Iteris (ITI) Q4 2021 Earnings Call Transcript

Iteris (ITI -1.34%)
Q4 2021 Earnings Call
Jun 01, 2021, 4:30 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good day, and welcome to the Iteris fiscal 2021 fourth-quarter and full-year financial results conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Todd Kehrli, MKR Group.

Please go ahead, sir.

Todd Kehrli -- Investor Relations Contact Officer

Thank you, operator. Good afternoon, everyone. And thank you for participating in today's conference call to discuss Iteris' financial results for its 2021 fiscal first quarter -- fourth-quarter and full-year ended March 31, 2021. Joining us today are Iteris' president and CEO, Mr.

Joe Bergera; and the company's CFO, Mr. Doug Groves. Following their remarks, we'll open the call for questions from the company's covering sell-side analysts. Although we invited investors to submit written questions to the company in advance of the call per instructions in our press release dated May 18, 2021, we did not receive any written investor questions.

Before we begin, we'd like to remind all participants that during the course of this call, we may make forward-looking statements regarding future events or the future performance of the company which statements are based on current information, are subject to change, and are not guarantees of future performance. Iteris is not undertaking an obligation to provide updates to these forward-looking statements in the future. Actual results may differ substantially from what is discussed today, and no one should assume that at a later date, the company's comments from today will still be valid. Iteris refers you to the documents that the company files from time to time with the SEC.

Specifically, the company's most recent forms 10-K, 10-Q, and 8-K, which contain and identify important risk factors that could cause actual results to differ materially from those that are contained in any forward-looking statements. I'd like to remind everyone that you'll find a supplementary report of Q4 and full-year financial metrics as well as a webcast replay of today's call on the investor section of the company's website at www.iteris.com. Now with that, I'd like to turn the call over to Iteris' president and CEO, Mr. Joe Bergera.

Joe, go ahead.

Joe Bergera -- President and Chief Executive Officer

Super. Thanks, Todd. I appreciate it. And good afternoon to everyone.

I appreciate all of you joining us today. Before we begin our regular earnings commentary, I want to remind everyone that on March 8, 2021, the board announced that Iteris initiated a comprehensive review of strategic alternatives. At this time, the review is ongoing, and we do not expect to make any further announcements about its status until the Board has approved the course of action requiring disclosure. Also, I want to remind everyone that given the sale of our agriculture and weather analytics segment to DTN LLC on May 5, 2020, we're reporting the results of that segment as discontinued operations for all periods presented in today's earnings announcement.

As such, I'll be discussing only our continuing operations for the remainder of this call. So jumping right in. I'm pleased to report that the company's record fourth-quarter revenue provided a nice capstone to our fiscal year 2021. During the fiscal year, we recognized solid total revenue growth, and we realized a significant improvement in net income and adjusted EBITDA despite a challenging economic environment related to the COVID-19 pandemic.

In fiscal 2021, we also launched our ClearMobility platform and introduced three cloud-enabled managed services, asset management, congestion management, and maintenance management, all of which received positive market acceptance as measured by more than $5 million in combined bookings during the fiscal year. And finally, we used the proceeds from the sale of our agriculture and weather analytics segment to complete a successful acquisition of TrafficCast International, Inc. TrafficCast acquisition produced several financial and strategic benefits such as accelerating our ClearMobility Cloud roadmap and creating new access to various commercial markets, as I'll discuss in a few moments. As for financial metrics, Iteris reported record fourth-quarter total revenue of $31.7 million and record full-year total revenue of $117.1 million, representing a 10% and 9% year-over-year increase, respectively.

Total net bookings were $32.9 million for the fourth quarter and $121.8 million for the full year, representing growth of 17% and 6% year over year, respectively. The strong bookings growth resulted in total ending backlog on March 31 to $78 million, representing a year-over-year increase of 26%. The company's record total revenue, total net bookings, and total ending backlog reflect the strong performance across both reporting segments, though our roadway sensors segment delivered particularly strong results. I'll take a few moments to summarize the commercial and operational performance of each segment, after which, Doug will discuss our fourth-quarter financial results in more detail.

Our transportation systems segment recognized record fourth-quarter revenue of $16.8 million, representing a 3% year-over-year increase against an unusually strong prior-year comparison, and recognized record full-year revenue of $60.6 million, representing a 4% year-over-year increase. As noted on prior earnings calls, this segment experienced some COVID-related delays that impacted revenue recognition throughout the fiscal year. Approximately 42% of the segment's total annual revenue was recurring revenue. The transportation systems segment reported fourth-quarter net bookings of $19.3 million, representing a 41% increase from the same prior-year period and full-year net bookings of $64.4 million, representing a 2% increase from the same prior-year period.

As a reminder, the segment experienced some booking softness in the period ending December 31, 2020, due to COVID-related delays. As of March 31, 2021, the segment's ending backlog was $66.5 million, representing a 25% year-over-year increase and a 4% sequential increase. The segment's fourth-quarter and full-year net bookings performance reflects continued demand for all of the segment's lines of business, consulting, software, and managed services, as well as the continued increase in market penetration in Texas and Florida to strategic geographies. About 37% of the segment's fourth-quarter bookings will be recognized as future annual recurring revenue.

The mix of bookings that will convert to recurring versus nonrecurring revenue will fluctuate from quarter to quarter. The notable fourth-quarter bookings include a contract of $3.7 million from Pulice-FNF-Flatiron joint venture to redesign and expand a critical segment of the I-10 Freeway adjacent to Phoenix and Sky Harbor Airport, this contract includes the use of our ClearGuide and ClearRoute software as well as the use of our congestion management managed service over the lives of the multiyear contract; a $3.2 million task order from the U.S. Department of Transportation to maintain the architecture reference for collaborative and intelligent transportation, which is the nation's reference architecture for connected and automated vehicle enablement; multiple task orders in the state of Florida for a combined value of more than $2.3 million; a $900,000 software agreement with the state of Utah for the use of our ClearGuide product; an $800,000 task order to support the I-405 modernization projects in Orange County in California; and a $700,000 software agreement with the state of South Carolina for the continued use of our ClearRoute product. Now let's discuss our roadway sensors segment.

Roadway sensors segment reported fourth-quarter revenue of $15 million, representing a 19% year-over-year increase and record full-year revenue of $56.5 million, representing a 15% year-over-year increase. These results reflect particularly strong performance in three geographic territories: Texas, Northern California, and the Mountain State. In addition to a strong revenue performance, the Roadway Sensors segment made significant progress against various other business priorities. For example, this segment launched a cloud-enabled managed service, managed care, that continuously monitors and optimizes Iteris' advanced detection systems supported intersections and arterials.

Completed successful field trials for our next-generation radar-based detection product, which is branded as VantageRadius Plus and initiated a soft launch of the new product. And lastly, developed joint technology with Continental AG, that fuses vehicle and infrastructure sensors to improve the safety and connected -- I'm sorry, the safety of connected and automated vehicles through infrastructure to vehicle connectivity. Overall, our fiscal 2021 operational performance across both segments was quite solid, with the business achieving several important operational goals despite the complications from COVID-19. Now I'd like to turn the call over to Doug.

Doug Groves -- Chief Financial Officer

Thank you, Joe. Good afternoon, everyone. As a reminder, please see the company's 10-K filing, press release, and supplemental financial metrics document, all of which are posted on our IR website for further description of matters under discussion during the call today. The results of the ag and weather analytics segment are reported discontinued operations in our SEC filing.

And today, my comments will be focused only on our continuing operations. Likewise, the TrafficCast acquisition, which closed on December 7, 2020, is in our full Q4 results. TrafficCast commercial business, which is all software, is included in our transportation systems segment results and its public sector business, which is primarily IoT devices, is included in our roadway sensors business results. Consistent with the last several quarters' results, we've seen the performance of the business in the fourth quarter continuing to improve with favorable year-over-year trends in certain key metrics, including top-line growth, improving cash flow from operations, and increasing backlog.

We continue to diligently manage our costs, which is helping to drive full year-over-year EBITDA and operating margin expansion. Now I will move on to the details of the fourth-quarter results. Total revenue for fiscal 2021 fourth quarter increased 10% to $31.7 million compared to $28.9 million in the same quarter a year ago. Our gross margins in the fourth quarter were 40.9% compared to 44% from the same quarter last year.

The decrease in gross margins was driven primarily by the transportation systems segment, which had more subcontractor labor and revenue in Q4 fiscal year '21 compared to Q4 fiscal year 2020. Our subcontractor labor and revenue tend to have much lower margins. Operating expenses in the fourth quarter were $13.4 million compared to $11.7 million in the same prior-year quarter. The increase reflects a full quarter of operating expenses for the TrafficCast business and an increase in intangibles amortization of $440,000, mostly related to the TrafficCast acquisition.

We reported a GAAP operating loss in the fourth quarter of $382,000, which did include approximately $140,000 in onetime nonrecurring inventory adjustments and $130,000 in acquisition expenses, both related to the TrafficCast acquisition. This compares with GAAP operating income of $979,000 in the same quarter a year ago. However, we did report a full-year operating profit of $439,000 compared to a full-year operating loss of $2.1 million last year. This is the first time in several years we've been able to report a positive operating profit.

The GAAP net loss from continuing operations in the fourth quarter was $385,000 or $0.01 per share compared with a $1.1 million net income or $0.03 per share last year. However, for the full year, we reported net income from continuing operations of $491,000 or $0.01 per share compared to a full-year net loss of $1.8 million or $0.04 per share loss in the prior year, hence, a substantial improvement this year. Adjusted EBITDA for the fourth quarter was $1.8 million or 5.5% of revenue, which compares to $2.5 million or 8.7% of revenue in the fourth quarter of last year. Full-year EBITDA increased $3.3 million to $7.5 million or 6.4% of revenue compared with $4.2 million or 3.9% of revenue in the prior year.

This was a 64% improvement in EBITDA as a percentage of revenue, and we expect our EBITDA as a percentage of revenue to grow near 20% for our fiscal year '22 at the midpoint of our fiscal year '22 outlook. Now let me turn to our segment results. Our transportation systems revenue for the fourth quarter was $16.8 million compared to $16.3 million in the prior-year quarter, an increase of 3%. During the period, the segment's direct labor revenue was consistent with our expectations but was substantially lower when compared to the prior year Q4, which adversely impacted operating margins since our margins are much higher on our own labor versus the margins on our subcontractors' labor.

Segment level operating income for the fourth quarter was $2.2 million compared to $4.4 million from the prior-year quarter and the related operating margins were 12.8% compared to 26.8% last year. The margin decrease was primarily the result of the mix of labor between our own staff and that of our subcontractors, as I mentioned. Our roadway sensors revenue for the fourth quarter was $15 million compared to $12.6 million in the prior-year quarter or an increase of 19%. This increase was driven by continued market share gains in the rapid adoption of our next product line that was launched several quarters ago.

Segment level operating income was $2.7 million for the quarter compared to $1.7 million last year, and the related operating margins were 17.8% versus 13.9% last year. The improvement in margins being primarily driven by increased volume and improved product mix. Corporate expenses in the fourth quarter were $4.4 million compared to $4.9 million in the prior year. Total year corporate expenses were $17.3 million, down $1.7 million or 9% for the full-year fiscal '21 as we continue to be laser-focused on controlling our costs.

Now turning to liquidity and capital resources. Total cash and short-term investments were $28.3 million at the end of the fourth quarter. The increase quarter over quarter and the prior year was a result of strong cash flows from continuing operations of $5.6 million in the current quarter. The full-year cash flows from continuing operations was $8.9 million or an improvement of $9.4 million over the prior year.

We spent $381,000 in capital expenditures and capitalized software costs in the quarter, and these expenditures were approximately 1% of revenue for the whole year, reflecting our asset-light business model. We remain focused on generating cash to fund our expected future organic and inorganic growth. In summary, we're pleased to report another solid quarter of performance, along with record backlog, which positions us well for the fiscal year '22 revenue guidance of $132 million to $142 million. Fiscal year 2021 was a big inflection point for the company as we swung to profitability and positive cash flow.

We do expect to maintain this momentum in fiscal year 2022 as we look to grow our adjusted EBITDA as a percentage of revenue in the 20% range year over year. As a housekeeping matter, we are planning to file a new S-3 Universal Shelf registration in the next several days since our last shelf registration expired in September 2020, and the shelf will be good for three years. Therefore, to sum it all up, we couldn't be more excited about the future. We remain focused on growing the business and our recurring revenue, while vigorously managing our working capital and cost structure to improve margins as we move forward.

With that, I will turn the call back over to Joe. Joe?

Joe Bergera -- President and Chief Executive Officer

Great. Thank you, Doug. At this time, I want to share some commentary on our business strategy, certain key product, and commercial initiatives, and associated expectations for fiscal '22. The convergence of ubiquitous connectivity, cloud computing, and various innovations in mobility, in our opinion, is profoundly changing the operation and utilization of transportation infrastructure.

As a result, agencies are committing to reimagine their internal operating models, overcome technology silos that limit collaboration with one another, and enable new forms of interaction between the mobility infrastructure, and those who use that infrastructure every day. This is demonstrated by a variety of data points, including our own direct engagement in numerous connected and automated vehicle initiatives across the country such as a new initiative with the New Jersey Department of Transportation and Rutgers University that we announced on April 24. Based on our own significant direct observations and validated by various additional parties, it is technically infeasible and financially impractical for each individual agency to first modernize its technology stack and redesign its various business processes without external resources; second, integrate and maintain point-to-point integrations to facilitate collaboration with other agencies; and third, integrate and maintain point-to-point integrations with automotive OEMs, fleet operators, and other commercial entities with a strategic business imperative to understand and interact with the mobility infrastructure. Therefore, it is inevitable that new platform-enabled ecosystems will emerge in the mobility infrastructure market to solve various network effects similar to what is occurring in industries as diverse as finance, insurance, energy, distribution, manufacturing, and entertainment.

Recognizing this business opportunity, Iteris launched our ClearMobility platform in January 2020. This new platform included a unified service layer, which we branded as ClearMobility Cloud, to enable a new portfolio of cloud-enabled managed services that are aimed at providing the capabilities agencies need to ensure their transportation infrastructure meets the demands of a connected world. Subsequently, the acquisition of TrafficCast, as noted in my earlier remarks, enhanced our ClearMobility road map. To realize the full potential of our ClearMobility strategy, we've reorganized Iteris effective April 1, 2021, into three business units: applications and cloud solutions, advanced sensor technologies, and mobility consulting solutions, all of which are now supported by a new chief technology officer.

With this new business unit structure, we have centralized all of our Software as a Service development resources and created a team dedicated to the delivery of our ClearMobility Cloud roadmap within our application and cloud solutions business unit. In addition to the business unit changes, we created an overlay team that is focused on the further development and commercialization of our cloud-enabled managed services portfolio. And we organize both our product and software sales activities into a new shared services model. We believe these organizational changes will create various development efficiencies, increase our recurring revenue contribution and accelerate the execution of our platform-enabled business strategy.

In FY '22, we'll be particularly focused on the following key initiatives. First, releasing our next-generation video detection system that will bring machine learning to our edge devices for real-time deep-level object classification and contribute rich new data sets to ClearMobility Cloud. Second, introducing our next-generation radar detection system, which will open new end markets for our detection products and enable new cloud-enabled managed service revenue streams. Third, continuing to develop and commercialize our portfolio of cloud-enabled managed services to both planned enhancements and the introduction of new services.

Fourth, introducing multiple connected vehicle solutions, including new Software as a Service applications. And fifth, continuing to develop our partner ecosystem and further monetize our existing partnerships through the release of new products with partners, such as Continental AG and Cisco Systems. Our overall sales pipeline is already at historic levels. And the planned release of significant technology innovations should improve our competitive differentiation in existing markets as well as expand our total addressable market.

Therefore, as we enter fiscal 2022, we look forward to continuing our trend of solid full-year bookings growth even though results may fluctuate in any given quarter, especially as we continue to pursue more multimillion-dollar contracts. Also given the focus of our ClearMobility strategy, we'd expect to see an increase in the percent of bookings that will be recognized in the future as the annual recurring revenue. As Doug noted, based on our expected bookings growth and record backlog entering fiscal 2022, we estimate total full-year revenue to be in the range of 132 million to 142 million, which should represent a 22% rate of growth at the high end of the range. We would further expect the contribution of annual recurring revenue to further increase and fall within a range of 24% to 26% of total revenue.

Our estimates of total revenue and annual recurring revenue mix do not include any potential upside from transformational initiatives we are pursuing, such as strategic partnerships and acquisitions because we're unable to predict the timing of these initiatives. Based on the increase in our operating scale and the higher concentration of Software as a Service, and sensor revenue, we anticipate further improvements in gross profit margin in fiscal 2022. Our development costs will increase as a percent of revenue in order to support our ambitious ClearMobility roadmap, however, our general and administrative costs should remain relatively flat. As a result, in fiscal 2022, we anticipate a significant year-over-year improvement in both net income and adjusted EBITDA.

In summary, the smart mobility infrastructure market is an increasingly dynamic sector due to favorable secular trends and emerging network effects that require agencies to reimagine their internal business processes, their interagency collaboration model, and their interactions with commercial entities who are critically dependent on mobility infrastructure. With the unique combination of core competencies and market access, in what has traditionally been a highly fragmented industry, Iteris is in a particularly strong position to create a platform-enabled ecosystem that capitalizes on the significant market opportunity. Iteris' ClearMobility platform, which is the foundation of our platform-enabled business strategy, has already been adopted by a variety of public agencies within the first year of release, and ecosystem partners are also already integrating our platform into their solutions. In addition with the acquisition of TrafficCast, we've seen an increase in the number and variety of commercial entities seeking to integrate with our platform.

As we look ahead, we believe Iteris will evolve into a critical mobility infrastructure digital platform that will not only benefit society, but will create significant long-term shareholder value. With that, we'd be delighted to respond to your questions and comments. Operator?

Questions & Answers:

Operator

[Operator instructions] We'll take our first question from Jeff Van Sinderen with B. Riley.

Jeff Van Sinderen -- B. Riley & Co. -- Analyst

Good afternoon, everyone, and congratulations on the strong outlook. You gave some guidance for the fiscal year, but wondering what's the outlook for the various business segments for first half of this year versus second half of this year, again, for the fiscal year in terms of revenue growth, margins, etc. Just wondering if we should be waiting one more than the other. If there are any things that are sort of anomalous in the picture that we might want to factor in.

Joe Bergera -- President and Chief Executive Officer

So Jeff, I'll start off by, first of all, saying thank you for the question. I'll start off by just reminding everyone that, as I said, we reorganized Iteris effective April 1, and that's going to impact our financial reporting going forward. But I'll let Doug talk to your specific questions. So Doug, do you mind responding to Jeff?

Doug Groves -- Chief Financial Officer

Sure. No, no problem. Thanks for the question, Jeff. And yeah, the -- we're going to be reporting in just a single segment.

And, you know, the pacing of the revenue by quarter, we would expect to follow historical trends. So, you know, our first quarter and second quarter make up about 50% of the full year. It's a little softer in our third quarter because that's actually the winter months in a lot of parts of the country with a rebound in the fourth quarter. So we're not going to be reporting separate segments, but you could think about, you know, with that guidance range that we've given that, you know, both the segments are going to contribute to that growth.

Those -- not one that's tremendously stronger than the other because we'll expect to see, you know, a lot of our annual recurring revenue starting to pick up now with a lot more of these software contracts that Joe mentioned.

Jeff Van Sinderen -- B. Riley & Co. -- Analyst

OK. Great. And then as you sort of look over things today, do you think that the higher end of the growth rate that you guided to for the fiscal year is a sustainable organic growth rate for the company for the next few years? And also, I guess, wondering what needs to happen to kind of get to that higher end of guidance this year? And conversely, what could hold you back to how you end up closer to the lower end of guidance this year?

Doug Groves -- Chief Financial Officer

Sure. So multiple questions in there. Let me try and take them one at a time. So at the high end of the range, I mean, obviously, we're getting the benefit of the TrafficCast acquisition, right? We only have four months in our fiscal year '21.

We'll have a full 12 months in our fiscal year '22. I think we've previously, you know, been guiding to, you know, over the longer term, something closer to a, you know, low double-digit growth rate. But as Joe emphasized in his comments, that excludes any of these, you know, collaboration and potential new agreements that we've been entering into with people such as Continental. So, you know, we do think it's possible.

But to go out more than a year right now when there's still, you know, a little bit of uncertainty in the environment, you know, didn't feel that, that was appropriate. So I think, you know, sticking with the targeted three-year model we put out there is probably closer for a longer-term view knowing that the shorter term is going to look much better than what's in our target operating model and our updated investor relations presentation.

Jeff Van Sinderen -- B. Riley & Co. -- Analyst

OK. That's helpful.

Doug Groves -- Chief Financial Officer

And as far as risk goes, yeah, we tried to provide, you know, a broad enough range that would encompass the downside, as well as the upside.

Jeff Van Sinderen -- B. Riley & Co. -- Analyst

OK. And then anything to add on supply chain because I know that was – you know, that's been something that's been a bit of a headwind, if you will, for a part of the systems business?

Doug Groves -- Chief Financial Officer

I would say, and I'll let Joe jump in here as well. I'd say it's recovering, you now, but not as fast as, you know, maybe we had thought. There's still several of our subcontractors that are behind in delivering, you know, critical pieces of equipment to job sites to help us, you know, complete the overall installation and completion of the projects. So it's getting better, but I wouldn't say we're out of the woods yet by any stretch.

And hence, the reason we've still got some risk that we're trying to signal in that guidance.

Joe Bergera -- President and Chief Executive Officer

Yeah. And this is Joe. I just would add, Jeff, that as a reminder, in the prior fiscal year, we had the two segments, transportation systems, and roadway sensors, and there were sort of different supply chain dynamics for the two different segments. As Doug was referring to transportation systems, as it turns out, was more impacted by supply chain and kind of general COVID issues than roadway sensors because they have a higher reliance on subcontractors to provide certain elements of these larger projects that were increasingly involved in.

And a lot of these smaller companies were, I think, a little bit caught off guard, in some cases, surprise and unable to meet their delivery requirements had a knock-on effect. And Doug talked to that. You know, we do think things are getting better, but we'll have to continue to monitor it. I did want to note though that roadway sensors has its own supply chain dynamics.

They do rely on certain third parties to provide various components. We were able to navigate that pretty successfully by buying ahead, in some cases, sourcing from alternative providers, and in some cases, making some engineering changes in order to minimize our exposure. We'll continue to do that going forward. But I just wanted to be clear that both pieces of the business have some exposure that specific exposure looks different.

And then as a final reminder, in FY '22, obviously, the segmentation changes, but the basic dynamics will stay the same for the various lines of business. 

Jeff Van Sinderen -- B. Riley & Co. -- Analyst

Okay great. Thanks for taking my questions and best of luck. 

Joe Bergera -- President and Chief Executive Officer

Thanks, Jeff.

Operator

Thank you. We'll take our next question from Mike Latimore with Northland Capital Markets.

Mike Latimore -- Northland Capital Markets -- Analyst

Great. Thanks. Yeah, very, very nice results. In terms of the recurring revenue, I think it's at 24% to 26% growth -- or 24% to 26% of revenue within the year guidance.

I guess, what kind of growth rate would that imply?

Doug Groves -- Chief Financial Officer

So. Yeah, I --

Joe Bergera -- President and Chief Executive Officer

Yes, I believe it's in the mid-20% year over year. And as a reminder, annual recurring revenue includes -- and the way we're defining it includes both managed services, as well as our Software as a Service product line. The actual rate of growth for the various offerings obviously vary. But when you aggregate it all, it's an approximate mid-20% rate of growth. 

Mike Latimore -- Northland Capital Markets -- Analyst

OK. Got it. And then just to be clear, are you -- you're not going to report roadway sensors and transportation systems separately anymore. You're just going to give one revenue line?

Doug Groves -- Chief Financial Officer

Well, there'll be two revenue lines. There'll be product, which is primarily just as we did today, our Roadway Sensors and then services, which is a combination of our software business, as well as the professional services.

Joe Bergera -- President and Chief Executive Officer

And Mike, our intent is to provide better visibility to the different forms of service revenue over time. So with this change, we're actually hoping it'll provide better visibility to some of the key questions people have been asking such as what is your enterprisewide annual recurring revenue, and what's the rate of growth of your annual recurring revenue, which today is difficult to present. Because while most of the annual recurring revenue is in transportation systems, we do have some in roadway sensors, as well, and it gets complicated to try to present that.

Mike Latimore -- Northland Capital Markets -- Analyst

Yeah. Yeah. OK. And then just last on the federal infrastructure bill.

If you do benefit from that, is it kind of across the board, all your products? Or is it more focused on ClearGuide or some specific line?

Joe Bergera -- President and Chief Executive Officer

Well, potentially, it could benefit us across the board. Obviously, the -- well, first of all, let's step back. Everyone right now in the media is very focused on the infrastructure bill, which is obviously important, and we would love to see that get passed. But there's also going on is that reauthorization of the FAST Act, which is the federal transportation funding bill for various surface transportation initiatives.

In our opinion, it's likely that these two pieces of legislation will actually be gained together. But there are important elements of both of these -- both legislative items that have a positive impact, we believe, in Iteris. So I just wanted to be clear that currently, there are two different pieces of legislation, and I'm talking broadly about the two, which I ultimately expect to be gained together. But anyway, there is a sizable element of both the FAST Act reauthorization and infrastructure bill that's going to focus on technology and the use of technology to enhance the safety and the velocity of the physical infrastructure.

And so that entire line item, which is going to be, you know, we expect, very large would benefit virtually every aspect of Iteris' business.

Mike Latimore -- Northland Capital Markets -- Analyst

OK. Again, thanks a lot. Good luck.

Joe Bergera -- President and Chief Executive Officer

Thank you.

Operator

Thank you. We'll take our next question from Ryan Sigdahl with Craig-Hallum Capital Group.

Ryan Sigdahl -- Craig-Hallum Capital Group -- Analyst

Good afternoon, guys. A couple of questions on organic growth. And maybe I missed it in the prepared remarks, but what was organic revenue growth in the quarter, excluding TrafficCast and ag and weather, which I think was pretty small given when you divested it?

Doug Groves -- Chief Financial Officer

Yeah. So yeah, all the results presented were on a continuing operation. So there's no ag and weather in either of the comparison. The organic revenue growth was about flat in Q4 as we kind of previewed in our Q3 results with, you know, the total quarter being up high single digits, which is right about where we finished.

Ryan Sigdahl -- Craig-Hallum Capital Group -- Analyst

Gotcha. What was TrafficCast revenue in Q4?

Doug Groves -- Chief Financial Officer

The TrafficCast revenue was just about $4 million.

Ryan Sigdahl -- Craig-Hallum Capital Group -- Analyst

Great. Then just on guidance. What does that imply or what's the assumption for organic growth, excluding TrafficCast at the midpoint?

Doug Groves -- Chief Financial Officer

So the organic growth is mid- to high single with the balance making up the TrafficCast full 12 months' worth of revenue at the midpoint.

Joe Bergera -- President and Chief Executive Officer

And Ryan, to answer the next part of your question, it's in the low teens at the high end of the range consistent with what we've previously indicated our expectation to be.

Ryan Sigdahl -- Craig-Hallum Capital Group -- Analyst

Gotcha. And that does kind of segue. I guess at the midpoint, it is lower than the long-term targets you put out. So I guess maybe the assumption is we should assume the high end.

But I guess, if we just go to the midpoint of guidance, what are the headwinds that are causing to kind of be mid- to high single-digit versus the 10% to 12% medium-term annual CAGR you put out a couple of months ago when you did your Analyst Day?

Joe Bergera -- President and Chief Executive Officer

Yeah. We're trying to be -- well, so first of all, when we put out the number at our Analyst Day, that was a cumulative average growth rate. And we still, you know, would stand by that. But right now, you know, where we sit, while we definitely feel like they're – you know, we're seeing an improvement in the economy, it is unclear exactly where we stand in terms of the recovery and what the actual pace of the recovery is going to be.

And while -- I think most people see, for example, a big increase in demand, as we've been talking about on this call, there do continue to be, you know, supply issues, which could negatively impact a lot of businesses, including Iteris. And so there are these countervailing effects. And, you know, that's -- we did a pretty good job of managing through that in our fiscal '21, and we would expect to still do that in fiscal '22. But depending on how that plays out, you know, we're not confident -- we're not absolutely confident that we'd be able to deliver, you know, growth or strictly organic growth in the low teens due to some of these countervailing factors.

And that's why – you know, if you pick the midpoint, it reflects, you know, high-single-digit organic growth. And it's really just a function of where we are in the recovery and what some of the bumps, you know, are looking ahead over the next couple of quarters.

Doug Groves -- Chief Financial Officer

Yeah. And Ryan, just to clarify my answer on the TrafficCast contribution in the quarter. I gave you the cumulative, which was four months' worth of revenue. In the quarter, the revenue was about 3.2 million for TrafficCast.

Ryan Sigdahl -- Craig-Hallum Capital Group -- Analyst

Great. Thanks for that clarification. One last question for me. Just as you think about infrastructure bill and some bigger, potentially more construction going on.

Can you talk through ClearGuide and really how you guys can play into that specifically?

Joe Bergera -- President and Chief Executive Officer

Yeah, sure. Well, so first of all, ClearGuide has really broad value proposition. And so I don't want to -- want people to think that the value proposition for ClearGuide is strictly limited to construction. But that being said, I'm glad you asked the question because we are seeing a lot of interest from global construction firms in using ClearGuide to help them manage their construction projects in order to minimize disruption and specifically, the disruption to the movement of traffic.

And as a result, to help them maximize their profitability on these various projects. And so what a lot of these global construction firms are looking to us to help them do is to figure out exactly when to time their construction activities, how to maximize the window during which they can perform construction. And then also how they can optimize any rerouting of traffic such that it minimizes disruptions and congestion. The reason this is so important to global construction firms is that they generally, today when they engage in a contract for like a large multiyear construction project, there's a very significant success fee that is associated with traffic impact.

And the success fee can actually make or break the entire profitability on like a multibillion-dollar project for these big construction firms. We demonstrated our ability to significantly accelerate the pace of construction and improve the economics for the joint venture that is performing the I-405 expansion in Orange County. And based on that success, we're seeing significant demand from other global construction firms to use ClearGuide and our congestion management managed service to help them realize the same kind of economic benefit that we created for OC 405 venture partners. So we expect significant demand not only in the United States but worldwide for our ClearGuide and congestion management project -- or managed service, I apologize.

Ryan Sigdahl -- Craig-Hallum Capital Group -- Analyst

Great. Thanks, Joe. I'll hop back in the queue.

Joe Bergera -- President and Chief Executive Officer

Great. Thank you.

Operator

[Operator instructions] We'll take our next question from Mike Shlisky with Colliers Securities.

Mike Shlisky -- Colliers Securities -- Analyst

Good afternoon, guys. I was on a couple of minutes late, so you've already covered some of these, please feel free to refer me back to the transcript, I'm happy to do that. But let me ask first, $1 billion you did mention this infrastructure bill, you mentioned other stuff, but there's also -- was a giant stimulus bill back in the calendar first quarter, fiscal fourth quarter, and quite a bit of local government aid attached to it. And some of the DOTs I've heard from have said that they have never seen budgets dislodge in their entire lives and trying to find ways to spend it.

Have you got a lot of interest in some of these onetime projects that don't involve SaaS to fix anything or improve anything given some of these large budget outlays?

Joe Bergera -- President and Chief Executive Officer

Yeah, Mike, this is Joe. And we -- definitely, the market is very strong right now. And just as a reminder for everyone, we'll continue to provide all of our products and services as we -- as discrete products as we have in the past. So in other words, there are a lot of agencies that will continue to buy our detection products and deploy them across arterial corridors.

And a lot of those purchases are often associated with modernization initiatives, which could be funded through some of the windfalls, let's say, that these agencies realize. And so yes, we absolutely expect that to continue to happen. But we also think that there's a long-term systemic change happening in the way mobility infrastructure is managed. And so over time, there will be more and more of a transition to recurring revenue.

And our SaaS portfolio and our managed services portfolio is designed to maximize our share of that wallet. But anyway, to answer your question, yes, the market is very robust. We expect it to continue to be robust, and it will benefit us across all of our product lines. Now coming back to the question that Ryan was asking, which is like, well, then why isn't your organic revenue forecast even higher? And again, the reason for that is despite the tremendous demand, there are some pressure points with -- particularly with respect to the availability of certain inputs.

And -- so it is hard to -- so what that means is we would expect bookings to be strong, look at our backlog right now, which is at a historic high, it's up approximately 25% year over year. But the rate of backlog conversion could be impacted over the next couple of years -- next couple of quarters, I'm sorry, due to supply chain and other disruptions as they need to get worked through as the economy begins to renormalize. So we're trying to be prudent. And again, at the midpoint of our range, it reflects high single-digit growth.

But at the high end of the range, we would expect organic growth of about 13% and total growth of about 22%. And we're going to do our very best to navigate this environment and come in at the top of the range.

Mike Shlisky -- Colliers Securities -- Analyst

OK. Got it. I wanted to ask secondly about the Continental agreement. In your comments, Joe, you emphasized pretty strongly that your outlook does not include any new arrangements or new expansions, or that's M&A or other kind of contracts.

I wasn't sure if that included Continental because that was already -- that's already been announced and signed? Or is that also include -- at this point, there's no Continental impact in our fiscal 2022 guidance?

Joe Bergera -- President and Chief Executive Officer

In the guidance that we provided, there's no Continental impact. And just to be clear, what we've announced already is we've entered into a collaboration agreement with Continental, and it's our expectation that we'll commercialize joint technology. At this point, I am not able to comment on what precisely when that technology would be available. And I'm not at liberty to talk about the potential pricing or the economics.

And so it is not included in our forecast to the extent that we were able to launch joint technology, and we were to start to see sales of that technology in the current fiscal year, that would all be upside.

Mike Shlisky -- Colliers Securities -- Analyst

Got it. Just a follow-up there. Could you maybe share with us your thoughts on how substantial Continental deal could be when it's kind of fully realized? Probably not going to be this year, but several years away from now, at least. Is that going to be a large business for you? Or will it be just one of many products that Iteris offers?

Joe Bergera -- President and Chief Executive Officer

Yeah. Well, so first of all, I hope it will be large. We think it's -- the technology that we're developing with Continental, we think, is groundbreaking and will create significant commercial and social benefits. So I would hope that it's going to have a -- lead to a meaningful financial contribution to the business because it's deserving out because of the capability that we'll be introducing.

But in terms of talking about the specific total financial impact or like the larger addressable market associated with that technology, let me kind of step back a little bit and comment on like the more general nature of the activity that we're pursuing with Continental. But with other people, other entities in the -- that would -- that include automotive OEMs, but other Tier 1 parts suppliers, the general focus is on connected and automated vehicle enablement. And we think that in order to realize the full potential of connected and automated vehicles and particularly level three through level five automation, it is essential for the infrastructure to be able to communicate with vehicles. And we believe that both our technology, as well as our ClearMobility Cloud platform will be a critical element of enabling infrastructure to vehicle communication.

And that broader marketplace, I think, is extremely large likely equivalent to -- over time, it's going to take a while for that to develop. And let's be very clear about that. I mean, I think we're talking a number of years for that market to move from nascency to an established category. But when it does, I believe that that market will be on the order of our -- the same size as our current total addressable market of approximately $6 billion.

So in other words, it would add -- it would double our addressable market, let's say, to potentially as much as $12 billion.

Mike Shlisky -- Colliers Securities -- Analyst

Gotcha. Thanks for that color, I appreciate it. I'll pass it along.

Operator

That concludes today's question-and-answer session. At this time, I will turn the conference back to Joe Bergera for any additional or closing remarks. 

Joe Bergera -- President and Chief Executive Officer

Super. Thank you, operator, and thanks to all of our analysts, as always, for the good questions. Obviously, we appreciate everyone's support, and again, thank you for making time to participate in today's call. On the investor relations front, I did want to note that we're going to be presenting at the Craig-Hallum Capital Group Investor Conference tomorrow on June 2.

And then also with the Stifel Virtual Cross Sector Insight Conference on June 8, 2021. If you're participating in either of those conferences, please schedule a visit with us. We'd love to talk to you. And in the meantime, we look forward to updating you again on our continued progress when we report our fiscal 2022 first-quarter results.

With that, that concludes today's call. Thanks again, everyone.

Operator

[Operator signoff]

Duration: 54 minutes

Call participants:

Todd Kehrli -- Investor Relations Contact Officer

Joe Bergera -- President and Chief Executive Officer

Doug Groves -- Chief Financial Officer

Jeff Van Sinderen -- B. Riley & Co. -- Analyst

Mike Latimore -- Northland Capital Markets -- Analyst

Ryan Sigdahl -- Craig-Hallum Capital Group -- Analyst

Mike Shlisky -- Colliers Securities -- Analyst

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