Jacksonville, Fla.-based Duos Technologies Group, Inc. (Duos) highlighted its new subscription model during a third-quarter 2023 financial report.
The machine vision and artificial intelligence provider in October 2022 announced it was expanding its business to build, own and operate Subscription RIPs (railcar inspection portals) at strategic North American locations.
“The Subscription RIPs will be 100% owned and operated by Duos supplying near real-time machine vision-based data and artificial intelligence-based detections to railcar owners who subscribe to these enhanced services,” the company reported at the time.
Duos in July 2023 implemented its first subscription services agreement with a passenger transit operator. That agreement, renewable annually, was valued at $300,000 and encompassed customer training, installation and railcar data services across up to three existing Class I portals, according to the company. With this signing, Duos said it expects to provide the same near real-time inspection data and AI-based alerts that have been developed and tested in conjunction with its Class I railroad customers.
“Regarding subscriptions, we expect to begin executing a subscription with a large railcar group in the near future, and we are in discussions with another dozen prospective subscribers,” Duos CEO Chuck Ferry said during the company’s Nov. 14, 2023, financial report covering the three-months ending Sept. 30. “Our current backlog [of contracts] is $6.4 million, and we have another $5 million to $7 million in near-term renewals and contract modifications, which we anticipate closing in late Q4 2023 and into early Q1 2024.
“Our goal is that the Duos Railcar Inspection Portal becomes the industry standard for machine vision wayside detection, and I believe that we are a company that has the leadership position in the rail sector under that premise. Our transition over the next 12 to 18 months into a recurring revenue business model puts us in a very strong position to give an expected high return on investment. Despite our current short-term revenue challenges, the company remains in a strong financial position with sufficient cash for operations; meaningful near-term business opportunities; and, most importantly, a growing acceptance of Duos’ technology that will set the stage for the growth that we are anticipating to take Duos to its next evolution.”
Ferry noted that Duos’ third-quarter 2023 results “were impacted by several external factors, underscoring the challenges of operating a capex-focused business and further reinforcing our ongoing efforts to focus on a primarily subscription-based model in the future.” These challenges, he said, “included a postponement of installation for a major transit system in the Northeast U.S., additional planned projects being pushed out for budgetary reasons, and temporary delays in the initial rollout of our subscription business, the last of which has now been addressed, enabling us to monetize our first subscription agreement. In response, we have proactively initiated cost reductions in several non-essential areas to lessen the cash burn during this transition phase while revenues are lower than originally anticipated.”