Good day, ladies and gentlemen. Welcome to the Iaxcess Alpha Virtual Best Ideas Fall Investment Conference 2025. The next presenting company is Xtract One Technologies Incorporated. If you'd like to ask a question during the webcast, you may do so at any point during the presentation by clicking the Ask Question button on the left side of your screen. Type your question into the box and hit Send to submit. I'd now like to turn the floor over to today's host, Mr. Peter Evans, Chief Executive Officer with Xtract One Technologies Incorporated. Sir, the floor is yours.
Thank you so much, Ollie, and good morning or good afternoon, everyone, depending on where you're calling in from and listening to this webcast today. Thank you for taking the time to dial in and listen to what we at Xtract One Technologies are doing to change the world and make all of our lives a little bit safer and a little bit more welcoming. At Xtract One Technologies, we talk about making a great first impression. I'll start with an anecdote that every one of us has experienced. We've all gone to a scenario where it's through the airport to a sports event or some other activity where they're screening for weapons on the way in the door. In this world that we live in today, unfortunately, there's a continuing and growing threat. We have a challenge as a society. How do we keep ourselves safe?
How do we keep our coworkers, our students, and others safe in this world where the historical response to these kinds of increasing threats was a labor-based business model that was populated with adding more security guards or using 50-year-old walkthrough metal detector technology? We're in the business of changing that. We do so by leveraging digital innovation in a manner that has not been previously seen in the physical security world. We can all think about the history that we've seen in the industry where digital transformation has changed fundamental market segments. We've gone from brick-and-mortar bank branches to all of our online banking occurring in a digitally enabled world.
Similarly, if we think about how we get educated, how we actually do commerce and purchase items, the world has moved from an analog world to a physical world, but in the physical security marketplace heretofore, it's still been represented by technologies and approaches that are about 50 years old. Xtract One Technologies is out to change that. We're disrupting this physical security industry by leveraging software, AI capabilities, and purpose-built sensor technologies to provide a proactive and preemptive approach to reducing the numbers of threats and specifically weapons-based threats in the industry. Let's talk a little bit about more of what we see in the marketplace and why this is becoming a great opportunity for us. Every day we read more and more about some of the tragic stories about more weapons proliferation, not just here in North America, but also globally.
I saw an interesting story yesterday out of Australia where a local hospital organization was highlighting that they'd had five times more workplace violence issues in the hospital with weapons involved than they did in the previous year. This is not just a North American problem or a U.S. problem, it's a global problem. We've also seen since COVID a rise in societal unrest and a higher degree of expectations out of individuals and more polarization in society. We've also seen in many places a decline in the labor force, particularly those folks in the security industry, because it's becoming a more challenging role for people to take on as a career. Amongst all of this, perfect storm items that are creating a more risky environment for all of us, we're seeing the rise of pragmatic applications of AI software.
In the case of Xtract One Technologies Incorporated, we have purpose-built software solutions that leverage AI to allow us to be proactive instead of reactive when it comes to security, to provide massive scale when it comes to security, and to digitally enable security organizations to be able to carry safer environments. What does this mean for the investors? We'll dig into the details a little bit more, but let's start with a conclusion to begin. Why are investors choosing to invest in Xtract One Technologies Incorporated? First off, like many other vertical marketplaces, we're digitally disrupting an existing market which has some very, very high barriers to entry.
We are bending the laws of physics with what we're doing with sensor technology to be able to allow an individual to simply walk right into a building with their laptop, their backpack, their chargers, their cell phones, all their other metal items, and to not alert. While at the same time, if somebody does walk in with a gun or a knife, being able to specifically say that there is a gun in the backpack, a knife in the pocket, all at walking speed. Now I'd invite people to think about the last time that you went through a metal detector going into your favorite sports arena or going through the TSA or other applications like that where you had to stop, wait, take all your metal objects out of your pocket, put them all in a bin, go through, your belt buckle alerted.
It's not a very embracing experience, and it's not a brand experience that many places want, particularly when places like a hospital or a school are looking to increase the level of protection for their environment. That's not the brand experience of care that a hospital wishes to deliver, and we can change that. As a company, we've developed over the last four years strong revenue growth and backlog, and we're on an accelerating trajectory as a business right now with increasingly high growth on our top line while keeping our OpEx model growing at single-digit numbers every year. Independently, our technology has been verified and proven by some of the most secure organizations in the world, whether it's the TSA, the Federal Aviation Administration, organizations like the Department of Homeland Security, or the National Protective Security Authority in the UK.
We pride ourselves on taking our solutions and taking it to those third parties who validate technology for its effectiveness in the world in the applications it was meant for. The platform that we've built in the marketplace is playing into a $135 billion marketplace globally, and we've barely scratched the surface in terms of market penetration, whether in North America or globally. As a business model, we're delivering a SaaS-based approach to delivering revenues, which creates a lot of predictable and recurring revenues for our customers and for our investors and for our business. Most importantly to me personally is the key customer wins that we've delivered and the compelling ROI not only for our customers but for their customers.
We see scenarios where hospitals have deployed our technology, and the employee satisfaction shoots through the roof, and the caregivers in that hospital are saying, "I feel safe at work for the first time." When patrons who are attending a concert at their favorite venue, not only is the venue doing very well, getting people in much faster and at a much lower cost, but the patrons are having a much better guest experience by simply walking into the venue. Let's talk about this in a little bit more and what this means in terms of a solution and an experience for everyone on this call and anyone who attends a concert, for example. We've all experienced the obsolete walkthrough metal detectors as the proxy for detecting weapons. The metal detector was developed 50, 60, 70 years ago and came into its forefront in society about that time frame.
It was developed and deployed at a time when the average person walked around with a leather wallet, maybe the keys to their car. That was about it. Metal was a good proxy for a weapon. Today, the average person is carrying two smartphones, earbuds, jewelry, tablet, laptop, all sorts of other metallic items. The experience of going through a metal detector has become more and more onerous.
Instead of the long lines that are averaging six people per minute to go through the metal detector, a system like ours can have people just flow in at a natural pace, 50, 60 per minute, as if there was nothing there, allowing all those people, as you see this lady on the left or on the right, sorry, walking through with her purse, her cell phone, her watch, her keys, and all her personal items, and the system only alerting should she have a gun or a knife. At this point, typically what we would do is show a video of what this experience looks like in the real world. Unfortunately, due to the platform where we've set this up, we don't have the video, but we have lots of case studies on our website for others to look at.
Let me describe what you would see if I ran this video. The video shows children going into a school with their backpacks, their laptops, their metal water bottles. They've got these metal lunch boxes, and they're all just streaming in through the front door as if there's nothing there that is slowing them down, causing them to have secondary searches of their backpacks, causing people to look through all of their personal items. It's as if they're just walking to school normally. A security guard walks through the system, and he has on his flak jacket, he's got on, you know, his communications devices, he's got his smartphone, he's got his walkie-talkie, keys, watch, wallet, all sorts of other items, and he has a gun on his left hip.
As he walks through, instantaneously, within about 0.7 seconds, the system correctly identifies that there is a gun on his left hip. When we think about this for all of our schools and all our hospitals, that's a very welcoming experience while keeping the environment much safer. The big difference for Xtract One Technologies in this marketplace versus any other potential opportunities or solutions that are out there is that we consider ourselves an and, not an or. The choices we've made on our architectural design for our solution and the way we develop our software with a singular purpose in mind is that we can detect the guns and the knives and have a high ingress speed of people entering in a building, 3,000 people per hour through a door, or about as many people as you could get through normally, while having a very low false alert rate.
This creates a great ROI for our customers where, for example, a hockey arena may normally have 42 walkthrough metal detectors and 85 security guards and spend about $2 million on the salaries for those security guards, versus a scenario today where they're now using nine of our systems, 27 security guards, and they've cut their spending on OpEx to about a third of what it was before. Most importantly, though, they're keeping out the weapons from the facility while getting the average individual into the arena for their concert in what used to be 17 minutes, now to under two minutes. Of course, what are those people doing while they're inside the building? They're not only buying merchandise, food, beverage, but they're having a much better brand experience. An incredibly compelling ROI for environments like arenas, stadiums, and others.
We deliver our solutions to the marketplace in one of two ways. We have two solutions that are purpose-built for various market segments. For the past four years, we've been delivering the SmartGateway solution to the marketplace. About four years ago, in 2021, we did a couple hundred thousand dollars of business. We've grown the business over the last four years. We're now in the tens of millions of dollars of business with the SmartGateway, and that trajectory continues for that product. The SmartGateway serves arenas, stadiums, and hospitals very, very well for the objectives that they're trying to achieve, particularly the ability to catch very small knives in the case of hospitals where you want to keep that weapon away from the threat it could provide to a caregiver.
We've most recently introduced the Xtract One Gateway, purpose-built for schools and office environments and convention centers where the average person is walking in the door with a backpack, with a laptop, and probably what everyone on this call would be carrying if they were working to their office environment. The Xtract One Gateway has been going through its certifications in the first half of this year, and as of July, we've been shipping it out to the marketplace for a backlog of customers that had already seen the early betas of the product. I'm very, very pleased with the trajectory of what we're seeing from One Gateway and particularly the trajectory that we're seeing in the school marketplace. With the One Gateway itself, the unique capabilities of it that are purpose-built for the schools are offering an opportunity for the schools to rethink entry.
Previously, the schools would have to set up an environment or an entrance that looked like a TSA checkpoint where I had a separate X-ray machine for screening bags, and the children had to go through a separate system to screen the people. Instead of two systems and all the footprint and all the software and all the maintenance and the requirement from state or federal inspectors to examine those X-ray machines as is mandated, one simple solution, the One Gateway, allows those children to stream into class without any sort of delay or impediment. What does this mean in terms of the markets we serve with these two products?
Originally, as a business, four odd years ago, myself and our CFO, Karen Hersh, together we sat down and took a hard look at the business and where do we want to go with the business and how could we get it on a high growth trajectory. Our initial target market was to take the SmartGateway into the arenas and stadiums and theater marketplace in North America. This was an obvious choice. These organizations already screened for weapons, they already had security staff, they already had fans who were ready to be screened, and they already had budgets. We could offer a better, faster, cheaper outcome by simply redirecting that existing spend that was budgeted for over to our solution. That's what created our first wave of trajectory of growth for the business. However, the markets were not willing to wait for us.
Hospitals, schools, manufacturing, distribution, organizations like auto manufacturers who were also experiencing weapons threat in the workplace were pulling us into their marketplaces and to come and do demonstrations at their locations. Accordingly, we now play in those four big markets: schools, hospitals, manufacturing and distribution, and arenas and stadiums as our primary four markets, with the SmartGateway and the Xtract One Gateway each uniquely serving some of those segments. This has had us playing into a $40 billion, $39.5 billion marketplace as pulled by those customers. Similarly, in the last 18 months or so, we're seeing a pull into the international market space with organizations in places like Japan, Australia, and Western Europe, in the UK, France, and other places now deploying solutions where we are known specifically for detecting the knives and not just the firearms.
Internationally, knives are the primary problem, as mentioned in that story about the hospital in Australia. When we think about other locations like Singapore, Japan, and the UK, their primary focus is making sure they keep those edged weapons out of the facility. That's where Xtract One has a unique competitive advantage. Any other solution in the marketplace to do so will now start alerting on items like smartphones, and therefore one could expect an almost 100% alert rate. That does not deliver the value proposition that Xtract One delivers of just walk right in experience while keeping the weapons out. I mentioned briefly our trajectory financially as a company. Going back to early days post-COVID, in 2021, we delivered a couple hundred thousand dollars of business for our SmartGateway platform.
As you can see here, we've effectively been doubling or greater our revenues over the last three to four years. You'll see us announcing our next fiscal year as we move towards the end of October. Our total contract value of new bookings continues to grow, and the booking backlog is a very healthy number that's a predictor of the future for us. Our bookings backlog typically is comprised of customers who have ordered and not yet deployed or customers who have purchased on a SaaS-based business model where they bought a subscription and we recognize the revenue over time as they continue to progress with us monthly, quarterly, or annually through their contract.
We believe that we're in a solid position, and there's a lot of tailwinds for our business right now, unfortunately, due to the weapons threats that continue to grow in the world right now, but very fortunately because we've delivered a solution unlike anything else that's been seen in the marketplace before. We think we have a unique competitive advantage in each of those four big segments that we play into. The validation of all of this in the real world is the customers.
We find that when customers are truly focused on having the highest level of security, iconic venues like Madison Square Garden or the Sphere, NBA teams, NHL teams, well-known hospital organizations like the VA Hospital, or well-known entertainment organizations that are global in nature like Cirque du Soleil, we find that organizations who take security seriously and define that Xtract One is the right solution for them because we can deliver on that security value proposition as well as delivering on the great guest experience. There is no need to trade off one for the other. An organization can have both. As a business, recapping why investors are interested in us, again, we're playing in a very large and growing marketplace where we barely scratched the surface on the market penetration so far.
This is a very, very difficult problem to solve with the sensor technologies that can uniquely identify the characteristics of one item, a gun, versus another item, a smartphone. We've been able to deliver that value and actually get to the point of object detection where as people walk through the system, our system can identify that's a gun, that's a laptop, that's a knife, all at walking speed and without the complexity of things like X-ray machines. We find that this is a marketplace that is continuing to grow and grow aggressively for us and that we've got a lot of tailwinds.
As investors see the market opportunity, as they see our growth rate to serve that marketplace, and as they see the high moat around our business in terms of what we've done that is very unique, this is all the telltale signs of what we believe is a great investment opportunity. At this point, I'd like to open it up for any questions that might have come in from the line. Karen, are there anything that you've seen on the line so far, please?
Sure, Peter. There have been a number of questions. I'll start with one about our competition. It's a multi-part question, so I'll paraphrase here. Basically, the question asks, how do we stack up against our competitors on a system-by-system basis? Do you see the market transforming to the platform? How is the size of the market? Is there enough for all competitors at this point, in your opinion?
That's a great question. It's a complex question. Let me unpack that a little bit. First off, the easiest way to characterize what we are doing versus the competition is I think of us as an and, not an or. The competitive solutions, in order to catch the broad set of weapons, including things like edged weapons and even something like a composite gun, think like a Glock 43, a Glock 27, a Smith & Wesson Bodyguard, or something like that. In order for those solutions to capture these types of weapons, they have to turn the sensitivity up so high that the false alert rate goes up very high also. Unfortunately, organizations are left with a decision.
Do I turn down the sensitivity and accept missing weapons, as we've actually seen with some public news announcements, but then I have a tolerable guest experience with a lower level of false alerts, or do I dial the sensitivity up? Now I've got a terrible guest experience, very similar to a walkthrough metal detector, but I'm catching the weapons. In the case of Xtract One Technologies, where we differentiate is we're an and, not an or. I'm not forcing customers to make a decision to have a great guest experience and missing weapons or not. In our case, we can catch the guns, we can catch the knives, we can have the high ingress speed. A single lane of our system is now equivalent almost to a dual lane of other systems at half the price. I can have the low false alert rates.
That's the core of where we see our differentiated value versus the competition. Said another way, I think we're truly delivering on the promise of what an AI-powered threat detection system does versus a stylized walkthrough metal detector.
Great.
Thank you. Next question, please, Karen.
Sure. The next question, and I may chip in on this one as well, is where do you see revenues over the rest of your fiscal year? Just to let listeners know, we are into our fiscal 2026 new year, which started August 1. Obviously, while we can't comment specifically on where we think revenue is going, I think there's certainly a number of indicators that investors should sort of focus in on when thinking about revenue growth. Peter, could you talk to some of the items like, you know, our growth in the target market and our backlog?
Okay. Do you want to answer the revenue question first?
Sure. I'll start. Part of that was my own comment at the end, which is that the indicators are backlog and the growing market. We've certainly seen a growth in our revenue over the last couple of years, and we fully expect this to continue going forward. There are probably a number of factors that contribute to that. I'll start first, Peter, and then certainly feel free to add in. We've had a continually growing backlog, which in my opinion is our best indicator of our future growth. We work on a subscription basis with many of our customers, so you'll see a growing contractual backlog that will be recognized over time. We also have a pending backlog, which is orders that have been signed and have still yet to be installed, and that continues to grow as well.
I think both of those growing backlogs are the best indicator of what's to come in fiscal 2026. The other factor that I would say that investors should focus in on is the size of our market that we currently address. Peter mentioned in the presentation that we started with arenas and stadiums. That has grown to hospitals and schools. With the newly launched Xtract One Gateway, we've made great inroads into the education market as well. I think the fact that that market is growing is going to help us to have some more predictability and accelerate our growth by having just a larger market that we're able to address with both our SmartGateway and our Xtract One Gateway. Peter, I invite you to add anything you'd like to that as well.
Yeah, I think you've hit the key ideas here, Karen. The SmartGateway continues to be adopted by the marketplace at a nice steady pace, particularly with the arenas, the stadiums, and the hospitals. We're finding with some of the hospital organizations, they will make a purchase for a SmartGateway on a hospital-wide network and then deploy over time. It's virtually impossible for someone to flash cut every entrance at every hospital when you've got 14 hospitals in the network. We'll see that backlog represent the decision by the hospital to select Xtract One and the SmartGateway. Then we'll start to see that convert to revenue over time as the hospitals will go through one hospital, then the next, then the next, and then the next, and deploy. Similarly, we're seeing the same thing with schools.
I could not be more pleased with the uptake that we're seeing from the schools now that Xtract One Gateway is out in the marketplace in a larger manner. Every time we do a demonstration with a school, seeing the looks on people's faces as they see what we've achieved is telling me that there's a great future for the Xtract One Gateway product. We expect that backlog to continue to grow. Similar to the hospital analogy I just gave, if somebody, I think we've publicly announced Volusia County, for example, for 48 systems, they're not flash cutting those overnight. They're working through one school by the next school by the next school and making sure they're set up for success. All the students are trained, all the teachers are trained, and so on.
As Karen pointed out, that backlog is a really good indicator of future health and growth of the business and conversion to revenues. There are a couple of other questions here that I can see have been asked by Christopher Meredith. Karen, should we address those too?
Sure. I think we're out of time, but I think we can just ask one more quick question, which is you've talked about hospital systems in Canada and generally larger opportunities. Can you, do you see larger deal size in your pipeline for other market verticals as well?
We continue to see the, you know, smaller theaters and other organizations who might buy two, three, four systems. We are starting to see that the size of the average company and the cut deal, whether it is a manufacturing organization, a retail organization, hospital systems and hospital networks, school organizations, we do start to see the same sort of thing across all verticals. It's not just schools. Even within schools or within hospital systems, I might look at a hospital organization in, like, for example, Manitoba that we've announced where the whole province chose us. There are other organizations and other locations where somebody might be looking at one or two hospitals or a school system where there are three schools in the total district or others where there might be 200 schools. We're going to see a mix in all vertical marketplaces.
Excellent. I think we're out of time for today.
I believe we are. If everyone who attended, I very much appreciate it. I see some familiar names on here. Kip, I hope you're doing well. Thank you, everyone, for dialing in today. If you have any further questions, you can reach us at xtractone.com. Please send a note into the investor channel there. We'd be happy to get on a call and have a further discussion. Thank you so much.
Thank you, ladies and gentlemen. That concludes Xtract One Technologies Incorporated's presentation. You may now disconnect. Please consult the conference agenda for the next presenting company.