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01/10 23:06
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call summary presents a mixed picture. Financial performance shows growth in hardware and software revenue year-over-year but reveals operational losses and declining cash reserves. The Q&A section indicates uncertainty in federal funding, impacting future deals. Despite a strong backlog and some positive developments, the inability to provide specific guidance on federal funding reliance and operational losses tempers optimism. The market reaction is likely to be neutral, with no significant short-term movements expected.
EPS Reported EPS is $-0.14, compared to expectations of $-0.13.
Revenue Generated roughly flat revenues sequentially and 21% growth compared to the prior year quarter.
Hardware Revenue Grew slightly sequentially and was up 17% year-over-year.
Software Revenue Grew 29% year-over-year, but was down 3% or $64,000 sequentially.
Gross Profit Margin 37.7%, effectively flat with the prior year’s period, but down nearly 8 points from December.
Operating Expenses $8.9 million, down from $9.1 million in the December quarter and $9.2 million in last year’s second quarter.
Operating Loss $6.3 million, compared to a loss of $7 million in the year-ago quarter and a loss of $5.9 million in the December 2024 quarter.
Adjusted EBITDA Negative $5.1 million, an improvement from negative $5.7 million in the second quarter of 2024, but down slightly from $4.8 million in the December 2024 quarter.
Net Loss $6.1 million, compared to last year’s second quarter net loss of $7 million and the first quarter of fiscal year 2025 of $4.1 million.
Cash and Cash Equivalents Totaled $7.2 million, down from $13.9 million on December 31, 2024.
Cash Used in Operating Activity $6.3 million, including a $973,000 use of cash from changes in operating assets and liabilities.
Customer Deposits At March 31, 2025, received a net $9.7 million of customer deposits, net of local taxes.
12-Month Backlog Grown to $50 million, including ARR of $8.6 million.
Genasys Protect: The Genasys Protect platform proved to be effective during the January fires in L.A., showcasing its capability in managing emergency response and evacuation notifications.
LRAD Units: New use cases for LRAD units are emerging, including their use on autonomous surface vessels in Singapore.
CROWS AHD Program: The CROWS AHD program is expected to span multiple years with deliveries of thousands of LRAD units, with initial production orders expected this fiscal year.
Puerto Rico Project: Implementation and installation work on the first of 19 dams in Puerto Rico has begun, with expectations of significant revenue recognition in the second half of fiscal 2025.
Software Business Growth: The software business is expected to see sequential growth, despite some delays in closing larger deals due to uncertainties in federal grant funding.
Bridge Loan: Genasys secured a $4 million bridge loan to maintain momentum and capitalize on opportunities, with an additional $4 million available upon request.
Backlog Growth: The company’s 12-month backlog has grown to $50 million, indicating strong future revenue potential.
Market Positioning: Genasys is expanding its presence as a trusted communication partner across 39 states, with a focus on enhancing its software capabilities and emergency communication systems.
Earnings Miss: Genasys Inc. reported an EPS of $-0.14, missing expectations of $-0.13, indicating potential financial instability.
Puerto Rico Project Payment Delay: The company has not yet received a down payment for the third group of dams in Puerto Rico, which could impact cash flow and project timelines.
Bridge Loan Acquisition: Management decided to obtain a $4 million bridge loan to maintain momentum due to the delay in receiving the down payment, indicating cash flow challenges.
Federal Grant Funding Uncertainty: Access to federal grant money is in question, which may delay larger Genasys Protect deals, particularly at the state level.
Tariff and Trade Negotiations: Ongoing tariff and trade negotiations introduce uncertainty into procurement processes, affecting funding and state budget priorities.
Software Revenue Decline: Total software revenue decreased by 3% sequentially, indicating potential challenges in customer retention and contract renewals.
Operational Losses: Genasys reported a GAAP net loss of $6.1 million, reflecting ongoing financial challenges despite some revenue growth.
Market Conditions: The macroeconomic environment remains challenging, making it difficult to forecast growth and profitability accurately.
Puerto Rico Project: Implementation and installation work on the first of 19 dams has begun, with expectations for significant revenue recognition in the second half of fiscal 2025.
LRAD Business Growth: Bookings for LRAD business are tracking ahead of last year, with international and domestic demand improving.
CROWS AHD Program: Expected to receive the initial production order this fiscal year, which will support LRAD business for the next several years.
Software Business Growth: Despite fewer deals closing, the software business is expected to see sequential growth for the remainder of fiscal 2025.
Revenue Expectations: Significant revenue recognition expected in the second half of fiscal 2025, particularly in the fourth quarter.
Backlog: 12-month backlog has grown to $50 million, including annual recurring revenue (ARR) of $8.6 million.
Financial Projections: Expectations for substantial growth and improvement in profitability, particularly in the fiscal fourth quarter.
Bridge Loan: A $4 million bridge loan has been secured to maintain momentum and capitalize on upcoming opportunities.
Bridge Loan: Management and the board made the decision to obtain additional capital to maintain momentum and enable Genasys to capture the opportunity at our doorstep. A $4 million first amendment to the term loan was signed with creditor Whitebox.
Customer Deposits: At March 31, 2025, Genasys received a net $9.7 million of customer deposits, net of local taxes, for the Puerto Rico project.
Revenue Recognition: Initial revenues were recorded in the second fiscal quarter, with more significant revenue recognition expected in the June quarter.
12-Month Backlog: The 12-month backlog has grown to $50 million, including ARR of $8.6 million.
The earnings call indicates strong revenue growth (70% YoY), improved operating metrics, and a promising backlog. Despite some concerns about guidance and cash flow, the Puerto Rico project and CROWS program offer significant future contributions. The Q&A highlights ongoing government engagements and new commercial opportunities. While some guidance is withheld, the overall financial health and strategic developments suggest a positive outlook, likely leading to a 2-8% stock price increase over the next two weeks.
Despite some positive aspects like revenue growth from the Puerto Rico project and increased interest in flood products, the overall sentiment is negative due to gross margin decline, cash flow challenges, and unclear management responses. The backlog and potential future revenue from programs like CROWS are positive, but immediate concerns such as liquidity issues and cost reductions impacting morale overshadow these. Additionally, the impact of federal budget constraints and natural disasters adds uncertainty, leading to a likely negative stock price movement.
The earnings call summary presents a mixed picture. Financial performance shows growth in hardware and software revenue year-over-year but reveals operational losses and declining cash reserves. The Q&A section indicates uncertainty in federal funding, impacting future deals. Despite a strong backlog and some positive developments, the inability to provide specific guidance on federal funding reliance and operational losses tempers optimism. The market reaction is likely to be neutral, with no significant short-term movements expected.
The earnings call reveals several negative factors: connectivity issues, delayed deal closures, cash flow challenges, and a decrease in cash reserves. Although revenue and backlog are up, margins have compressed, and a bridge loan was necessary, indicating financial strain. The Q&A highlights dependency on federal funds, which adds uncertainty. Despite some positive signs, such as backlog growth and software revenue, the overall sentiment leans negative due to financial health concerns and operational challenges, suggesting a stock price decline in the range of -2% to -8%.
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