度上線。 3.8 版改進了用戶界面功能、計算速度、存儲，並且更自然地與機械汽車檢查工作流程保持一致。

To date, we have deployed 37 AI use cases with plans to reach more than 50 by year end. Our upcoming applications will have a particular focus on finding defects that cause train derailments, including specific AI use cases for passenger rail and special models that take advantage of our patent-pending oblique vehicle undercarriage examiner.

迄今為止，我們已經部署了 37 個人工智能用例，併計劃到年底達到 50 多個。我們即將推出的應用程序將特別關注發現導致火車脫軌的缺陷，包括客運鐵路的特定人工智能用例和利用我們正在申請專利的傾斜車輛底盤檢查器的特殊模型。

I'd like to highlight an example with a specific customer to show how our AI translates into tangible results in the field. We recently deployed our AI catalog into one of our Class I customers. Following two derailments, it was -- following that customer having two derailments, it was determined that defects on end of car cushion, which serves a similar function as a shock absorber, were responsible.

我想重點介紹一個特定客戶的示例，以展示我們的人工智能如何轉化為該領域的切實成果。我們最近將我們的人工智能目錄部署到了我們的一個 I 類客戶中。在發生兩次脫軌事故後，該客戶發生兩次脫軌事故後，確定是汽車坐墊末端的缺陷造成的，該坐墊具有與減震器類似的功能。

At the customer's request, we developed and deployed a new algorithm that now inspects end of car cushion. Within the first five days after deployment, the RIP found 19 validated defects, which our customer was then able to immediately address and leverage to avoid potential further derailments from this specific issue. To be clear, the RIP and our supporting organization with mechanical railcar expertise are focused on continuous improvement, which is one of our key differentiators in the market and makes our offerings so powerful.

根據客戶的要求，我們開發並部署了一種新算法，現在可以檢查汽車坐墊的末端。在部署後的前五天內，RIP 發現了 19 個經過驗證的缺陷，然後我們的客戶能夠立即解決並利用這些缺陷，以避免因該特定問題而可能進一步出現脫軌。需要明確的是，RIP 和我們擁有機械軌道車專業知識的支持組織專注於持續改進，這是我們在市場上的關鍵差異化因素之一，並使我們的產品如此強大。

We expect to continue adding more recurring revenue through our new subscription model, support services and maintenance, and artificial intelligence offerings. Our focus continues to be on building an industry-leading machine vision and artificial intelligence company. As I just mentioned, with the increased number of AI models we continue to roll out, we have increased the portfolio of detections we're able to offer which has led to a steady increase in our recurring revenue base.

我們預計將通過新的訂閱模式、支持服務和維護以及人工智能產品繼續增加更多經常性收入。我們的重點仍然是打造行業領先的機器視覺和人工智能公司。正如我剛才提到的，隨著我們不斷推出的人工智能模型數量的增加，我們增加了能夠提供的檢測組合，這導致我們的經常性收入基礎穩步增長。

Our customers are actively using the additional algorithms as they become available, and we are developing new AI with their direct input. I continue to believe that we are the only company in this industry that self-performs all aspects of AI creation and support, which includes good hardware, IT, software, and AI, which provides a more reliable and integrated solution.

我們的客戶正在積極使用可用的其他算法，我們正在根據他們的直接輸入開發新的人工智能。我仍然相信，我們是這個行業中唯一一家能夠自行執行人工智能創建和支持的各個方面的公司，包括良好的硬件、IT、軟件和人工智能，從而提供更可靠和集成的解決方案。

Moving to our new subscription model, we have continued to actively engage in discussions with numerous railcar owners and operators who have expressed strong interest. We are currently finalizing negotiations for this first subscription and expect this to be operational by the end of the second quarter. The team is very encouraged by the discussions around this new commercial offering, and we are on track to begin installation of our first subscription RIPs in the southeastern United States during the second half of 2023.

轉向我們的新訂閱模式，我們繼續積極與眾多表示強烈興趣的軌道車車主和運營商進行討論。我們目前正在敲定首次訂閱的談判，預計將在第二季度末投入運營。圍繞這一新商業產品的討論讓團隊深受鼓舞，我們有望於 2023 年下半年開始在美國東南部安裝我們的第一個訂閱 RIP。

We are also being strategic and thoughtful about our capital allocation strategies associated with RIP ownership and are in discussions related to repurchasing existing portals to help minimize costs related to deployment. We hope to share more in this area soon.

我們還對與 RIP 所有權相關的資本分配策略進行戰略性和深思熟慮，並正在討論有關重新購買現有門戶的問題，以幫助最大限度地降低與部署相關的成本。我們希望很快能在這一領域分享更多內容。

Moving to our commercial focus in the rail sector, I'll now provide an update on current deployments, beginning with the $9.4 million master services agreement with a major national passenger carrier. In April, we secured contract with further modifications worth an additional $1.9 million. When combining with prior modifications, this additional add-on brings total contract value to approximately $3.5 million or more than a 40% increase from the original agreement. Excuse me, let me say again -- this additional add-on brings the total contract value to approximately $13.5 million or more than 40% increase from the original agreement. I think I got that right this time.

轉向我們在鐵路領域的商業重點，我現在將提供當前部署的最新信息，首先是與一家主要的國家客運航空公司簽訂的 940 萬美元的主服務協議。 4 月份，我們獲得了價值 190 萬美元的進一步修改合同。與之前的修改相結合，這一附加附加條款使合同總價值達到約 350 萬美元，比原始協議增加了 40% 以上。對不起，讓我再說一遍——這個額外的附加條款使合同總價值達到約 1350 萬美元，比原來的協議增加了 40% 以上。我想這次我做對了。

This additional modification supports our view that investing in improving our service offerings directly translates to increased deal sizes, higher margins, and greater revenues -- greater recurring revenues from additional services and maintenance work. The completion of the first two high-speed passenger portals is slated for later this year. When online, these RIPs will provide significant enhancements to existing systems, including highly efficient trackside image data processing as well as a new advanced wheel tread and brake analysis.

這一額外的修改支持了我們的觀點，即投資改進我們的服務產品直接轉化為增加交易規模、更高的利潤和更多的收入——來自額外服務和維護工作的更多經常性收入。前兩個高速客運門戶預計將於今年晚些時候竣工。在線時，這些 RIP 將為現有系統提供顯著增強，包括高效的賽道旁圖像數據處理以及新的先進車輪踏面和製動分析。

In Q1, we successfully completed a third portal with another Class I customer in Georgia and have also completed a separate portal installation in Texas for another customer. This brings the overall total number of operational freight-focused portals to 13, along with two additional high-speed passenger portals being installed later this year. We are discussing with these customers the potential to develop more long-term comprehensive railcar inspection portal coverage of their network.

在第一季度，我們與佐治亞州的另一家 I 級客戶成功完成了第三個門戶，並在德克薩斯州為另一家客戶完成了單獨的門戶安裝。這使得運營中的貨運門戶總數達到 13 個，另外兩個高速客運門戶將於今年晚些時候安裝。我們正在與這些客戶討論開發更長期、全面的鐵路車輛檢查門戶覆蓋其網絡的潛力。

We are also expanding our commercial reach beyond the Class I railroads and into Class II carriers and are in the process of negotiating deals where our more flexible pricing structure, including subscription offerings, can allow for smaller carriers to get the benefits of Duos's RIP and AI technologies, but at a price which is commensurate with their business model. While this is a recent development, I am pleased to announce we are actively engaging with at least one carrier as a strategic partner in their region and expect the business results will follow within a few months.

我們還在將我們的商業覆蓋範圍擴大到 I 類鐵路以外的 II 類運營商，並且正在談判交易，我們更靈活的定價結構（包括訂閱服務）可以讓較小的運營商獲得 Duos 的 RIP 和 AI 的好處技術，但價格與其商業模式相稱。雖然這是最近的進展，但我很高興地宣布，我們正在積極與至少一家運營商合作，作為其所在地區的戰略合作夥伴，並預計業務成果將在幾個月內顯現出來。

In closing, we believe it's now evident in our performance that our plan is translating to results. While we will always strive to improve in all aspects of our organization, I think it's fair to say we're officially done turning the company around and are now proactively introducing technical advances, new subsystems, and more AI and are ready to scale up quickly if necessary, in response to the Railway Safety Act and the increased interest it has already created.

最後，我們相信，從我們的表現來看，我們的計劃正在轉化為結果。雖然我們將始終努力改進組織的各個方面，但我認為可以公平地說，我們已經正式完成了公司的扭虧為盈，現在正在積極引入技術進步、新的子系統和更多人工智能，並準備快速擴大規模如有必要，響應《鐵路安全法》及其已引起的日益增長的興趣。

And with that, we're ready to open the call for your questions. Operator, please provide the appropriate instructions.

至此，我們準備好開始詢問您的問題了。操作員，請提供適當的說明。

Thank you. We will now be conducting a question-and-answer session.(Operator Instructions)

謝謝。我們現在將進行問答環節。（操作員說明）

Mike Latimore, Northland Capital Markets.

邁克·拉蒂摩爾 (Mike Latimore)，北國資本市場。

Great. Thanks. Yeah, congrats on the strong growth this year so far. As you look to the guidance for the year, I just want to be clear, the majority of it's going to come from deploying these two RIPs that you're working on now. I guess, if you think about the revenue beyond that, is that likely to come from additional RIPs under the traditional model or through subscription? Maybe just a little color on that would be great.

偉大的。謝謝。是的，祝賀今年迄今為止的強勁增長。當您查看今年的指導時，我只想明確一點，其中大部分將來自部署您現在正在開發的這兩個 RIP。我想，如果你考慮除此之外的收入，這可能來自傳統模式下的額外 RIP 還是通過訂閱？也許只要加一點顏色就很好了。

Yes, let me -- I'll start and let Andrew come in behind me on that. Look, I think conceptually, we are going to see a mix of where we sell our portals in a traditional CapEx fashion, and towards the latter part of the year, we'll begin to see the effects of some of the subscription revenues coming in. But to your point, yeah, a good chunk of our revenue is certainly due to our passenger contract. And Andrew, why don't you provide maybe a little bit more color on that, if you'd like?

是的，讓我——我將開始，讓安德魯在我身後介入。看，我認為從概念上講，我們將看到以傳統的資本支出方式銷售門戶網站的混合方式，到今年下半年，我們將開始看到一些訂閱收入的影響.但就你的觀點而言，是的，我們收入的很大一部分肯定來自我們的乘客合同。安德魯，如果你願意的話，為什麼不提供更多的色彩呢？

Sure, and I'm happy to share to Chuck's point. When we look at our current backlog, we anticipate recognizing for the balance of the year, that $7.7 million of revenue. And I think right now that's comprised about 40% services and 6% project revenues. To Chuck's point, as we phase through the year, we're undertaking some strategic initiatives right now, which we think will help begin to grow out the subscription revenue. But we also know that in certain cases, customers are going to be more of a candidate for a CapEx approach. So, to reiterate Chuck's point, we anticipate there being a good mix across the back half of year between subscription and (multiple speakers)

當然，我很高興分享查克的觀點。當我們查看當前的積壓訂單時，我們預計今年剩餘時間將確認 770 萬美元的收入。我認為目前這包括大約 40% 的服務和 6% 的項目收入。查克認為，隨著今年的逐步推進，我們現在正在採取一些戰略舉措，我們認為這將有助於開始增加訂閱收入。但我們也知道，在某些情況下，客戶將更多地成為資本支出方法的候選者。因此，重申查克的觀點，我們預計下半年訂閱和（多個發言者）之間會有良好的組合

Yeah, and I think one of the other things you'll see this year as we get -- especially, get into the second half is we're going to be able to -- we'll have more customers and then more diversification. So, over time, we're slowly kind of de-risking having to rely only on a handful of customers, and I think that's the other major feature that we're seeing this year and into next.

是的，我認為今年你會看到的其他事情之一 - 特別是進入下半年，我們將能夠 - 我們將擁有更多的客戶，然後更加多元化。因此，隨著時間的推移，我們正在慢慢地降低只依賴少數客戶的風險，我認為這是我們今年和明年看到的另一個主要特徵。

That sounds like the pipeline suggests the potential for both more CapEx customers and obviously the new subscription model coming online.

這聽起來像是管道表明了更多資本支出客戶的潛力以及顯然新的在線訂閱模式的潛力。

Yes, that's correct.

對，那是正確的。

Okay, good. And then, in terms of the number of portals under the subscription model, any more color on how many you want to see this year in the [timeline]?

好的。然後，就訂閱模式下的門戶數量而言，您今年希望在[時間軸]中看到多少個門戶？

Yes. I mean, for sure, we're looking to get through at least that 15 mark, which we kind of talked about during the formal part of the presentation today. Our goal is to get up to about 20 by the very, very end of this year. And we've got plans in place. We've identified where we'd like to put those next five, if you will. We have a good sense where we want them to go. And we are in discussions with the owners of those right aways with the intent that those would be subscription portals. And that's where our projections are on that subscription revenues is coming from.

是的。我的意思是，我們當然希望至少能達到 15 分，這也是我們在今天演示的正式部分中談到的。我們的目標是到今年年底達到約 20 個。我們已經制定了計劃。如果您願意的話，我們已經確定了接下來的五個的放置位置。我們很清楚我們希望他們去哪裡。我們正在立即與這些網站的所有者進行討論，希望這些網站能夠成為訂閱門戶。這就是我們對訂閱收入的預測。

Yeah, makes sense. This last one on the AI algorithms you have. It feels like it looks like you're accelerating the number of algorithms you're developing on the quarterly. Any additional color there on one -- is that right? It does look like you're accelerating the development. And two -- why is that occurring?

是的，有道理。最後一篇是關於你所擁有的人工智能算法的。感覺好像你正在加速每季度開發的算法數量。上面有任何額外的顏色嗎——是嗎？看起來你確實正在加速開發。第二——為什麼會發生這種情況？

Yeah, you are correct. We are accelerating it and getting faster and producing more algorithms right now with our team. Again, one of the key differentiators that we feel we have in this industry is we control all four of the control knobs that are required to actually produce AI and then actually deploy it correctly. And that involves being able to make adjustments on the hardware side, the IT infrastructure side, the software side --that all supports a good artificial intelligence.

是的，你是對的。我們現在正在與我們的團隊一起加速它並變得更快並產生更多算法。同樣，我們認為我們在這個行業中擁有的關鍵區別之一是我們控制實際產生人工智能所需的所有四個控制旋鈕，然後實際正確部署它。這涉及到能夠在硬件方面、IT基礎設施方面、軟件方面進行調整——所有這些都支持良好的人工智能。

Just about everybody else that I'm aware of, somebody else produces the hardware. They might do the hardware, IT and software, but then they're almost always sending the AI production out to a third party who doesn't understand the other three components of the solution. And so, we've seen some of our rail customers or potential customers struggle with that model.

據我所知，幾乎所有其他人都生產硬件。他們可能會負責硬件、IT 和軟件，但他們幾乎總是將人工智能產品發送給不了解解決方案其他三個組成部分的第三方。因此，我們看到一些鐵路客戶或潛在客戶在這種模式上遇到了困難。

We do all four of those components in-house. What our goal is to get to is where we can cover the entire FRA inspection checklist with artificial intelligence. That is then obviously validated by the mechanical carmen and will make their job safer and easier and more accurate, but also ultimately, probably produce -- where mechanical car inspectors will spend more time repairing things than being out trying to find things.

我們在內部完成所有這四個組件。我們的目標是用人工智能覆蓋整個 FRA 檢查清單。這顯然會得到機械卡門的驗證，將使他們的工作更安全、更容易、更準確，但最終可能會產生——機械汽車檢查員將花更多的時間來修理東西，而不是出去尋找東西。

That's great. I guess, this last question -- in terms of the potential subscription customers that are out there, how many roughly are you talking to today that have interest in a subscription model?

那太棒了。我想，最後一個問題 - 就潛在的訂閱客戶而言，您今天大約有多少人對訂閱模式感興趣？

Yes, we're in discussion with probably about 20 legitimate car-owning companies or companies that -- chemical companies, we've got a couple of those that we're talking with and some other shippers, if you will. There's serious interest from all of them. They can see the benefits of it. By and large, the subscriptions are definitely at the top of the list.

是的，我們正在與大約 20 家合法的擁有汽車的公司或化學公司以及其他一些托運人（如果你願意的話）進行討論。他們所有人都很感興趣。他們可以看到它的好處。總的來說，訂閱絕對是最重要的。

I would say that there are probably about a third of those, I'll say, car-owning-type companies that also run large maintenance depots and some of them are interested in having subscriptions, but also potentially buying some portals in a CapEx fashion to basically scan cars as they're entering and exiting their large maintenance facilities.

我想說，其中可能有大約三分之一的汽車擁有型公司也經營大型維修站，其中一些公司對訂閱感興趣，但也可能以資本支出方式購買一些門戶網站基本上是在汽車進出大型維修設施時對其進行掃描。

That's interesting. Okay. Great. Well, thanks a lot. Best of luck.

那很有意思。好的。偉大的。嗯，非常感謝。祝你好運。

Thanks so much, Mike. Appreciate it.

非常感謝，邁克。欣賞它。

Ed Woo, Ascendiant Capital Markets.

Ed Woo，上升資本市場。

Yeah. Thanks for taking my questions and congratulations on the growth that you guys have so far. I want to get some more questions on the Rail Safety Act of 2023. Government doesn't have a good track record for doing things on a very fast basis. What's your feel of the timing on this? And is there any potential that some of the railroad companies will get ahead of any potential legislation and start acting now? Or is this something that they will probably wait until the bitter end to implement any of the legislation?

是的。感謝您提出我的問題，並祝賀你們迄今為止所取得的成長。我想了解更多有關 2023 年鐵路安全法案的問題。政府在快速辦事方面沒有良好的記錄。您對這個時機有何看法？一些鐵路公司是否有可能領先於任何潛在的立法並立即開始採取行動？或者他們可能會等到痛苦的結局才實施任何立法？

Well, I'll take the first part of the question and just talk about the -- so, I've spent two different weeks now in Washington, D.C. I had an opportunity to meet and I was invited to meet with six or seven different senators, [which would] include our senators from the state of Florida as well as about 10 or 11 congressmen in the House of Representatives. Most of those members either sit on the Commerce Committee on the Senate side and then the other representatives are mostly on the transportation or infrastructure or T&I Committee on the House side.

好吧，我將回答問題的第一部分，只是談談——所以，我現在在華盛頓特區度過了兩個不同的星期。我有機會見面，我被邀請與六七個不同的人會面。參議員，[其中]包括來自佛羅里達州的參議員以及眾議院大約 10 或 11 名國會議員。這些成員中的大多數要么是參議院商務委員會的成員，其他代表大多是眾議院交通或基礎設施或運輸與工業委員會的成員。

My sense from getting a chance to meet with all of them was that they were very well-informed. The congressional leaders along with their staff were very well-informed. And quite frankly, both Republican and Democrats seem to be pretty motivated to enact new legislation to update rail safety in general as well as take advantage of new technologies that have been introduced since 2008 when the last big bill was done.

有機會見到他們所有人，我的感覺是他們消息靈通。國會領導人及其工作人員都消息靈通。坦率地說，共和黨人和民主黨人似乎都非常有動力製定新的立法來更新總體鐵路安全，並利用自 2008 年上一項重大法案完成以來引入的新技術。

So, how fast will it happen? When I left the Hill about two weeks ago, to see the -- at least on the Senate side, it's already gone through Committee and may potentially go to the Floor in the next few weeks. That's very encouraging and actually faster than I thought. I think the House is a little further behind, but I think we'll see something in the next few months but we'll have to see how that goes. No one can predict the exact timing of what will happen in Congress, but I think we will see something here in the next couple of months.

那麼，它會以多快的速度發生呢？當我大約兩週前離開國會時，至少在參議院方面，它已經通過了委員會，並可能在接下來的幾週內進入眾議院。這非常令人鼓舞，而且實際上比我想像的要快。我認為眾議院有點落後，但我認為我們會在接下來的幾個月內看到一些東西，但我們必須看看情況如何。沒有人能夠預測國會將發生什麼事情的確切時間，但我認為我們將在接下來的幾個月內看到一些事情。

As far as the other Class I railroads -- look, the Class I railroads are absolutely critical to the commerce here in the United States. And that was one of the big points I think that we made with our congressional leaders along with talking about safety and our technology. But I think the Class Is are already -- many of them are already taking very proactive measures on their own without any -- short of any legislation to adopt technologies like ours.

就其他一級鐵路而言，一級鐵路對美國的商業絕對至關重要。我認為這是我們與國會領導人討論安全和技術時提出的重要觀點之一。但我認為 I 類已經——他們中的許多人已經自己採取了非常積極主動的措施，而沒有任何——缺乏任何立法來採用像我們這樣的技術。

I would tell you that while this legislation has been in motion, we have gained significantly more interest and phone calls, quite frankly, from all of the Class Is as well as a number of Class II operators, transit rail operators and also, a lot of car owners have been calling us. So, even if this bill doesn't pass, I think the interest that this kind of inflection point has generated will ultimately benefit here for us at Duos Tech and for others that are in the industry with wayside detection systems.

我想告訴你，雖然這項立法已經在進行中，但坦率地說，我們從所有一級運營商以及一些二級運營商、公交鐵路運營商以及很多其他運營商那裡獲得了更多的興趣和電話。的車主一直在給我們打電話。因此，即使這項法案沒有通過，我認為這種拐點所產生的興趣最終將使我們 Duos Tech 以及業內擁有路邊檢測系統的其他公司受益。

That sounds good. Thank you for answering my question, and I wish you guys good luck. Thank you.

聽起來很好。謝謝你們回答我的問題，祝你們好運。謝謝。

Okay, Ed. We really appreciate it.

好的，艾德。我們真的很感激。

Management will now take select listeners' submitted questions.

管理層現在將接受選定聽眾提交的問題。

Yes. We've got a few questions that were submitted. One came from Timothy. Timothy also asked about the Rail Safety Act, which I did just address and expressed also some interest in order activities that might be outside of rail and into some of the other verticals such as trucking.

是的。我們收到了一些已提交的問題。其中之一來自提摩太。蒂莫西還詢問了我剛剛談到的《鐵路安全法》，並表達了對可能在鐵路之外以及卡車運輸等其他一些垂直領域的訂單活動的一些興趣。

So, as you know, we have a product called the Automated Logistics Information System or ALIS. I like to call it a truck inspection portal because that's -- it just sounds better to me. But this has been installed across a number of sites with a major retailer. Currently, I think there's about 19 [already] of these systems deployed at about 10 different sites where it's basically doing automated gate processing.

如您所知，我們有一個名為自動化物流信息系統或 ALIS 的產品。我喜歡稱其為卡車檢查門戶，因為這對我來說聽起來更好。但這已經安裝在一家大型零售商的多個站點上。目前，我認為大約 19 個此類系統[已經]部署在大約 10 個不同的站點，基本上在這些站點進行自動門處理。

So, we're in the process of updating that system right now for the purpose of imaging and the analysis of trucks using similar machine vision technology in our patented AI process. We anticipate the new system to be introduced later this year as the truck inspection portal, like I said. And I'll update shareholders at the appropriate time.

因此，我們現在正在更新該系統，以便在我們的專利人工智能流程中使用類似的機器視覺技術對卡車進行成像和分析。正如我所說，我們預計今年晚些時候將推出新系統作為卡車檢查門戶。我將在適當的時候向股東通報最新情況。

We've also submitted two patent applications. One is for the methodology of inspecting aircraft. We have recently had visits with a very, very large MRO facility that does major repair and overhauls for aircrafts. But this is at the very, very early stages of development, but again, the same type of technology that we use for speeding railcars can be used and we anticipate will be used to inspect trucks, automobiles as well as potentially, aircraft.

我們還提交了兩項專利申請。一是檢查飛機的方法。我們最近參觀了一家非常非常大的 MRO 設施，該設施對飛機進行大修和大修。但這還處於非常非常早期的開發階段，但同樣，我們可以使用與超速軌道車相同類型的技術，並且我們預計將用於檢查卡車、汽車以及潛在的飛機。

We have another question here from Timothy, who also asked about the development of our sales pipeline following the Ohio derailment in February.

蒂莫西還向我們提出了另一個問題，他還詢問了二月份俄亥俄州脫軌事件後我們銷售渠道的發展情況。

You know, we didn't really expect to have this happen. But obviously, as I said before, this legislation that's now going through Congress is really quite a bit of an inflection point for us and could potentially really increase the demand for our technology. As part of our strategic goals for 2023, we were focused on engaging all the Class I railroads, and this legislative activity and the events in Ohio have caused us to kind of accelerate that.

你知道，我們真的沒想到會發生這種事。但顯然，正如我之前所說，國會正在審議的這項立法對我們來說確實是一個轉折點，並且可能真正增加對我們技術的需求。作為我們 2023 年戰略目標的一部分，我們專注於讓所有 I 級鐵路參與進來，這項立法活動和俄亥俄州的事件促使我們加快了這一進程。

We've since begun commercial discussions with existing customers interested in expanding their RIP programs. We have three Class I customers, very good customers with us now. We're in discussions on expanding programs with them, and that's obviously picked the pace up here in the last few months. And we're also in contact now with just about all of the other Class Is and a number of other customers in the industry.

此後，我們開始與有興趣擴展其 RIP 計劃的現有客戶進行商業討論。我們現在有三個一級客戶，都是非常好的客戶。我們正在與他們討論擴大計劃，過去幾個月顯然加快了步伐。我們現在還與幾乎所有其他 I 級客戶以及業內的許多其他客戶保持聯繫。

We're very encouraged by the increase interest in the RIP and we're aware that it may take some time though to convert these opportunities as Andrew kind of discussed in the formal presentation. But -- a really good question. I appreciate those questions there from Timothy.

我們對 RIP 興趣的增加感到非常鼓舞，並且我們知道，正如 Andrew 在正式演示中所討論的那樣，可能需要一些時間才能轉化這些機會。但是——一個非常好的問題。我很欣賞蒂莫西提出的這些問題。

And operator, that's -- unless there's more questions, that's all we have. I will turn it back over to you.

接線員，除非還有更多問題，否則我們就只有這些了。我會把它還給你。

At this time this concludes our question-and-answer session. I'd now like to turn the call back over to Mr. Ferry for his closing remarks.

至此我們的問答環節就結束了。現在我想將電話轉回給費里先生，讓他作結束語。

As always, we appreciate everyone joining. Particularly, thanks to our long-term shareholders for their strong support of our company, and we hope that anyone that's on the call that needs more information, you can get a hold of us and we'll get you some more information.

一如既往，我們感謝大家的加入。特別感謝我們的長期股東對我們公司的大力支持，我們希望任何需要更多信息的人都可以聯繫我們，我們將為您提供更多信息。

Thank you very much for joining us on today's call, and we'll turn it back over to you, operator.

非常感謝您參加今天的電話會議，我們會將其轉交給您，接線員。

Before we conclude today's call, I would like to provide you a safe harbor statement that includes important cautions regarding forward-looking statements made during this call. This earnings call contains forward-looking statements within the meaning of Private Securities Litigation Reform Act of 1995. Forward-looking terminologies such as believes, expects, may, will, should, anticipates, plans and their opposites or similar expressions are intended to identify forward-looking statements.

在我們結束今天的電話會議之前，我想向您提供一份安全港聲明，其中包括有關本次電話會議期間所做前瞻性陳述的重要警告。本次財報電話會議包含 1995 年私人證券訴訟改革法案含義內的前瞻性陳述。前瞻性術語，如相信、預期、可能、將、應該、預期、計劃及其反義詞或類似表達方式旨在識別前瞻性術語。看起來的陳述。

We caution you that these statements are not guarantees of future performances or events and are subject to a number of uncertainties, risks, and other influences, many of which are beyond our control, which may influence the accuracy of the statements and the projections upon which the statements are based and could cause Duos Technologies Group Inc's actual results to differ materially from those anticipated by the forward-looking statements.

我們提醒您，這些陳述並不是對未來業績或事件的保證，並且受到許多不確定性、風險和其他影響，其中許多因素超出了我們的控制範圍，這可能會影響陳述和預測的準確性。這些陳述是有依據的，可能導致 Duos Technologies Group Inc 的實際結果與前瞻性陳述的預期存在重大差異。

These risks and uncertainties include, but are not limited to, those described in Item 1A in Duos's annual report on Form 10-K, which is expressly incorporated herein by reference, and other factors as may periodically be described in Duos's filings with the SEC.

這些風險和不確定性包括但不限於 Duos 表格 10-K 年度報告第 1A 項中描述的風險和不確定性（通過引用明確納入本文），以及 Duos 向 SEC 提交的文件中可能定期描述的其他因素。

Thank you for joining us today for Duos Technologies Group's first-quarter 2023 conference call. You may now disconnect your lines at this time. Thank you for your participation.

感謝您今天參加 Duos Technologies Group 2023 年第一季度電話會議。此時您可以斷開線路。感謝您的參與。