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12.27.2023
MPS Shareholders –
I wanted to wish all of you a Merry Christmas, Happy Hanukkah and an amazing New Year.
Speaking about amazing years, 2023 was just that for MPS. This was our best year by a long shot and 2024 is going to be so good you would have thought we did nothing in 2023. As usual I want to apologize in advance for the length of this update. We have a lot to cover.
I have said this before but Covid really kicked our butts 3 years ago. Things were just starting to go our direction in a big way and then bam, out of nowhere, Covid hit us right between our eyes. Not only did we lose nearly all of our revenue we lost 100 percent of our pipeline and our momentum. We spent all of 2020 and 2021 on our backs. It was not until the midway through 2022 that cities and parking lot operators were willing to have a conversation. I look at 2023 as being our first year where the black cloud of Covid was not hanging over our head. 2023 was the year we got our foundation set and put all of the pieces in place. We have done that now. Operations and manufacturing are in place to scale, the products are solid, and the sales and marketing departments are cooking on all cylinders.
I wanted to take some time to recap 2023 as a significant amount went on and talk about our goals for 2024.
Engineering Recap and Goals:
I don’t often talk about our engineering team in our investor letters, but they are honestly the key to our success, and deserve a spotlight in this update. If you don’t have amazing products that work and that customers want, you are dead in the water before you ever get started. We have amazing products that people use every day and you know we are winning deals all the time now. Last month, our technology managed approximately 150,000 daily parking sessions and we are processing over 80,000 parking tickets monthly. Those are crazy numbers and could only happen if our products were solid. On a side note, that represents almost a 400% increase year-over-year. We are on the move baby!!
For all of our investor who are propeller heads this next part is for you.
In 2023, we performed 80 software releases across 13 products, which is nearly 7 releases per month – a torrid pace, especially for a relatively small engineering team. This doesn’t include all the development of test automation, testbeds and tools that the QA team has developed.
Engineering also completed our annual security PCI DSS audit as well as our penetration (hardware and software) testing, both of these are key data security accreditations.
Engineering added four new team members focused on DevOps Database Administrator, QA Automation, QA Testing and Business Intelligence. And equally as important we have had no departures from this team.
There is no rest for the weary in 2024, our goals are the following:
Improved internal KPI reporting
Solar version of the Parking meter
Install app for the SafetyStick
New version of our pay by phone app
Record Growth in 2023
Thanks to our engineering, service and operations team’s we have a strong foundation to really grow sales from. As you have noticed our customer growth this last year has been staggering. Some highlights:
Our technology is currently being used in 737 locations across 70 cities and 33 states.
We started 2023 with 1 Solar SafetyStick deployment installed and producing revenues. At the end of 2023, we have SafetyStick installations in 46 locations across 14 states.
Newly installed customers in NJ and PA are ordering and re-ordering SafetySticks and changing local ordinances to expand the use of SafetySticks in new areas, e.g., timed parking and school zones.
Our parking lot and garage enforcement technology continues to gain traction in the market. It is now used at more than 680 parking lots and garages across the country with momentum at an all-time high.
MPS Parking Lot Technology Approaching Industry Inflection Point
Several months ago, I announced our largest parking lot to date - the Arizona Cardinals-Westgate Entertainment District in Glendale Arizona, that is now installed. Notably, our success there has led to several other event venues. This week we are starting the installation at Brookshire Grocery Arena in Bossier City, LA and have just begun the initial design and planning for installation at the Milwaukee Brewers baseball team stadium. It consists of 20 lots and approximately 10,000 spaces and has to be up and running by opening day, which is April 2nd as the 2024 season will be utilized to perfect all point of sales systems, processes and migration away from manual methods with the expectation the entire venue will be completely automated on MPS technologies in 2025. There are many more of these type deals in our current pipeline.
When we reflect on 2023, it is clear that the market is nearing a major inflection point towards adoption of our patented gateless, automated enforcement approach to managing parking lots and garages. We expect a wave of adoption in the next couple years as lot and garage owners/operators move towards our frictionless parking solution that cuts costs associated with gates and labor while also materially boosting revenue.
In 2023 we were able to take the same technology that we use for these huge stadiums and scale it back for use in very small parking lots (Micro Lots). I am very excited about these little lots and No one is better positioned than MPS to capitalize on it.
Introducing Our MicroLots Solution – A Promising New Growth Opportunity
In mid 2023, we began testing a new parking lot concept targeting a market segment that we refer to as MicroLots. MicroLots, as the name implies, are small parking lots ranging in size from 5 to 50 spaces. This is an unexploited market segment that is off the radar of the major parking operators but is a lucrative new market that we expect will generate attractive returns. Target areas include small parking lots in busy areas where there is a shortage of available parking, parking abuse or parking challenges. Our patented automated enforcement technology allows commercial property owners to monetize their excess parking inventory and enforce their parking policies in ways previously not possible.
Examples include highly abused parking areas such as locations designated for “restaurant parking only” or “employee parking only” or existing paid parking areas with low payment compliance levels that previously had no way of cost effectively enforcing. Despite universal signage warning that “violators will be towed” this has proven a shallow threat that is rarely enforced.
Starting this Summer and Fall we began commercially testing the concept in 4 locations with 4 different use cases and deployment configurations. The real-time market feedback proved valuable and enabled us to make enhancements to our offering resulting in what we believe is a best-in-class turn-key solution.
Attractive Economics and Performance
Importantly, we demonstrated that these small, overlooked parking environments can prove quite attractive to both MPS and property owners. Unlike larger operator-managed lots and garages, with MicroLots MPS retains a healthy portion of both violation and parking revenue. Furthermore, the property owner covers installation related expenses, which substantially reduces our risk and improves our return profile.
As an example, we converted a free parking lot designated for “restaurant parking only” into a paid parking lot where restaurant patrons are able to park free for 2 hours by simply entering their license plate inside the restaurant on any web-enabled devise. All other parkers are required to pay via QR code or text. In our first several months, this 10 space lot has gone from generating zero income to grossing more than $2,000 per month resulting in roughly a 2 month payback for the property owner and a material new passive income stream.
Based on the initial success of these commercial tests, we’ve developed a strategy to commercialize and scale this new segment and will begin implementing the strategy in Q1 with only modest MPS investment. We are excited to hit the accelerator on this business and believe this segment has the potential to more than double our lot and garage total addressable market (TAM).
Safety Sticks
As we roll into the new year. Our solar powered safety stick will still be the tip of the spear. We have about 450 cities in our current SafetyStick pipeline. While Democrats and Republicans cannot agree on who is a man and who is a woman these days, they still have full agreement on the fact you cannot park in front of fire hydrants all day. So not only are SafetySticks politically correct they take 2 seconds to install. We will cover a lot of ground quickly . We will lead with SafetySticks and follow with meters. We now have several cities that started with SafetySticks and have come back to us to talk about meters.
Marketing Efforts
As you have seen over the last 12 months, we have cranked up the Marketing Engine. Here is a quick recap.
Working side by side with the sales team, our marketing department has aggressively been filling the pipeline with highly targeted and qualified opportunities in cities and on campuses across the U.S. We even started to explore potential opportunities in Latin America at our first ever, international tradeshow in Mexico City.
Some 2023 Highlights:
We refreshed the MPS brand, website and created new content to further showcase the power of our technology, products and patents.
We attended 26 tradeshows and conferences where we had the opportunity to engage with key city and campus law enforcement stakeholders about the SafetyStick.
We were in the news a lot, actually over 200 times! We were featured in the Boston Globe and on dozens of TV stations about our cutting-edge technology and how our SafetySticks are already making streets safer in their communities.
We found success in new channels to reach decision makers and increase our marketing ROI. Highly targeted webinars with campus law enforcement and continued support of partners with similar goals to make city streets safer like Vision Zero and IPMI will continue to be key areas of focus.
Just a quick mention about 2024. We are doubling down on our show attendance this year with 50 on the calendar. We will also be a key exhibitor at Intertraffic Amsterdam, the Superbowl of parking shows
Boosting our Patent War Chest and Prepping for Battle.
We currently have 47 patents issued around the globe and about 30 pending patents as we speak. Over the last several years there have been 4 companies that have started to infringe on three of our patents. These 3 patents are around our open parking lot technology. In 2024, we will start spending the money to protect and enforce our Intellectual Property. The time has come for them to get it with both barrels! We have gotten several legal opinions and everyone feels that these 4 idiots are dead men walking so it is time for us to go take care of business. We have identified the weakest company of the 4 and our plan is to start a federal lawsuit against them in 2024. We do not know of any way that you can do open lot technology using cameras without infringing on our patents. We had the vision that with camera technology you can get rid of the gate at a parking structure and we patented the only way you could actually do it. Those patents are issued and enforceable.
Operations
We continue to install new parking lots and SafetyStick technology each week across the country. Currently, we have active installs that we are working on in 30 states including new states, like Utah, Montana, Oklahoma, Rhode Island, Arkansas and Ohio.
At this time last year, we had the capacity to assemble about 50 SafetySticks per week in our Minnetonka, Minnesota location. We have since moved our assembly operations to Texas and now have in place an operation capable of scaling up to 3,700 SafetySticks per week -- that is a big jump from 50 SafetySticks per week.
2024 Outlook
As we enter 2024, we have the deck stacked in our favor. To put it in context, we entered 2023 with about 30 deals in the pipeline. We start out 2024 with over 600 deals in the pipeline. We should close more deals in the first quarter of 2024 than all of 2023. Where I come from that is called momentum.
Our goal for 2024 is to get Publicly traded. Now a lot of that is out of our control as we need the capital markets for tech IPOs to return. Right now, they are nonexistent. If you look at the last 10 IPOs from 2023 you see that 9 of the 10 are below water. The capital markets are not back yet. We can only do what is under our control. We are going to go and land and install deals like our life depends on it. We are going to scale the crap out of this business. We are going to be ready to go once the capital markets return. The plan remains the same – once the capital markets open back up, we plan on raising a large private equity round followed by an IPO.
As we head into this new year it is going to take all of us to get there. I promise that I will pull on the rope the hardest but I need everyone to pull. We are not publicly traded yet and until we get there, I would appreciate any help that you can give us. If you know anyone who works at a city send me their name, I will call them. If you have a buddy who owns a parking a lot, send me their name I will call them, if you have a friend that will hate you because you never told them about the MPS investment before the IPO and I promise they will hate you, I don’t want you to have to live with that guilt. Send me their name, I will call them.
As always, if you have questions call me. If you lost my number here it is again 612-308-1921. I get calls every day from so many of you and I am happy to talk to you and grateful for your ongoing support.
2024 is our year. We are going to crush it this year.
Hold on to your Hat!!
Thanks
Joe