OMNIQ Corp.
Q2 2022 Earnings Call Transcript

Published: 15 Aug 2022

[Operator:]

Good morning, and thank you for joining us for the OMNIQ Corporate Update Call for the Second Quarter and Six Months ending in June 30th, 2022. At this time, all participants are in a listen-only. After management's prepared remarks, there will be a question-and-answer session. Joining us today we have Shai Lustgarten, CEO of OMNIQ, who will provide an operational overview; and Neev Nissenson, Chief Financial Officer, who will discuss financial results. I will now take a brief moment to read the Safe Harbor statement. During the course of this conference call, we will make certain forward-looking statements. All statements that address expectations, opinions, or predictions about the future are forward-looking statements. Although, they reflect our current expectations and are based on our best view of the industry and our current expectations and our business as we see them today, they are not guarantees for future performance. These statements involve a number of risks and uncertainties and since these elements can change and in certain cases, are not within our control, we would ask that you consider and interpret them in that light. We urge you to review the company's Form 10-K and other SEC filings for a discussion of the principal risks and uncertainties that affect the company's business and performance factors that could cause actual results to differ materially. OMNIQ undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, unless required by law. I will now turn the floor over to Shai Lustgarten. Please go ahead.

[Shai Lustgarten:]

Thank you, operator, and thanks to everyone joining us on the call today. We're very pleased to share with you our 2022 second quarter and six months' financial results combined with some of the following recent achievements. 85% growth in the second quarter's revenue compared to Q2 of 2021, an 81% increase in the second quarter's gross profit with keeping the same 25% margin compared to the Q2 of 2021. Sequential revenue decrease of $2 million compared to a strong Q1 of 2022, mainly due to the global supply chain shortages which are getting better per our strong third quarter deliveries. The 54% growth in the six-month revenue marks another record of over $50 million, in line with our annual run rate of $100 million revenue target, 104% growth in the six-month gross profit up to over $12 million. Gross margin for the six months up to 24% compared to 18% in the same period of 2021, in line with our profitability increased target. Q2 marks another breakthrough penetrating the retail and restaurant markets with the company's AI integrated solution. OMNIQ's Q Shield, AI-based law enforcement solutions offered to municipalities is experiencing positive momentum as 12 cities in the US have already contracted and more are in the pipeline. Revenue model is based on recurring revenue sharing. Here are some of the highlights of recent events. On April 19, 2022, we announced the receipt of a purchase order to deploy our AI machine vision system in South America. On June 8, 2022, we announced the receipt of $11 million order from the government of Israel for our supply chain IoT solution. On June 13, 2022, we announced the receipt of a $29 million order from our Fortune 100 customer for a supply chain IoT solution. On June 17, 2022, the company announced that, it has been selected by the City of East Dublin to deploy its AI-based Q Shield vehicle recognition system, technology, and its cloud based citation management platform. On June 23, 2022, the company announced that its AI based Q Shield system assisted law enforcement in Adrian, Georgia to allocate and return home an elderly men suffering from cognitive memory impairment. Our municipality installed base is constantly increasing hand-in-hand with a growing number of municipalities interested in deploying Q Shield in their cities to help keep their street safe. Our momentum remains strong, achieving significant growth despite the macroeconomic conditions, including the supply chain prices that caused some limited delays in the second quarter's deliveries. We have a strong backlog of orders and are seeing strong deliveries in Q3. With our AI machine vision proprietary technology and innovative solutions, we are entering two mega markets, the retail and fast food restaurants market. When we began this endeavor into the retail space, some saw fantasy, we saw a vision. We knew our technology would add value to our customers by adding value to their consumers. To describe our Q Shield solution for retail and fast food restaurant in a nutshell, OMNIQ automatically records and provides real-time and historical consumption information, which provides improved customer service and experience, resulting in revenue growth utilizing OMNIQ’s technology will provide tools to better understand consumers' consumption habits, while improving each unique customer's interaction. OMNIQ solution will be part of the CRM, customer relationship management system, allowing for dynamic decisions based on each unique customer visits. And together with our OMNIQ's security enforcement in each restaurant location, our total solution is unparalleled. Before I go further, let me now turn this over to Neev to take a deeper look at our financial results. Neev?

[Neev Nissenson:]

Yes. Hello, everybody. As Shai highlighted, we reported revenue of $24.2 million for the quarter ended June 30, 2022, which is an increase of 85% from $13.1 million in the second quarter of 2021. Revenue increased reflects a combined strength of our consolidation with Dangot as well as continued traction in our market. Total operating expenses for the second quarter were $8 million compared to $5 million in the second quarter of 2021. The increase reflects the consolidation of Dangot as well as certain non-recurring expenses. Net loss for the quarter was $3.1 million, or a loss of $0.44 per share compared with a loss of $2.5 million or a loss of $0.53 per share for the second quarter of last year. Adjusted EBITDA, meaning adjusted earnings before interest, tax, depreciation and amortization for the second quarter of 2022 amounted to a loss of $777,000 compared to an adjusted EBITDA loss of $437,000 in the three months that ended on June 30, 2021. Cash balance was $2.9 million at the period ended June 30, 2022 compared to $7.1 million in December 31, 2021. Turning to the six-month results. OMNIQ reported record revenues of $50.5 million for the six months that ended June 30, 2022, an increase of 54% from $32.9 million in the same period of 2021. Our gross profit grew to $12.1 million in the first six months of 2022 compared to $5.9 million in the same period in 2021. Total operating expenses for the six months that ended June 30, 2022 were $15.5 billion compared with $10.6 million in the first half of 2021. Net loss for the six months ended June 30, 2022 was $5.7 million or a loss of $0.79 per basic share compared with a loss of $5.8 million or a loss of $1.24 per basic share for the same period last year. Adjusted EBITDA for the six months that ended June 30, 2022, amounted to a loss of $564,000 compared with an adjusted EBITDA loss of $1.6 million in the six months that ended June 30, 2021. I do wish to point out that in April, we announced the acquisition of the last remaining shares of the Dangot Computers, Ltd., and as a result, we now own 100% of Dangot. Let's now turn the call over back to Shai to talk more about operational chip.

[Shai Lustgarten:]

Thank you, Neev.

[Neev Nissenson:]

Shai?

[Shai Lustgarten:]

Thanks, Nev. Our business fundamentals are solid and prove once again the strength of our business model, relying on top of the line technologies, proprietary AI-based innovative solutions and an invaluable loyal customer base, which I will mention only a few; The Government of Israel, IDF – the Israeli Defense Forces, Safeway, Geodis [ph], Google, Ace, Ridgestone, McKesson, Bayer, Abbott, Foot Locker, police and municipalities such as Hialeah, Tel Aviv, Cito Veteran and many others, airports such as JFK, LaGuardia, Los Angeles Airport, Miami, Chicago, Salt Lake City and many others. This is a partial list that chose one of our most important assets being trusted by the most demanding customers. To sum it up, our three business lines; supply chain automation, traffic management and smart city are each showing growth. We're continuing to sell deeper and wider to our existing customers. We focus on generating cash and profitability through better operations and revenue increase, and we continue the momentum in sales and deployment of our AI products to the new segments we penetrated. As we turn the time over to questions now, let me take this opportunity to thank OMNIQ's devoted and talented employees. I would also like to extend my sincere thanks to our loyal customers and suppliers, our professional team and other strong supporters. Last but not least, we would like to thank our shareholders for your continuing support as well as wish you all continued success. Operator, I'll now turn this over for questions.

[Operator:]

Certainly. The floor is now open for questions. [Operator Instructions] Your first question is coming from Jaeson Schmidt with Lake Street. Please pose your question. Your line is live.

[Jaeson Schmidt:]

Hi, guys. Thanks for taking my question. Shai, I just want to follow-up on your comments on sort of the supply chain headwinds in Q2. Just curious if you could quantify how much revenue that impacted in the quarter? And I guess relatedly, how are you guys thinking about the supply chain environment going forward? Do you expect any sort of improvement here in the back half of the year?

[Shai Lustgarten:]

Hi, Jaeson. Thanks so much for your question. To quantify, I would tell you about couple to several millions of dollars, like we mentioned also last call that this is how we can limit the effect of it. Of course, that if you quantify that and add it back to the quarter, you see the increase quarter-by-quarter revenues. But again, we had this challenge. And that, of course, connects to the second portion of your question, how do we see this going forward? We already see this much better right now, like we expected also when we discussed this on our last call, we see better and improved delivery rate, more stable, not like the peaks we've seen in last several quarters due to these challenges. What we see month-by-month in this quarter and third quarter is much stable deliveries and fulfillment of our backlog, so that gives us a positive, I would say, view of how this is going to be handled in the second half.

[Jaeson Schmidt:]

Okay. That's really helpful. And if I heard correctly, you said you had 12 cities under contract. And if I can recall that's up from maybe around seven in Q1. I mean, as we look forward, obviously, you've been pretty transparent that you're seeing some really good traction in that space. How should we think about those cities under contract growing through the second half of this year? And I guess, if you look out to next year, how many cities could be under contract by the end of 2023?

[Shai Lustgarten:]

So we're -- yes, we're continuing to see the very positive traction of Q Shield deployed in cities and the interest of cities to deploy Q Shield. You're correct about the numbers. Q1 versus Q2, not -- by the way, it could have been even more. And it's not because the cities were not there. The cities are definitely there. We have much more than what we are -- I mean, we can sign, actually, we did today about 20 cities already. We're doing this cautiously because we started this product, if you remember, really by January of this year, and it's really growing nicely. To answer how we should look at this next year by 2023, we should look at least 50 cities

[Jaeson Schmidt:]

Okay. No, that's really helpful. And then last one for me, and I'll jump back in the queue. I would assume as kind of Q Shield continues to ramp and your overall AI portfolio continues to ramp even in light of some of the supply chain inflationary pressures, should gross margin continue to expand from these levels?

[Shai Lustgarten:]

Absolutely. And this is exactly in line with what we've been saying that we're focusing on for several calls already. So we are seeing the increase in all parameters and definitely, the gross margin is one of the more important ones, and we should continue seeing that increases.

[Jaeson Schmidt:]

Okay. Perfect. Thanks a lot guys.

[Shai Lustgarten:]

Thank you, Jaeson.

[Operator:]

Your next question is coming from Hela Pinaki [ph]. Please pose your question. Your line is live.

[Unidentified Analyst:]

Hello, Shai. Great results.

[Shai Lustgarten:]

Thank you very much.

[Unidentified Analyst:]

Okay. I have a few questions, please. So first, thank you for the details on the retail and restaurants. Do we have competitors on the solution?

[Shai Lustgarten:]

I would say that there are companies that would -- that try to approach, bring in efficiencies and drive more, I would say, revenues for that segment with different technologies, but definitely, Machine Vision, our technology OMNIQ's product is one that is unique and you cannot really find the -- I would -- not one that I'm aware I need to be cautious about it, but we are not seeing competition when we go to and offer our unique solution, which also combines, of course Q Shield security, automatic machine-to-machine security that it brings with it. So definitely, we are not seeing anyone in that field offering what we offer.

[Unidentified Analyst:]

Okay. That's wonderful. Another question is, lately, the company announced a $29 million order from a US company. Is this order already delivered?

[Shai Lustgarten:]

Yeah. It started deliveries immediately. And we have, I would say, delivered probably over the one-fourth of that order.

[Unidentified Analyst:]

Great. Okay. In previous quarter, you mentioned the hiring of new resellers any results from that?

[Shai Lustgarten:]

Yeah, yeah. That is a very good question. Thank you. We are continuing to hire resellers, and we are expanding our reseller channel, what we call the indirect channel sales, which, of course, brings with it more and more opportunities that we are translating into deliveries, which -- and stronger pipeline and backlog, that's part of why our backlog is so strong.

[Unidentified Analyst:]

Okay. That's very good to hear. And that's what brings me to my next question is, what can you say about the third quarter?

[Shai Lustgarten:]

Third quarter, we're seeing positive, really positive trends that gives us much better, even more visibility into how the year is going to end. First thing that we've been concerned about before and challenged with in the previous quarters for the last two years, of course, the global supply chain. So we definitely see much better performance there. We've been told that this is how it's going to be by our -- when discussing this strategically with our partners. And overall, we're all not only at OMNIQ, but our partners as well, we see better performance in answering this, and getting over the supply chain, global supply chain challenges that is visible already in Q3 by strong deliveries. And I think we're going to see a very healthy quarter.

[Unidentified Analyst:]

Okay. I believe so. And can you -- last thing, can you update about the Dangot acquisition?

[Shai Lustgarten:]

Yes, the Dangot acquisition, what we call our Israeli operation is because it's definitely very much consolidated already into the OMNIQ business lines. We are seeing very positive I would say, merger into the US -- emerging its products into the US market, we're seeing advantages and added value that is coming with the products that Dangot brought, and we're seeing good demand and how it completes better our solution in the different segments and markets we operate in, which brings again, it all turns to better and stronger backlog, and it comes a lot as well by selling -- cross-selling Dangot's equipment into our existing customer base and also new customers by expanding our services to our existing customers. This is exactly what I meant when I mentioned in the previous section of this call where we are focusing on selling deeper and wider to our existing customer base. This Dangot equipment and products, unique products definitely bring that capability for us to do that. So -- and of course, as a separate P&L, definitely, they show growth as well. So all-in-all, we're very happy about how things are progressing with our Israeli operation.

[Unidentified Analyst:]

Okay, great. Thank you very much.

[Shai Lustgarten:]

Thank you, Hela.

[Operator:]

Your next question is coming from Neal Fegan [ph]. Please post your question. Your line is live.

[Unidentified Analyst:]

Hi. Shai, thanks for taking my questions. Just to set the stage, I'm relatively new to the OMNIQ opportunity. So my first couple of questions are around your retail, vertical and entering the fast casual dining, fast food vertical. Two of the big contracts you've recently announced, one was a 5,000 store retailer and another the last week, the 800 store fast casual dining chain. Am I correct that you've been given the green light to only go into a limited number of those stores? And if that's correct, how long do you think it will take to fully install into those initial stores? And how long do you expect the customer to want to evaluate those initial stores before they would give you the go ahead to expand further?

[Shai Lustgarten:]

Yeah. First of all, thank you for joining our investor’s families, supporters, hoping that you will remain with us and appreciate you being now taken position. So thank you for that. Secondly, Yeah, you're correct that you first start with the limited number of locations where the customer then test your equipment and sees exactly that everything operates as it should. And we are -- the current status we're at is that they're already happy. They've run this equipment for a while, our products. And that's why we came out with these announcements as well. We didn't start -- I mean, we didn't go out with the announcement when it if at the point we just received the approval, the green light to go and put it in several locations. It was already after they've been testing it. So we are already in discussions now of, how do we now manage the forecast going forward? How do we provide and schedule together with these customers? Together with them the deployments, right, because they have to schedule with our installers and how to integrate each store, et cetera, et cetera. That's a whole operation. I was involved in one of these calls earlier, I mean, Friday, actually, where we wanted -- because they want to ramp it up even quicker than we thought initially. We're very happy about the performance. And they want to ramp up even the schedule that we looked at before. So I was on the call to support that requirement. How long is it going to take us to do that? Again, it depends on them. Currently, what we're seeing is that they want to first of all, receive the equipment quicker than we thought. This could be several months to do within the year. And for them -- and then they feel -- I mean, it will be much easier for them now to schedule all the deployment. So it's going to be hand-in-hand. I mean, we're going to deliver probably faster than they will deploy, and their deployment will be done together with us, but that's going to be taken a little longer. So -- but I still think that within the year, we can see a significant number of locations already getting deployed.

[Unidentified Analyst:]

Okay. And so if you were to roll into all 5,000 of the retail customer and all 800 of the Fast Casual Chain, but should we be thinking that, that's several quarters or a couple of years to fully deploy across that many stores?

[Shai Lustgarten:]

I wouldn't say a couple of years. Again, we're seeing there -- I mean how eager they are to do this even quicker than we thought. So I wouldn't say a couple of years, I would say, several quarters.

[Unidentified Analyst:]

Okay. And a quick one on the Fast Casual customer, you mentioned that you had integrated with the CRM system the customer is using, how significant is that? And is your software easily integratable with any CRM system, or does it require a lot of collaborative work with the CRM provider?

[Shai Lustgarten:]

We already have a lot of experience in integrating with different operating system, CRM is one of them. So we have many years of experience with integrating with government, operating systems, with different type of operating systems. And as integrators of solutions, this is something that we are doing on a daily basis. So I would say that, it's not a heavy lifting thing for us. Of course, it requires the other company, the other – the CRM company to put their resources to get that done as well from our end. This is something that we can do very fast and well. We have our APIs ready. We're not integrated today with all operating systems or all CRMs of course, but we have done a lot of it, a lot of such integrations before in different environments and with different customers. So that's not new to us at all. And I think that again to us -- to answer your question, it's not a difficult thing for us. Yes, it takes resources, but a lot of it is already – a lot of it already is our APIs are already in place for many years doing that same thing.

[Q –Unidentified Analyst:]

Okay. And one more for me, if I could. So, you've just been on a torrid pace of announcing new Fortune 500, Fortune 100 customer wins and you're talking about having a large pipeline, how do you feel about your staffing, your corporate staffing from the executive team, to the sales team, to the customer support team that's working with all these customers to make sure they have the best possible experience with on the Q, do you have the people in place that you need or is it a work in progress? I mean how do you – how would you color that?

[Neev Nissenson:]

I think it's always a work in progress. You always want to get better and you always -- when you grow, you need to strengthen your teams. We try to focus on making our product as an infrastructure, to making our product as a plug and play to do that. We focus on the software a lot, right? How do you remote control into every location? And how do you -- how are you able to – one push of a button update, versions and etcetera? And see the health by knowing how to do the management on every device on every location, how can you monitor the health of the equipment, etcetera? We focus a lot on it -- on that and we're getting better and better. That allows us not to – for example, if we have 10 today in support not to raise it immediately to 20 because we are increasing customers. It's not -- that's not the way that it's done at OMNIQ. We don't need that because a lot of it, like I mentioned is done also remotely. We are very known for more than 20-something years now for our very good support. So that's something that we're continuing to put the focus on and never to change because it is a very significant -- I would say a key factor in our success with our existing customers. We'll never give that up, of course and we'll always make it better to quantify you need to add about probably 10% gradually on an ongoing basis as you grow in support with regards to sales, the focus there. Yes, we are fully I would say, very, very well positioned in our staffing. No need to increase or decrease what we are focusing on, though, is what I mentioned before, is on our indirect sales, which is the reseller channel that we started building, which creates a lot of the growth right now. And focusing on the -- on how we train our resellers better, how we provide much better videos and training sessions and go hand-in-hand together with them to different deployments and teach them much quicker and better how to resell our product and some of them provide also the support, by the way. So -- this way, I think that in south were really good and staffed well there, no need to change anything on the executive team as well no need to make any changes. We always want to be better. We always want to increase our -- the quality of the skills that our people have, and we'll do it in many ways, and it's an ongoing process. But I think that we're very well positioned right now in all departments in staffing.

[Q – Unidentified Analyst:]

Okay. Great. Well, thanks again. And quite exciting what you've got going on there. So I'll stay tuned.

[A – Shai Lustgarten:]

Thank you, sir. I appreciate your support.

[Operator:]

Your next question is coming from Howard Halpern at Taglich Brothers. Please pose your question. Your line is live.

[Howard Halpern:]

Congratulations, guys. Great quarter.

[A – Shai Lustgarten:]

Thank you, sir.

[Howard Halpern:]

Talking a little bit more about the operations and operating expenses. I noticed it was about a little over 615,000 in nonrecurring expense, was that related to the Dangot finishing up the acquisition? And was that included in SG&A expense?

[A – Shai Lustgarten:]

Yes, I think there are some elements relating to Dangot and other expenses relating to the financial -- the loan that we've got that have increased those recurring expenses.

[Howard Halpern:]

Okay. And so with that, that should not continue going forward with so SG&A expense will fall back into the $6 million plus -- $6 million plus area going forward, or is it going to stay above $7 million?

[A – Neev Nissenson:]

Yes, I think it's going – it will go down. Obviously, sometimes other longer challenge expenses find their way to kind of tack back in. But yes, we don't expect -- we expect those not to recur, obviously.

[Howard Halpern:]

Okay. And then in terms of what you've talked about with your existing long-term high-quality customer base, what are you seeing in terms of them wanting to move towards the AI machine learning? And have you seen an increase in the number of pilot programs that they're requesting for your new offerings.

[A – Neev Nissenson:]

Shai, I think it was directed to you.

[Operator:]

Just actually one moment, it seems we have lost Shai. We're just trying to reconnect him now.

[Neev Nissenson:]

Okay.

[Operator:]

Okay. Just please remain on the line one moment. We are trying to rejoin, Shai. Okay. Shai has rejoined.

[Shai Lustgarten:]

Neev, yes, I'm sorry about that.

[Howard Halpern:]

Okay. I'll repeat the question to you. With your established customer base, are you starting to see them demanding or requesting pilot programs to test out your AIs too, so you're leveraging your existing equipment based customer base?

[Shai Lustgarten:]

Yes. The answer is yes. We are seeing that increased demand. I would like to mention that the increased demand is there for a while. We are penetrating or answering that demand very cautiously, because like, I mean, these are enterprises that we have to prepare ourselves before we go even into a pilot, you have to come with -- from our experience at least, you have to come with what is very close to the finished or ready solution. Now the technology is firm, right? We are -- there's -- it's even more -- its performance is even more than what the demand is for that market. I mean, going with our technology to our existing customers in the supply chain, the Fortune 100 customers, our technology answers even more than what they would need. That's not the question. The application development, the pilot scheduling, the customer expectations; that is exactly what takes longer and much more closer work together with the customer, because once you deploy, in one, for example, you go to Vans, one of our customers, they have so many stores. Once you go to -- and you succeed in one pilot even, and I have no doubt that we are going to, then it spreads to thousands, right, the location. And we're seeing that. We started that, but this is why we're controlling and managing that pace, if that makes sense.

[Howard Halpern:]

Okay. Yes, it does. Okay. Well, thanks, guys and keep up the great work.

[Shai Lustgarten:]

Thank you, sir. Appreciate your support.

[Neev Nissenson:]

Thanks.

[Operator:]

[Operator Instructions] We have an additional question from Matt Williams with Friess Associates. Please pose your question. Your line is live.

[Matt Williams:]

Thank you so much. Shai, great quarter, and I appreciate you guys taking the time here. So the first thing I wanted to ask is, are you able to separate what the organic growth was in the quarter from the OMNIQ business versus the Dangot business?

[Shai Lustgarten:]

Yes, definitely. And…

[Neev Nissenson:]

Yes, go ahead.

[Shai Lustgarten:]

Yes. Go ahead, I'm sorry.

[Matt Williams:]

No, I was going to ask you what is that?

[Shai Lustgarten:]

Yes. So again…

[Neev Nissenson:]

Yes. I can answer, Shai.

[Shai Lustgarten:]

Sure.

[Neev Nissenson:]

So, we've seen organic growth materialized the Dangot side, of course the revenue has increased organically during the six months on the OMNIQ side. I would say that sales orders have increased. But given the supply chain difficulties in Q1 and Q2, some of these sales orders have not transformed into revenue yet. So, on sales orders, we have seen organic growth across portfolio. But in terms of deliveries of revenue, it's mostly center around Dangot to the six months of this year.

[Matt Williams:]

Okay, got it. All right. And then just a couple more things here. On the Q Shield Safe City side, it doesn't sound like demand is the gating factor there in your revenue growth. But is it more tied to the supply chain, or is it tied to the ability to deploy the systems? What would you say is kind of the gating factor?

[Shai Lustgarten:]

The factor that the factor -- well, I would back up for a second and say that it's not the supply chain or, I would say, any other factor that would make this for you not seem like a significant portion of the growth currently? If I understood your question correctly what it is, is the volume, right? The volume of cities as we deploy more and more, this is how we will see as a more and more significant portion in the total revenue of the company. And the reason why you're not seeing currently 100 city deployed is because we started this a few months ago. We've been very successful; very, very, very successful. We just unbelievable how much even more than what we thought, this system Q Shield can affect the everyday lives of residents even in a small town in less than 1,000 residents. In one month, we've been able to change and get 23 GAD test for example, cases to zero, the next month. So this is -- and of course, the missing person that we found as the first technology that does that. So, I mean, this is really something that's getting a lot of traction. We have many, many, many cities, more than 50 -- more than 60 now that are on the lease to get contracts. In one day, we submitted seven contracts for signing. And so this is moving nicely. And you will see it becoming significant portion of the revenue stream. Once we increase the volume, we are looking at 2022 as the year that Q Shield has that -- created that breakthrough into municipalities and we are working -- the supply chain challenges were there, but that wasn't the most, I would say, a factor of not deploying right now immediately 12 cities. It was the how do we gradually monitor, make sure that the software, make sure that everything works perfectly and building the reseller channel, training them. It's a whole process that needed to happen -- and that's what we are focused on in 2022. But definitely also in 2022, want to start seeing that -- I don't know if a significant, but at least getting to that or showing the trend to becoming a significant revenue stream.

[Matt Williams:]

All right. Perfect. That’s really helpful. If I may just a couple more. I don't know if you said this, but did you report what your backlog is, the size of the backlog?

[Neev Nissenson:]

Yes. Even if -- no, I don't think we did, but it's more than $20 million. It's about probably $22 million, $23 million.

[Matt Williams:]

All right. Great. And then -- so cash, obviously, there was some cash usage year-to-date. Can you just talk about liquidity, cash needs? Do you have adequate cash to sort of meet the demands that you're seeing in the business?

[Neev Nissenson:]

Yes, we have sufficient cash and funds to support our growth to support our operational needs, yes.

[Matt Williams:]

All right. Perfect. And then just the last thing, if I may. So this fast food order, can you just -- is this like a kiosk in-store application? Is it a drive-thru application? Can you just give some color on exactly what it is you're doing?

[Neev Nissenson:]

The -- it's not the drive-thru. It's not the smart kiosks that self-ordering kiosks that we do have actually. This is one expansion into these restaurants that will happen soon as well from selling deeper and water to our existing customers. The – what we are currently penetrated, what we currently penetrated with is our Q-post product and the software to get -- that's what we call QCO [ph]. So you can see that product on social media and on our website, one of the newest that we came out with recently. And what it does is we install it in the entrance to the facility before getting even into the drive-thru. And what we do is we identify the vehicles, parameters, all the vehicles may call it drive model, et cetera. We know how to integrate into the CRM system and this way, connect a person to the consumer actually to the vehicle and the order intake, et cetera. start tracking that, providing historical information, providing forecasting into going forward, creating efficiencies because of that hand-in-hand together with providing security and the same thing as we do with police departments, just much bigger now footprint when we are in these – deploying our systems into these fast food market and also provide better loyalty, experience programs for consumers to these restaurants – to these restaurants and all-in-all together, this is creating much higher revenue to the customer as they provide better service to their consumers. And even faster flow in that drive-thru operation. So what we've done is we've exposed that. We've got awarded, and it starts in phases. And we're providing in phases the solution where at the end, of course, that's going to be the -- everything that I just mentioned, that's going to be service to the customers.

[Matt Williams:]

Right. Awesome. Well, good stuff. A very impressive growth and we look forward to seeing the continued trends in the back half. Thanks for your time.

[Shai Lustgarten:]

Thank you, sir.

[Operator:]

There are no further questions in queue at this time. I would now like to turn the floor back over to Shai Lustgarten for any closing remarks.

[Shai Lustgarten:]

Thank you very much, operator. So, I would like to thank again the OMNIQ’s steam, it's devoted and talented employees. As I mentioned, I really want to thank also our customers, our suppliers, all of our partners, the professional team and any other strong supporters that we have. And like I said before you, the shareholders, thank you very much again to your continuing support. We're looking forward to grow our shareholders lease all the time. We're seeing that growth. And it's really exciting. These are exciting times for OMNIQ. So I appreciate everyone, and looking forward to talking to you again soon.

[Operator:]

Thank you, ladies and gentlemen. This does conclude today's conference call. You may disconnect your phone lines at this time, and have a wonderful day. Thank you for your participation.