Iteris, Inc. (NASDAQ:ITI) is a leading provider of smart mobility infrastructure management solutions. The company reported strong financial results for fiscal year 2024, with annual net income of $3,131,000, annual revenue of $171,987,000, annual operating cash flow of $11,378,000, and annual free cash flow of $8,343,000.

Financials

In the fourth quarter of fiscal 2024, Iteris reported total revenue of $42.8 million, representing a 1% increase year-over-year. For the full fiscal year 2024, the company generated total revenue of $171,987,000, up 10% compared to the prior year. This double-digit organic growth was driven by strong demand for Iteris' products and services, as well as the company's ability to capture a disproportionate share of the smart mobility infrastructure management market.

Iteris' product revenue in the fourth quarter was $21.6 million, down 14% year-over-year, primarily due to an unusually strong prior year period as the company shipped a large backlog that had accumulated over several quarters. However, for the full fiscal year 2024, product revenue increased 8% to $91,800,000. This growth was fueled by the company's success in winning large competitively sourced detection, fixed travel time, and cellular vehicle-to-everything (CV2X) sensor initiatives across the country.

Service revenue, which includes software-as-a-service (SaaS), data-as-a-service (DaaS), and managed services, grew 22% year-over-year to $21.2 million in the fourth quarter and 13% to $80,200,000 for the full fiscal year 2024. This increase was driven by the company's talent acquisition program, which improved labor capacity and services backlog conversion.

Iteris' gross margin expanded significantly in fiscal 2024, increasing 558 basis points to 37.4% in the fourth quarter and 1,063 basis points to 37.6% for the full year. This margin improvement was driven by the company's ability to alleviate supply chain issues, as well as stronger product and service mixes.

The company's adjusted EBITDA, a non-GAAP metric that excludes the impact of interest, taxes, depreciation, amortization, stock-based compensation, and other one-time items, was $3,107,000 in the fourth quarter, nearly double the prior year period. For the full fiscal year 2024, adjusted EBITDA was $12,900,000, a significant improvement of $19,500,000 compared to the prior year.

Business Overview

Iteris' strong financial performance was underpinned by its successful execution on several key initiatives. The company continued to enhance its sensor portfolio, introducing new features and capabilities that drove increased adoption. For example, Iteris released a comprehensive managed service branded as VantageCare, which leverages edge and cloud services to help agencies better maximize their traffic detection investments. The company also introduced an integrated intersection detection and connected vehicle system, Vantage CV, that combines traffic detection, cellular vehicle-to-everything communication, and connected vehicle safety applications into a single system.

Furthermore, Iteris entered into an exclusive technical and commercial partnership with Sumitomo Electric Industries to integrate its advanced pedestrian detection sensor into the company's ClearMobility platform. This integration is expected to transform pedestrian detection in the United States and double Iteris' total addressable market for detection solutions from about $500 million to $1 billion.

In addition to product innovation, Iteris continued to strengthen its software-as-a-service and data-as-a-service offerings. The company released VantageARGUS CV, a next-generation travel time and connected vehicle data collection and presentation system, and ClearGuide Signal Trends, which uses anonymized trajectory data to optimize signal timing without reliance on temporary traffic count data or communications infrastructure.

Iteris' strong commercial execution was also a key driver of its fiscal 2024 performance. The company reported record fourth quarter and full-year net bookings of $53.3 million and $181.6 million, respectively, representing year-over-year increases of 20% and 7%. This robust demand translated into a total ending backlog of $123.8 million as of March 31, 2024, an 8% increase compared to the prior year.

Outlook

Looking ahead, Iteris provided guidance for fiscal 2025 that reflects the company's confidence in its ability to continue capturing a disproportionate share of the smart mobility infrastructure management opportunity. The company expects total revenue to be in the range of $188 million to $194 million, representing organic growth of 11% at the midpoint. Iteris also anticipates an improvement in its adjusted EBITDA margin to a range of 8% to 10% of revenue, a 150-basis-point increase at the midpoint.

The company's fiscal 2025 guidance is underpinned by an aggressive solutions roadmap that includes the release of a new form factor for its Vantage Apex AI-based detection system, a new mobility data set to address various use cases, a cloud-connected edge solution for remote monitoring and management of critical third-party assets, and a highly advanced radar-based pedestrian detection system developed in partnership with Sumitomo.

Iteris believes these new product introductions will not only increase its total addressable market but also accelerate the adoption of its ClearMobility platform and improve the monetization of its expanding mobility data sets. The company also plans to further optimize its sales channels, expand its dedicated enterprise sales team, and enhance its customer success model to maintain a high retention rate and increase its software net dollar retention.

In addition to its organic growth initiatives, Iteris is evaluating various options to enhance shareholder value, including potential share repurchases, as the company believes the public market currently undervalues the company relative to precedent private market transactions involving intelligent transportation systems businesses.

Looking beyond fiscal 2025, Iteris remains on track to achieve its Vision 2027 targets, which include estimated revenue in the range of $245 million to $265 million and adjusted EBITDA margins in the range of 16% to 19%. This would represent a five-year organic revenue CAGR of approximately 14% at the midpoint.

Conclusion

Iteris' strong financial performance, innovative product roadmap, and strategic initiatives position the company well to continue capturing a disproportionate share of the growing smart mobility infrastructure management market. With a robust backlog, expanding annual recurring revenue, and a clear path to further margin improvement, Iteris appears poised to deliver sustainable long-term value for its shareholders.