Joe Bergera, CEO of Iteris, Inc. was recently interviewed by Benzinga.
Iteris is a technology company providing software, hardware and services for smart mobility infrastructure to modernize America’s transportation systems. Innovation in this arena is painfully needed; the company’s products make roads more efficient and safer.
The company’s ClearMobility platform incorporates smart sensors, services and applications – all of which are supported by cloud infrastructure, microservices, open application programming interfaces (APIs) and a proprietary mobility data processing engine.
Iteris is a technology company providing software, hardware and services for smart mobility infrastructure to modernize America’s transportation systems. Innovation in this arena is painfully needed; the company’s products make roads more efficient and safer.
The company’s ClearMobility platform incorporates smart sensors, services and applications – all of which are supported by cloud infrastructure, microservices, open application programming interfaces (APIs) and a proprietary mobility data processing engine.
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NewsTranscript
00:00 (upbeat music)
00:02 - Welcome everyone.
00:03 If you know anything about Benzinga,
00:04 you know that we love to get questions answered
00:06 from executives, from publicly traded company themselves.
00:09 And we've got a great interview here with Joe Bergera,
00:11 who is the CEO of ITERIS.
00:13 Ticker on the NASDAQ is ITI.
00:15 Joe, thank you so much for joining us.
00:17 - It's my pleasure to be here.
00:18 - There's so much I want to get to.
00:20 I know you've got news coming out as well,
00:21 but before we look under the hood,
00:23 if you can explain it to me like I'm five,
00:24 what is it that your company does?
00:26 - We provide a comprehensive cloud enabled platform,
00:29 which we brand as our ITERIS Clear Mobility Platform.
00:32 And what we're focused on is trying to address
00:34 those immediate friction points
00:36 with today's mobility infrastructure,
00:38 but also to enable what we call
00:40 tomorrow's connected transportation network.
00:42 - Now, what was interesting when we were looking up,
00:44 you know, information and research for this interview is,
00:47 why is a more connected,
00:49 data-driven transportation network important?
00:52 And like, what technology do you typically employ
00:54 to make it so?
00:55 'Cause I wasn't expecting that personally.
00:56 - Yeah, for sure.
00:57 Everybody thinks about transportation
00:59 and you immediately think about
01:00 physical infrastructure, right?
01:02 So it's kind of a multi-part answer to your question.
01:07 The first part is that the physical infrastructure,
01:10 especially in like the US, for example,
01:12 is largely built out.
01:13 There's just not a lot of additional room
01:15 to add more physical infrastructure.
01:18 So the logical opportunity is to figure out
01:19 how do you deploy technology to get better throughput,
01:23 improve safety, drive friction out of the system.
01:26 And there's been a lot of investment in technology,
01:28 frankly, over the last decade,
01:30 but at least initially a lot of that investment
01:33 went into these discrete technologies,
01:35 which ended up creating silos.
01:38 And so right now everybody's focused on
01:39 how do you overcome those silos?
01:41 How do you eliminate that friction?
01:42 You see the emergence of connected and automated vehicles,
01:45 and then also vehicle electrification.
01:48 And in order to realize the promise
01:50 of those new technologies,
01:51 it's really important that you open up that infrastructure
01:53 to the cloud to facilitate communication
01:56 or what's called integration
01:57 between the infrastructure and the vehicles.
01:59 - Now there's three things I want to focus on
02:01 based on your answer there.
02:02 You talked about optimizing,
02:03 then you also talked about clear mobility platform.
02:06 Sometimes you have situations where the hardware
02:08 and the software don't exactly line up, right?
02:10 So like how do the individual parts of the system,
02:12 I'm talking about the hardware and the software,
02:14 when it comes to the clear mobility platform,
02:16 how do they fit together?
02:18 - Yeah, exactly.
02:18 What you're talking about is a huge problem.
02:20 And recognizing that we've been focused
02:22 on creating a unified platform
02:25 that brings a broad range
02:27 of mobility infrastructure management capabilities together
02:30 in a way that they can interoperate seamlessly.
02:33 And we do that through our platform.
02:35 And the way to think about the platform is it's multi-level.
02:38 So first of all, at the kind of base level of the platform,
02:42 we have our various edge devices.
02:44 And those include intersection detection sensors,
02:47 fixed travel time sensors,
02:48 and fixed connected vehicle sensors.
02:51 And then above that, we've got
02:52 our cloud computing service layer.
02:54 And that includes our mobility data processing engine,
02:58 our mobility algorithms,
02:59 and applied artificial intelligence.
03:01 And then sitting above that,
03:03 we've got various mobility management services.
03:05 And those include routing and navigation,
03:08 as well as infrastructure to vehicle integration.
03:10 There's several other mobility management services
03:12 that we support at that level.
03:14 And then those capabilities are consumed
03:17 by our application layer.
03:18 So we've got various application services
03:20 that customers consume on a software as a service basis.
03:24 And then to make all that work,
03:25 we have an open API framework
03:28 that enables seamless integration
03:30 across the various platform levels
03:31 among the application services.
03:34 And then also enable communication
03:36 between ClearMobility and third-party data sources
03:39 and other third-party technologies.
03:41 And then additionally, we wrap a unique,
03:43 highly curated set of multidisciplinary expertise
03:47 around the ClearMobility platform
03:49 to facilitate the implementation,
03:51 the use and the benefits of the platform.
03:53 And we've designed the ClearMobility platform
03:55 so that users are incentivized to contribute,
03:58 you know, their geolocation information and road conditions
04:02 and signal phase timing and event and other mobility data
04:05 when they participate in the platform.
04:07 And one of the huge benefits of that
04:09 is it essentially creates an ecosystem or a network effect.
04:13 And what we found is that it generates
04:15 no near 100% customer loyalty
04:17 as a result of the benefits of participating
04:19 in that ecosystem.
04:21 You mentioned the users and I'll want to get to that
04:23 before I talk about the finances.
04:24 So what kind of clients do you typically,
04:27 primarily end up serving?
04:28 Yeah, so historically we've been focused
04:31 essentially exclusively on the public sector.
04:33 Today, still about 90% of our revenue
04:36 comes from public agencies.
04:37 And those agencies include federal, state
04:40 and local agencies, transportation agencies in the US,
04:44 but also comparable transportation agencies in Canada,
04:47 like provincial agencies, as well as the national
04:50 equivalent of the US Department of Transportation.
04:52 And then the same in Mexico.
04:54 Additionally, we sell to various transportation agencies
04:57 in other international markets as well,
05:00 throughout Central America, South America,
05:03 even the Middle East and in parts of Europe.
05:06 Additionally, you know, we're finding that a lot
05:10 of commercial enterprises see the value
05:12 of participating in this ecosystem.
05:14 And so we're seeing a lot of inbound interest
05:17 from automotive OEMs, automobile insurance companies,
05:20 media companies and mapping technology companies.
05:23 And the reason that they're interested
05:25 is that their business models have various dependencies
05:28 on understanding the transportation infrastructure
05:31 and like how it's operating in real time
05:33 and also historically, so they can make better real time
05:36 and planning decisions.
05:38 And in order for them to get that same kind of information,
05:41 they would need to integrate with the various devices,
05:45 tens of thousands of those deployed out there
05:47 in infrastructure and hundreds of different agencies, right?
05:51 Instead of having all those point to point integrations,
05:54 they can integrate with our platform,
05:56 which essentially provides a nexus point.
05:58 And so they see huge operational benefits
06:01 for participating in our ecosystem.
06:03 And so today about 10% of our total revenue
06:05 comes from various commercial entities.
06:07 And we see that revenue contribution
06:10 growing dramatically over the next several years.
06:12 - Now we've talked about the past,
06:14 we've talked about the present,
06:15 we've talked about what it is you do,
06:16 how you do it and who you do it for.
06:18 Let's talk about the money.
06:19 Specifically, I believe your Q2 financials
06:23 showed an 11% increase year over year.
06:27 How can we go ahead and expect this
06:29 to continue growing from here on out though?
06:32 - Yeah, well, actually 11% growth is kind of lower
06:36 than what we've seen in the most recent periods.
06:39 That an 11%, which as you've noted
06:42 was the most recent quarter is actually consistent
06:45 with the midpoint of our revenue guidance
06:47 for the current year.
06:49 Actually, the reason that's a little bit lighter
06:50 than what we've been reporting in the most recent periods
06:54 is that we had some kind of unusual prior period comparables
06:58 and it was due to prior supply chain issues.
07:01 And then as those began to ease,
07:02 we were able to ship a lot of sensors.
07:04 And so we saw unusual rates of revenue growth.
07:08 And again, the prior year comparables are kind of skewed.
07:11 But anyway, our vision 2027 target organic revenue
07:16 is 245 million to 265 million.
07:20 And that's assuming a 14% revenue CAGR
07:23 at the midpoint of that range,
07:25 which is consistent with our organic revenue growth
07:28 for the last few years.
07:30 And so we feel very confident
07:31 that we'll continue to experience that rate of growth.
07:34 Again, that being said, I do wanna note
07:36 that we do have a couple unusual comparables.
07:39 And so in the December 31 period and the March 31 period
07:42 of this year, our revenue growth on a year over year basis
07:45 is gonna be lighter,
07:47 probably in the low to mid single digits.
07:50 But again, for the year,
07:52 we expect that growth to come in at 11%.
07:54 That's consistent with the midpoint
07:56 of our current guidance range.
07:57 And that's actually relatively low
08:00 compared to recent organic growth.
08:02 And again, over the longterm,
08:03 we expect that organic growth to come in at about 14%.
08:06 - Let's talk about the new sibling on the block.
08:08 More specifically, I'm talking about AI
08:10 and how in the next 10 years,
08:12 you believe it'll impact the transportation industry.
08:15 - Yeah, for sure.
08:16 AI is huge.
08:18 It's really gonna change everything.
08:19 And that's certainly true in transportation as well.
08:22 Recognizing that we've been super focused on AI
08:25 for at least the last three years.
08:27 And I talked to you about the fact
08:28 that we've got this clear mobility platform
08:30 and it's a layered architecture.
08:33 We've actually been using AI
08:35 at virtually every layer of that architecture for some time.
08:40 So for example, we use various forms of machine learning
08:43 at the edge to better identify and classify objects
08:46 that our sensors are picking up.
08:49 And then we also collect literally petabytes
08:51 of mobility data that's coming from our own sensors
08:54 between Jess and our cloud,
08:55 but also from various third parties like agency systems
08:58 and other third party data sources.
09:00 And then we use AI to normalize, standardize
09:03 and enrich those data sets
09:05 to conform to international standards.
09:07 One of the problems in our sector
09:08 is some people are really good at collecting data,
09:10 but then they try to apply AI against it,
09:13 but they get spurious results
09:14 because the data isn't relevant or standardized.
09:18 So we're super focused on that.
09:20 And then after having done that in the cloud,
09:22 we then apply AI to those various large data sets
09:25 to predict future events.
09:26 And that'd be like such as collisions and congestion.
09:29 And then we recommend countermeasures
09:32 that individual drivers or agencies can make
09:34 in order to address those situations.
09:37 Anyway, we expect AI is gonna continue
09:40 to develop really rapidly in every sector of course,
09:44 but also certainly in transportation.
09:46 And as a result, we'd expect that to probably disrupt
09:49 some of the existing product categories.
09:51 And a couple of categories
09:52 I think are gonna be really impacted by this
09:54 in our space would be like signal controllers,
09:56 and then also advanced traveler management systems.
10:00 But in addition, more broadly,
10:02 we expect that the advances in AI
10:04 are gonna accelerate the evolution of autonomous vehicles,
10:08 infrastructure to vehicle integration,
10:09 which is related to that.
10:11 And then also ultimately accelerate the adoption
10:14 of the evolution of the connected transportation network.
10:18 So overall, AI is gonna be very transformative
10:21 in our marketplace,
10:22 but it's something that we've been focused on
10:24 for over three years and we'll continue to invest in.
10:26 And I frankly think we're at the head of the curve.
10:29 I couldn't agree more with how rapidly AI
10:32 has advanced itself.
10:33 I mean, we started with text,
10:34 now you've got video and imaging
10:36 that's kind of gone from there as well.
10:37 I mean, let's be honest,
10:38 soon enough you might be interviewed by an AI next time.
10:41 But for now-
10:42 Perhaps I am right now.
10:43 (laughing)
10:44 It's very detailed, we wrote a great coding on it.
10:47 But for now, thank you so much for joining me, man.
10:49 Of course, my pleasure.
10:50 Absolutely, and folks, that is Joe Bergera,
10:53 who is the CEO of Iteris.
10:54 Ticker on the NASDAQ is I-T-I.
10:56 And remember, for all things finance, visit benzinga.com.
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