Executive Summary / Key Takeaways

• SuperCom has successfully transformed from a legacy identification business in Africa to a high-margin IoT tracking solutions provider in developed markets, with over 97% of 2024 revenues from developed countries.
• The company's proprietary PureSecurity suite, including PureOne GPS ankle bracelets and PureProtect domestic violence solutions, offers significant technological advantages, driving a high win rate in competitive government tenders.
• Strong financial performance in H1 2025, including record GAAP net income of $5.3 million and expanding gross margins (59.1% in Q2 2025), reflects a successful shift to higher-margin contracts and operational efficiencies.
• Aggressive expansion in the fragmented U.S. market, alongside continued growth in Europe and recent wins in Germany and Israel, positions SuperCom for sustained revenue growth and increased profitability.
• A strengthened balance sheet, marked by substantial debt reduction and increased cash, provides the capital flexibility for strategic acquisitions and large project deployments, further enhancing long-term value.

The Evolution of Public Safety: SuperCom's Strategic Transformation

SuperCom Ltd., originally established in 1988 as Vuance Ltd., has undergone a profound strategic transformation, shifting its core business from legacy identification services in Africa to cutting-edge Internet of Things (IoT) tracking solutions for public safety in developed markets. This pivot, initiated around 2021, has been instrumental in the company's recent resurgence, with IoT solutions now accounting for 91% of its total revenues in 2024, a dramatic increase from just 1% in 2015. Over 97% of SuperCom's 2024 revenues originated from developed countries, underscoring the success of this strategic reorientation.

The company's mission is to revolutionize public safety through advanced electronic monitoring technology and data-driven solutions, partnering with national governments globally for over three decades. This focus addresses critical societal needs such as enforcing home confinement, easing prison overcrowding, and providing victim protection, particularly in the growing domestic violence prevention sector. The electronic monitoring market is projected to reach $2.3 billion by 2028, with the U.S. and Europe representing approximately 95% of this opportunity. SuperCom's strategy is built on three pillars: innovative technology, expanding global presence, and delivering outstanding service.

Technological Edge: The PureSecurity Suite

At the heart of SuperCom's competitive advantage lies its proprietary PureSecurity suite, a cloud-based, software-enabled platform that continuously monitors offenders and manages real-time information. The company has invested over $45 million in its technology platform, which consistently outperforms rivals in competitive tenders, achieving a win rate of over 65% in Europe. This technological superiority is a key differentiator, enabling SuperCom to displace long-standing incumbents.

The PureSecurity suite includes several advanced solutions:

• PureOne: An all-in-one GPS ankle bracelet monitoring solution, integrating comprehensive tracking capabilities into a single device. It boasts superior features, including a battery life of up to one year, significantly longer than many competitors' devices which typically last only one or two days. This extended battery life reduces operational overhead and enhances reliability. The technology also improves GPS reliability, utilizing GNSS and other location protocols to track effectively in challenging environments like underground areas or within dense urban settings, where many competitors struggle with interference.
• PureProtect (also branded as PureShield): A life-saving domestic violence monitoring solution that provides preventive measures to families at risk. This unique, light-based solution architecture offers long-term battery life and is gaining rapid adoption globally.
• PureCom, PureTrack, PureTag, and PureBeacon: These components further enhance the comprehensive monitoring and data management capabilities of the PureSecurity platform.

SuperCom has also begun integrating AI-driven analytics into its electronic monitoring solutions to enhance predictive insights and client outcomes, with further developments anticipated. This focus on continuous R&D ensures the company maintains its technological lead, offering actionable insights and timely interventions to authorities. The "so what" for investors is clear: SuperCom's differentiated technology translates directly into competitive wins, higher-value contracts, and the potential for superior margins due to reduced operational costs and enhanced service offerings.

Strategic Expansion: A Global Footprint

SuperCom's growth narrative is deeply intertwined with its aggressive global expansion, particularly in the high-growth U.S. and European markets. The company has a proven track record of securing multi-year government projects, with over 70 such contracts since 2018.

In Europe, SuperCom has secured over 15 national electronic monitoring projects through competitive tenders in recent years. Notable achievements include a $33 million program in Romania, awarded in 2022, designed to monitor up to 15,000 individuals simultaneously over six years. The company has also been repeatedly selected by Swedish government agencies since 2019, expanded its domestic violence solution nationally in Finland, and launched its third national project in Latvia. Most recently, in September 2025, SuperCom was awarded a $7 million national electronic monitoring contract in Germany, displacing a 20-year incumbent technology provider. These wins underscore the adaptability of its platform and the growing demand for comprehensive electronic monitoring solutions across the continent.

The U.S. market represents an even greater long-term opportunity, projected to grow to six times the size of the European market in the coming years. SuperCom's U.S. subsidiary, Leaders in Community Alternatives (LCA), acquired in 2016 for $3 million, has been a significant success, generating over $35 million in project wins in California alone. Since mid-2024, SuperCom has rapidly expanded its U.S. presence, securing over 30 new electronic monitoring contracts, entering 11 new states (including Tennessee, Virginia, Nebraska, Utah, Kentucky, Alabama, South Dakota, Arizona, Ohio, Wisconsin, Minnesota, and Michigan), and establishing 9 strategic partnerships with regional service providers. The company also secured a statewide procurement contract in North Carolina, enabling streamlined access to counties. This "planting seeds" strategy in the fragmented U.S. market, coupled with a centralized, cloud-based system and 24/7 support, allows for quicker, more cost-effective program launches and higher margin potential compared to Europe's country-specific requirements.

Financial Performance: A Turnaround Story

SuperCom's financial performance reflects a successful turnaround and a clear trajectory towards sustained profitability. The company achieved its first full year of GAAP profitability since 2015 in 2024, reporting a GAAP net income of $661,000. This was built on a record revenue of $27.6 million for the full year 2024, representing a 134% increase from its 2020 low and marking the fourth consecutive year of revenue growth.

The momentum continued into 2025, with the first half of the year delivering record GAAP net income of $5.3 million, an approximate 80% increase from the prior year period. In Q2 2025, despite a modest revenue decrease to $7.14 million from $7.5 million in Q2 2024, the company's strategic shift to higher-margin contracts significantly boosted profitability. Gross profit increased by 12.7% to $4.2 million, and gross margin expanded by 9.5 percentage points to 59.1% from 49.6% in Q2 2024. Operating income nearly tripled to $1.1 million, with the operating margin reaching 15.1% from 5.3% in the prior year period. This demonstrates the impact of high-value, technology-led projects and management's efforts to streamline operations.

EBITDA has been consistently positive, reaching $2.5 million in both Q1 and Q2 2025, marking the 11th and 12th consecutive quarters of positive EBITDA, respectively. This resilience underscores the strength of SuperCom's operating model. Furthermore, the company has made significant strides in improving its liquidity and capital structure. Cash and cash equivalents totaled $15 million at the end of Q2 2025, up from $5.7 million at the end of Q2 2024. Working capital improved to $40.8 million, and book value of equity rose to $37.3 million in Q2 2025. Long-term loans were reduced to $24.2 million in Q1 2025, a reduction of over $10 million year-over-year, achieved through debt-to-equity exchanges at premiums and an extension of debt maturity to December 2028. Operating cash flow has also seen a dramatic improvement, moving from a usage of $9.4 million in 2021 to positive free cash flows for the first nine months of 2024.

Competitive Landscape and Strategic Positioning

SuperCom operates in an oligopolistic growth market, competing against a mix of larger, diversified technology companies and specialized public safety providers. Key direct competitors include Zebra Technologies , Thales Group , and Axon Enterprise .

Zebra Technologies (ZBRA), a leader in enterprise asset intelligence, focuses broadly on supply chain optimization and real-time visibility. While Zebra has a vast global distribution network and integrated hardware-software ecosystems, SuperCom differentiates itself with specialized, regulatory-compliant solutions tailored for government and public safety applications. SuperCom's focus on national ID systems and offender tracking provides greater efficiency in high-security environments, though Zebra's commercial scalability is broader.

Thales Group (THLEF), a major provider of digital security and identity solutions, emphasizes secure communications and defense technologies. Thales benefits from extensive experience in regulated industries and global partnerships. SuperCom, in contrast, offers more cost-effective and agile IoT solutions, particularly in identity management and electronic monitoring. SuperCom's PureRF suite can deliver faster processing in targeted applications like offender tracking, giving it an edge in deployment speed for government clients, while Thales' scale allows for broader, more complex cybersecurity ecosystems.

Axon Enterprise (AXON) specializes in public safety technologies for law enforcement, including body cameras and tasers. While both Axon and SuperCom compete in tracking and monitoring for public safety, SuperCom's GPS offender systems and biometric solutions can offer materially lower operating costs for deployment in government settings. Axon's ecosystem is more geared towards integrated hardware and real-time data analytics for evidence management, whereas SuperCom's strength lies in comprehensive RFID-based tracking and broader IoT connectivity.

SuperCom's competitive advantages, or "moats," are primarily its proprietary RFID technology and its specialized focus on government-compliant solutions. The PureRF technology offers enhanced tracking accuracy and seamless integration with national ID systems, leading to superior margins through efficient operations and strong customer loyalty. This allows SuperCom to effectively counter larger competitors by providing superior performance in high-security, niche environments. However, SuperCom''s smaller scale and potential dependencies on specific hardware suppliers present vulnerabilities, which could impact costs and market share, particularly against larger, more diversified players like Thales.

Outlook and Growth Drivers

SuperCom's management maintains a long-term strategic vision, acknowledging that quarterly results can fluctuate due to the multi-year nature of government contracts. However, the underlying assumptions for a positive outlook are robust. Management anticipates continued margin expansion, with long-term gross margin potential expected to be even higher due to operating leverage, economies of scale, and the maturation of projects. The contribution margin for each additional unit deployed in existing contracts can be as high as 70% more, indicating significant profitability as programs scale.

The company encourages stakeholders to track key indicators such as its win rate in competitive tenders, expansion into new geographies, and new projects from existing customers. The U.S. market is expected to be a significant growth driver, with projects starting small and gradually scaling to larger deployments. Similarly, in Europe, SuperCom continues to bid on national projects, some of which are larger than previous wins, across Western European countries yet to fully adopt electronic monitoring. The increasing relevance of SuperCom's solutions is driven by high recidivism rates, escalating incarceration costs, and the global surge in victim protection solutions. Electronic monitoring offers a cost-effective alternative, costing $10 to $35 a day compared to $100 to $140 daily for correctional facilities. This public policy shift towards monitoring instead of incarceration, coupled with the potential "supercycle" from initiatives like the Trump administration's plan for ICE to apply electronic monitoring to immigrants, provides a strong tailwind for the industry.

Risks and Challenges

Despite a compelling growth story, SuperCom faces several risks. The inherent volatility in quarterly revenues and margins due to the project-based nature of its business makes short-term predictions challenging. Management explicitly states that it is difficult to predict the exact pace and source of growth or how project-specific margins will impact overall profitability in any given quarter.

Geopolitical factors, including ongoing global challenges and those in Israel where the company's manufacturing is based, could impact operations. While SuperCom has the ability to produce in other locations, potential tariffs between Israel and the U.S. remain an uncertainty. However, the company mitigates this risk by emphasizing its Software-as-a-Service model and the leasing of bracelets rather than outright hardware sales. Competition from larger, more established players and the need for continuous R&D investment to maintain technological leadership are also ongoing challenges.

Conclusion

SuperCom Ltd. stands at a pivotal juncture, having successfully executed a transformative shift towards high-growth, high-margin IoT electronic monitoring solutions in developed markets. The company's proprietary PureSecurity technology, exemplified by its PureOne GPS ankle bracelets and PureProtect domestic violence solutions, provides a distinct competitive advantage, consistently enabling it to displace entrenched incumbents and secure significant national contracts across Europe and the rapidly expanding U.S. market.

The robust financial performance in the first half of 2025, characterized by record net income and expanding gross margins, underscores the effectiveness of its strategic focus and operational efficiencies. With a strengthened balance sheet providing ample liquidity for future growth initiatives and strategic acquisitions, SuperCom is well-positioned to capitalize on the increasing global demand for cost-effective public safety solutions. Investors looking for exposure to a company with proven technological leadership, a clear growth strategy, and a strong financial turnaround story in a growing market should closely monitor SuperCom's continued expansion and execution.