NASDAQ:GNSS Genasys Q2 2025 Earnings Report $1.66 -0.05 (-2.92%) Closing price 05/23/2025 04:00 PM EasternExtended Trading$1.66 0.00 (-0.30%) As of 05/23/2025 06:59 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. ProfileEarnings HistoryForecast Genasys EPS ResultsActual EPS-$0.14Consensus EPS -$0.13Beat/MissMissed by -$0.01One Year Ago EPSN/AGenasys Revenue ResultsActual Revenue$6.93 millionExpected Revenue$8.05 millionBeat/MissMissed by -$1.11 millionYoY Revenue GrowthN/AGenasys Announcement DetailsQuarterQ2 2025Date5/13/2025TimeAfter Market ClosesConference Call DateTuesday, May 13, 2025Conference Call Time4:30PM ETUpcoming EarningsGenasys' Q3 2025 earnings is scheduled for Tuesday, August 5, 2025, with a conference call scheduled at 4:30 PM ET. Check back for transcripts, audio, and key financial metrics as they become available.Conference Call ResourcesConference Call AudioConference Call TranscriptPress Release (8-K)Quarterly Report (10-Q)Earnings HistoryCompany ProfilePowered by Genasys Q2 2025 Earnings Call TranscriptProvided by QuartrMay 13, 2025 ShareLink copied to clipboard.There are 8 speakers on the call. Operator00:00:00At this time, it is my pleasure to turn the floor over to your host, Brian Alger, SVP, Investor Relations and Corporate Development. Welcome, Brian. The floor is yours. Speaker 100:00:11Good afternoon. Welcome to Genesis' fiscal twenty twenty five second quarter results conference call. I'm Brian Alger, SVP, Investor Relations and Corporate Development for Genesis. With me on the call today are Richard Danforth, our CEO and Dennis Kwan, the company's CFO. During today's call, management will make forward looking statements regarding the company's plans, expectations, outlook and future financial performance that involve certain risks and uncertainties. Speaker 100:00:36The company's results may differ materially from the projections described in these forward looking statements. Factors that might cause such differences and other potential risks and uncertainties can be found in the Risk Factors section of the company's Form 10 ks for the fiscal year ended 09/30/2024. Other than statements of historical facts, forward looking statements made on this call are made based on information in management's expectations as of today, 05/13/2025. We explicitly disclaim any intent or obligation to update those forward looking statements, except as otherwise specifically stated. We will also discuss non GAAP financial measures and operational metrics, including adjusted EBITDA, bookings and backlog, which we believe provide helpful information to investors with respect to evaluating the company's performance. Speaker 100:01:19For a reconciliation of adjusted EBITDA to GAAP financial metrics, please see the table in the press release issued by the company at the close of market today. We consider bookings and backlog leading indicators of future revenues and use these metrics to support production planning. Bookings is an internal operational metric that measures the total dollar value of customer purchase orders executed in a given period, regardless of the timing of the related revenue recognition. Backlog is a measure of purchase orders received that are scheduled to ship within the next twelve months. Finally, a replay of this call will be available approximately four hours through the Investor Relations page on the company's website. Speaker 100:01:58Now at this time, it's my pleasure to turn the call over to Genesis' CEO, Richard Danforth. Richard? Speaker 200:02:05Thank you, Brian, and welcome, everyone. Fiscal twenty twenty five is turning out to be an exceptional year for Genesis. On our February call, we discussed how the January fires in LA brought global attention to the use of Genesis Protect for managing emergency response and evacuation notifications. As we have stated multiple times, the Genesis Protect platform proved to be incredibly resilient and effective at saving lives. The balance of the March progressed largely as expected, but one meaningful LRAD order that was expected to close moved to our fiscal third quarter. Speaker 200:02:43Since last November, we have known that the second half of fiscal twenty twenty five was going to see tremendous growth and acceleration in our hardware business. Throughout the March and continuing into our third fiscal quarter, design, planning and procurement for the Puerto Rico project has been progressing well. Recently, we began implementation and installation work on the first of 19 dams currently approved. Substantially, all of the materials for the first three groups have either been received or are on order. In Puerto Rico, since the March, we have been expecting the down payment for the third group of DAMs. Speaker 200:03:24The designs have been approved, our invoices for the down payment have been delivered and approved, all of the authorizations for the payment have been made. We have not yet received the deposit, however. To be clear, this has absolutely nothing to do with FEMA or anything else occurring in Washington, DC. The FEMA money for the development and installation of the early warning system for the identified 37 dams in Puerto Rico was funded in early twenty twenty four. We have received multiple assurances from our customer that the payment will be made shortly. Speaker 200:03:59That said, management and the board made the decision to obtain additional capital to maintain momentum and enable Genesis to capture the opportunity at our doorstep. Because of the timing and various provisions within our existing secured debt agreement, we signed a $4,000,000 first amendment to the term loan with our creditor, White Box. This smaller loan comes at the same interest rate as the original debt, but is intended to be very short term. In fact, it expires at the end of this calendar year. Additionally, the agreement comes with a statement for the availability of an additional 4,000,000 to be made at Genesis request. Speaker 200:04:41Suffice it to say, if we had received the down payment for the third group, we would not have sourced the bridge capital. We continue to drive to an aggressive timeline that delivers all of the hardware for the first three groups to the island by the end of this fiscal year, with installation schedules already underway. Dennis will go into the revenue recognition in much greater detail, but hitting the schedule as it stands today, result in record quarterly revenue in the fourth quarter this fiscal year. Beyond the project in Puerto Rico, bookings for our LRAD business continue to track ahead of our last year, driving further improvements in our twelve month backlog. This is in spite of a handful of opportunities slipping, including the one I just referenced. Speaker 200:05:28International and domestic demand continues to improve for both critical infrastructure as well as military needs. New use cases continue to emerge like a recent article that described the use of LRAD units on autonomous surface vessels in Singapore, or the upgrading of physical security systems like the one we recently announced for the SIP 14 electrical substation here in The US. Looking out a bit further, the project award in Puerto Rico is providing a meaningful proof point in a number of countries looking to provide citizens with reliable emergency communication link. Finally, I wanna take a moment to talk about Crow's AHD program. Like its predecessor, this program is expected to span multiple years with eventual deliveries of thousands of LRAD units. Speaker 200:06:19Based on our conversations with the Army Program Office, we expect to receive the initial production order under this program this fiscal year. Given that we don't yet have the purchase order, we cannot state for certain the size of the order, nor our ability to complete deliveries against that order this fiscal year. However, the importance of this milestone is critical, as it should serve as ballast to our LRAD business for the next several years. We look forward to updating you further, purchase order is issued. Now I would like to shift gears and speak a little about our software business. Speaker 200:06:55As you all are aware, we had a major proof point this past January. While that won't convert into instant lift in revenues, it has contributed Since the fires within LA County alone, we are in various stages of discussion with three separate communities for implementation of evac and acoustic systems. Nationwide, the performance of the system during the LA Complex of fires, as well as the high profile events in Oklahoma, North Carolina, New Jersey, and even Long Island contributing to an expanding pipeline. But still a ways from closing and being converted to revenue, this pipeline measurement has increased more than 100% since the beginning of fiscal twenty twenty five. Many of you are aware of Congressman Garcia's recently released a report regarding lessons from the Kenneth Fire false alerts. Speaker 200:07:50The event highlighted a breakdown in alert targeting that originated from within a complex environment of rapidly evolving conditions, overlapping systems, and high stake decision making during a historic disaster. Importantly, what has not been covered by this investigation, nor in any media reports, are the dramatic improvements Genesis software enabled in quickly disseminating evacuation notices to the public. During previous devastating wildfires, the elapsed time from first responder requesting evacuations to evacuation alerts being issued averaged forty to sixty minutes. Using the Genesis Protect platform, LA County reduced the average time to six minutes. This significant improvement likely saved hundreds and possibly thousands of lives. Speaker 200:08:40What we witnessed was more than just technology at work, it was a culmination of dedication, preparation, and coordination across multiple agencies. Emergency teams sent over 400 zone status changes to critical life saving situations through Genesys Protect, all in record time. As the report mentioned, a local network level disruption interfered with data transfer to a federal alerting backbone IPOS. The alert was correctly configured by the operator and properly localized across all channels. Intermittent network issue prevented the targeted area from registering in one channel, resulting in a broader than intended warning. Speaker 200:09:22This wasn't a software failure, it was a breakdown in connectivity in the middle of a crisis. Networks are strained with the unprecedented condition around Los Angeles County. Since that initial incident, we have taken the following actions, implementing new safeguards, strengthening cross channel validation, and introducing fail safes to ensure that geotargeting data is fully aligned or any alert is sent. These enhancements were live within forty eight hours of the original occurrence. Our technology remains the most widely deployed multi channel alerting platform in California, and continues to expand nationwide. Speaker 200:10:04We remain the trusted targeted communication partner to agencies across 39 states with Genesis Protect, and we are expanding rapidly. Our platform is stronger, smarter, and more resilient because of what we have learned, and we're only accelerating from here. In addition to the tailwinds for EVAC that have come in the wake of the LA Fires, our Connect software is rapidly gaining traction, with even greater awareness being fueled by the signal gate disclosures. Most Connect deals are relatively small from a revenue standpoint. Recently, however, we have been engaged with a number of larger organizations. Speaker 200:10:42One is a federal agency, another is a combination of regional agencies in one of the highest populated cities in The United States. Each of these opportunities are currently in trial and are expected to progress to contract. As strong as the momentum and growth in our pipeline is, we do have to acknowledge that fewer deals are closing. The opportunities are not going away, but rather being delayed. This is particularly true at the state level, where access to federal grant money is in question. Speaker 200:11:13While some deals are closing, many of the larger Genesis Protect deals, including those with Acoustics, have slowed. Up until last Monday, grant payments from the $553,000,000,000 Urban Area Security Initiative and the $374,000,000,000 State Homeland Security Program were frozen. Our expectation is that that funding becomes more certain, deals that are further in our pipeline will accelerate through closing. With that said, we still expect sequential growth in our software business over the remainder of fiscal twenty twenty five. At the macro level, Genesis is not being impacted by the ongoing tariff and trade negotiations. Speaker 200:11:57The administration's rapid pace of change is affecting procurement processes in that it introduces uncertainty into an already complicated process of securing funding, as not only do federal decisions affect federal agencies, but many state budgets rely heavily on the funds from the federal government, thus affecting state appropriation priorities. In summary, fiscal twenty twenty five is challenging to forecast and precisely predict, but is still on course for substantial growth and improvement in profitability, particularly in the fiscal fourth quarter. Beyond 2025, the outlook continues to improve with a broadening pipeline for both our hardware and software offerings, ultimately delivering increased visibility and predictability. Now I will turn the call over to Dennis to go through the financials and outlook in greater details. Dennis? Speaker 300:12:51Thank you, Richard. Before I begin to review the operational and financial details of the quarter, I would like to speak about my decision to retire. I've been fortunate to work with companies doing exciting things and learn something new in every organization I served in my forty five year career. Genesys has been an amazing opportunity, both personally and professionally, with rapid organic growth, multiple acquisitions, worldwide expansion, and essentially growing a new software company out of a hardware company. Genesys has a great team of passionate, hardworking, and dedicated employees that have made it a joy to come to the office every day. Speaker 300:13:32I want to thank Richard, the board, and the Genesis team for the opportunity to serve as Genesis CFO for the past eight years. I have some travel plans this year, but I'm available to assist the new CFO as needed to ensure that there's a smooth and orderly transition. In the second quarter of fiscal twenty twenty five, Genesis generated roughly flat revenues sequentially and 21% growth compared to the prior year quarter. Hardware revenues grew slightly sequentially and were up 17% year over year. Total software revenue in the quarter grew 29% year over year, but were down 3% or $64,000 sequentially as a few customers chose not to renew their expiring agreements. Speaker 300:14:24Gross profit margin was 37.7% in the March, effectively flat with the prior year's period, but down nearly eight points from December. Sequentially, this is primarily due to a mix of lower margin hardware revenue and the significantly higher volume network and messaging costs linked to software platform usage during the LA fire event. Quarterly operating expenses were 8,900,000.0 versus $9,100,000 in the December and $9,200,000 in last year's second quarter. Sequentially, the improvement is seen in SG and A, while on a year over year comparison, R and D is down slightly. On a GAAP basis, our second fiscal quarter operating loss was $6,300,000 compared to a loss of $7,000,000 in the year ago quarter and a loss of $5,900,000 in the December. Speaker 300:15:25Adjusted EBITDA, which also excludes non cash stock compensation, was a negative $5,100,000 an improvement from the negative $5,700,000 in the second quarter of twenty twenty four, but down slightly from the $4,800,000 in the December. GAAP net loss in this fiscal year's second quarter was 6,100,000.0 which compares to last year's second quarter net loss of $7,000,000 and the first quarter of fiscal year twenty twenty five's '4 point '1 million dollars net loss, which benefited from $2,200,000 of non cash other income related to the quarterly adjustment to the fair value of the warrants issued with the term loan last May. Cash, cash equivalents and marketable securities at the March totaled $7,200,000 down from $13,900,000 on 12/31/2024. Cash used in operating activities in the second fiscal quarter was 6,300,000.0 including a $973,000 use of cash from changes in operating assets and liabilities. Subsequent to quarter end, we'd expected to receive the deposit for the third group of Puerto Rico dams. Speaker 300:16:51The receipt is believed to be imminent, management and the Board of Directors chose to shore up the balance sheet with $4,000,000 bridge loan announced in the earnings release today. With the bridge financing in place and the third deposit expected shortly, we look forward to delivering on the growth investors have been waiting for. Third quarter revenues are expected to recognize initial shipments of materials to Puerto Rico, as well as improved other LRAD orders. As pertains to the Puerto Rico project, percentage of completion accounting requires that we record hardware material revenues initially at cost and then only after installation and the profit on the material be recognized. Thus, gross margins will initially be compressed before accelerating through installation and implementation of the systems. Speaker 300:17:48Initially, will precede revenue and profit recognition during the Puerto Rico project. At 03/31/2025, we've received a net $9,700,000 of customer deposits, net of local taxes and revenue recognized to date for the first two groups of dams on this project. The final 40% of cash is expected to be received upon customer acceptance of each dam. As Richard indicated, we achieved our first milestones with the project and initial revenues were recorded in the second fiscal quarter with more significant revenue recognition coming in the June and the broader deliveries and implementation on the first group gets underway. As we have stated from the beginning of this fiscal year, we expect to recognize significantly more revenues in the second half of this fiscal year than the first. Speaker 300:18:46Once revenue recognition on the completion of dams begins, we anticipate relatively steady contribution through project completion. With a twelve month backlog that has grown to $50,000,000 including ARR of $8,600,000 and an expanding pipeline of opportunities, Genesis financial turnaround is well underway. Now I'd like to turn the call back to Richard for some final remarks. Speaker 200:19:15Thank you, Dennis. On behalf of myself, the Board of Directors and all of the employees of Genesis, I would like to express heartfelt gratitude for all you have done for Genesis over the past eight years. You have been instrumental in transforming this company from a small hardware business with 45 employees to a much more diversified technology leader with more than 200 employees and customers spanning the globe. Although we are all saddened by your retirement, after forty five years it is well deserved. I wish you all the best as you went to this next phase, and thank you for all you have done for me personally and for Genesis. Speaker 200:19:56Now I would like to open it up for Q and A. Operator? Speaker 400:19:59Here we go. Operator00:20:00Thank you. Ladies and gentlemen, the floor is now open for questions. And we'll take our first question from Scott Searle from Roth Capital. Please go ahead, Scott. Speaker 500:20:27Good afternoon. Thanks for taking the questions. Dennis, congratulations and good luck on your retirement. Speaker 400:20:32Thank you. Speaker 500:20:33May maybe just to dive in quickly to start on prep up, you know, rev rec issues are it sounds like it's a change, but in terms of things progressing, it seems on track. Just wanna make sure I understand a couple of things for starters that the initial material shipment were basically at cost. So we're looking at zero gross margin before we start to see the rev rec kick in and then much, much higher gross margins on the remaining portion of the contract as you hit those, installed milestones. Is that correct? Speaker 300:21:03Yes. I mean, the the theory is that, you know, when you ship the materials, that's part of a solution, but the only way to really measure the percentage of completion of the project is by the level of installation cost and hours that have been have already been expended against what the total project dam by dam is anticipated to be. Speaker 500:21:29Gotcha. Okay. And then moving beyond the first three groups, I think there are seven groups in total. I'm wondering what the progress is, you know, on on groups four to seven at this point in time. Speaker 200:21:42Scott, this is Richard. The third group has been approved. That means all the designs have been signed off, we're ready to go notwithstanding the deposit hasn't arrived yet. The next group of dams, we will begin the detailed design process here shortly and then continue that until the fourth group I'm sorry. The seventh group is complete. Speaker 500:22:05Gotcha. Okay. And moving on to the impact of of federal budgets in terms of what they contribute to your your state agencies and state customers. I'm wondering if there's a number in terms of that opportunity pipeline, you know, that is dependent on those federal funds. Just kind of, you know, a number of ballpark in terms of percentage. Speaker 500:22:29And I'm not sure if you provided a total for the opportunity pipeline other than saying it was it was growing pretty significantly. Speaker 200:22:37Yeah. I don't think we put an absolute on it, Scott. And in terms of your first question, it's all over the map. I can't give you a specific percentage, Speaker 400:22:47but Speaker 200:22:50particularly in our software world, they're they are frequently dependent on grants. Speaker 500:23:00Okay. And moving over to CROs, it sounds like you don't have an order in hand yet, but you're getting close. I think, in terms of how you size the opportunity before in terms of thousands of vehicles, that the CROs opportunity would be larger than it historically represented before the old program expired. I'm wondering if that still holds, and you would expect this to annualize out at some point in time of 10 to 15,000,000 or so a year. Speaker 200:23:27That's exactly right. Speaker 500:23:30Gotcha. And and finally, and then I'll jump back in the queue. It seems like there's a lot of announcements that that go outside of, I'll call it, your traditional core base in terms of, you know, local, state, and federal agencies starting to see more utilities. You also announced a a Quake product in the last week or so. I'm I'm wondering if you could just give us a a quick update in terms of what's going on in those nontraditional markets and opportunities if you're starting to gain some momentum on that front? Speaker 500:23:55Thanks. Speaker 200:23:57So, Scott, much like Puerto Rico, the the software enabled us to secure a $73,000,000 hardware opportunity. The ShakeAlert thing that we released is a similar kind of deal that, when all else fails, the acoustic devices will work and will be able to have, emergency messages go out when traditional channels no longer work. So I think a software piece is driving us into different markets for our hardware. Speaker 500:24:33That's and and let me just throw one last in supply chains. I know you had some comments on tariffs not being meaningful, but there were some long lead time items in terms of polls and other things as related to the proper contract. I'm just wondering if you're seeing any other pressures on that front. Thanks. Speaker 200:24:49No. It's the simple answer. And the polls the polls are moving their way to Puerto Rico as we speak. Speaker 500:24:58Great. Thanks so much. Operator00:25:01Thank you. And we'll take our next question from Mike Latimore from Northland Capital. Speaker 400:25:11Congratulations and great work going with you over several years here. I guess just on the supplies for the Puerto Rico deal. I think you said you've received some and some are on order. Can you just kind of give an update on what percent of the total amount you've received? What percent on order? Speaker 400:25:31And for those that are on order, when do you expect to receive them? Speaker 200:25:36So a % is either on order or received for the three groups. All of those materials are expected to deliver to the island before the end of this fiscal year. Speaker 400:25:49Okay. Is that different? I thought they were there was a large tranche in the supposed to be in mid May here. Speaker 200:26:01Material is starting to flow to the island, but, you know, the the large numbers will happen later in our third quarter and and into our fourth. Speaker 400:26:11Okay. Got it. Can you talk about recognizing the hardware at cost in the third quarter? I assume the there's a similar dynamic in the fourth quarter as well, given you'll get some of the hardware supplies in the fourth quarter? How do we think about the balance there? Speaker 300:26:33No. Yes. That's correct. I mean, there will be a similar, as we start new dams in the fourth quarter, those materials initially will go in at cost. However, the materials that are shipped in the third quarter, presumably, there will be installation costs and implementation. Speaker 300:26:50Dams will start to be completed. So as that that installation percentage of installation is increases, that's when we'll be picking up more margin. So there should be more a higher level of margin than than the cost once you get over that initial material cost at revenue at cost. Speaker 400:27:14Mhmm. Got it. And then over the course of this program, you you still expect the same level of EBITDA and cash flow as always? Speaker 300:27:25Yes. Yes. That has not changed. Speaker 400:27:27Okay. Great. Thank you. Operator00:27:35Then we'll take our next question from Ed Woo from Ascendiant Capital. Please go ahead, Ed. Speaker 600:27:41Yeah. I also like to congratulate you, Dennis. Hope you enjoy retirement. My question is, you know, you mentioned that in The US because of some of the federal budget issues, have you noticed any longer lead times with any international opportunities? Speaker 200:27:59No. You know, Ed, the international opportunities usually take longer by its very nature, but, no, we're not experiencing any additional increased time to close. Speaker 600:28:14Great. Well, that's all the questions I have. I wish you guys good luck, and congratulations again, Dennis. Good luck. Speaker 300:28:19Right. Thank you, Ed. Operator00:28:22Once again, star one if you do have a question or a comment. And there appear to be no further questions at this time. I'd like to turn the floor back to Brian Alger for closing remarks. Speaker 700:28:40All right. Thank you, everyone. Thank you for participating in today's conference call. A replay of the call will be available on our website shortly. For additional information and up to date news and activity regarding Genesis, our products, and the customers we serve, we strongly recommend you follow the company and Genesis for deck on your social networks, particularly LinkedIn and ads where we actively post and comment events as they're happening. Speaker 700:29:02And as we saw yesterday, keep an eye on our website for blog posts where we often respond to breaking news as it happens. We look forward to speaking with each of you again next quarter when we report fiscal third quarter twenty twenty five results. Speaker 400:29:15And with that, good night. Operator00:29:19Thank you. Ladies and gentlemen, this does conclude today's teleconference. We thank you for your participation. You may disconnect your lines at this time, and have a great day.Read morePowered by Key Takeaways Puerto Rico dam project: Genesis began installing hardware for the first 19 dams with materials for Groups 1–3 either received or on order, but a delayed down payment for Group 3 prompted a $4 M bridge loan; record Q4 revenue is expected as installations accelerate. Genesis Protect performance: During the LA fires, the platform cut average evacuation alert times from 40–60 minutes to 6 minutes—likely saving lives—and has driven a greater-than 100% increase in the software pipeline since Q1. Financial results: Q2 revenue grew 21% YoY (hardware +17%, software +29%), with gross margin at 37.7% and an improved adjusted EBITDA loss of -$5.1 M, though elevated network costs weighed on sequential margins. Bridge financing: The company secured a $4 M amendment to its term loan at existing rates—expiring December 2025—with an option for an additional $4 M to shore up liquidity amid payment timing uncertainties. Crow’s AHD program: Genesis expects to receive the initial Army production order under the multi-year LRAD program this fiscal year, establishing a ballast for its hardware business over the coming years. AI Generated. May Contain Errors.Conference Call Audio Live Call not available Earnings Conference CallGenasys Q2 202500:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsPress Release(8-K)Quarterly report(10-Q) Genasys Earnings HeadlinesGenasys Inc. Provides Update on Puerto Rico Dam EWS Project | GNSS Stock NewsMay 19, 2025 | gurufocus.comGenasys Inc. Provides Update on Puerto Rico Dam EWS ProjectMay 19, 2025 | gurufocus.comSilicon Valley Gold RushA new technology has sparked a modern-day gold rush in Silicon Valley. OpenAI’s Sam Altman invested $375M. Bill Gates has backed four companies in this space. The World Economic Forum calls it “the most exciting human discovery since fire.” Whitney Tilson believes this trend could mint a new class of wealthy investors—and he’s sharing one stock to watch now, for free.May 25, 2025 | Stansberry Research (Ad)Equities Analysts Offer Predictions for Genasys Q3 EarningsMay 18, 2025 | americanbankingnews.comNorthland Capmk Estimates Genasys' Q3 Earnings (NASDAQ:GNSS)May 17, 2025 | americanbankingnews.comGenasys Inc. (NASDAQ:GNSS) Q2 2025 Earnings Call TranscriptMay 14, 2025 | insidermonkey.comSee More Genasys Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like Genasys? Sign up for Earnings360's daily newsletter to receive timely earnings updates on Genasys and other key companies, straight to your email. Email Address About GenasysGenasys (NASDAQ:GNSS) engages in the design, development, and commercialization of critical communications hardware and software solutions to alert, inform, and protect people principally in North and South America, Europe, the Middle East, Asia, and internationally. The company operates through two segments, Hardware and Software. It provides Genasys Protect ALERT, an interactive, cloud-based SaaS solution that is designed to enable SLED and enterprise customers to send critical information to at-risk individuals or groups when an emergency occurs using emails, voice calls, text messages, panic buttons, desktop alerts, TV, social media, and other; and Genasys Protect EVAC that enables responding agencies to determine and communicate the proper scope of a response or evacuation by replacing guesswork with data-driven intelligence; and Genasys Protect CONNECT, an instant communication platform that enables first responders and public safety personnel to collaborate and share information in a single space with text, videos, images, and audio from any location. The company also offers Genasys Protect ACOUSTICS, a mass notification speaker system with Genasys protect command-and-control software; and long range acoustic devices, such as acoustic hailing devices which are used to project alert tones and audible voice messages. It sells its products directly to governments, militaries, end-users, and commercial companies. The company was formerly known as LRAD Corporation. Genasys Inc. was incorporated in 1992 and is based in San Diego, California.View Genasys ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Booz Allen Hamilton Earnings: 3 Bullish Signals for BAH StockAdvance Auto Parts Jumps on Surprise Earnings BeatAlibaba's Earnings Just Changed Everything for the StockCisco Stock Eyes New Highs in 2025 on AI, Earnings, UpgradesSymbotic Gets Big Earnings Lift: Is the Stock Investable Again?D-Wave Pushes Back on Short Seller Case With Strong EarningsAppLovin Surges on Earnings: What's Next for This Tech Standout? 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There are 8 speakers on the call. Operator00:00:00At this time, it is my pleasure to turn the floor over to your host, Brian Alger, SVP, Investor Relations and Corporate Development. Welcome, Brian. The floor is yours. Speaker 100:00:11Good afternoon. Welcome to Genesis' fiscal twenty twenty five second quarter results conference call. I'm Brian Alger, SVP, Investor Relations and Corporate Development for Genesis. With me on the call today are Richard Danforth, our CEO and Dennis Kwan, the company's CFO. During today's call, management will make forward looking statements regarding the company's plans, expectations, outlook and future financial performance that involve certain risks and uncertainties. Speaker 100:00:36The company's results may differ materially from the projections described in these forward looking statements. Factors that might cause such differences and other potential risks and uncertainties can be found in the Risk Factors section of the company's Form 10 ks for the fiscal year ended 09/30/2024. Other than statements of historical facts, forward looking statements made on this call are made based on information in management's expectations as of today, 05/13/2025. We explicitly disclaim any intent or obligation to update those forward looking statements, except as otherwise specifically stated. We will also discuss non GAAP financial measures and operational metrics, including adjusted EBITDA, bookings and backlog, which we believe provide helpful information to investors with respect to evaluating the company's performance. Speaker 100:01:19For a reconciliation of adjusted EBITDA to GAAP financial metrics, please see the table in the press release issued by the company at the close of market today. We consider bookings and backlog leading indicators of future revenues and use these metrics to support production planning. Bookings is an internal operational metric that measures the total dollar value of customer purchase orders executed in a given period, regardless of the timing of the related revenue recognition. Backlog is a measure of purchase orders received that are scheduled to ship within the next twelve months. Finally, a replay of this call will be available approximately four hours through the Investor Relations page on the company's website. Speaker 100:01:58Now at this time, it's my pleasure to turn the call over to Genesis' CEO, Richard Danforth. Richard? Speaker 200:02:05Thank you, Brian, and welcome, everyone. Fiscal twenty twenty five is turning out to be an exceptional year for Genesis. On our February call, we discussed how the January fires in LA brought global attention to the use of Genesis Protect for managing emergency response and evacuation notifications. As we have stated multiple times, the Genesis Protect platform proved to be incredibly resilient and effective at saving lives. The balance of the March progressed largely as expected, but one meaningful LRAD order that was expected to close moved to our fiscal third quarter. Speaker 200:02:43Since last November, we have known that the second half of fiscal twenty twenty five was going to see tremendous growth and acceleration in our hardware business. Throughout the March and continuing into our third fiscal quarter, design, planning and procurement for the Puerto Rico project has been progressing well. Recently, we began implementation and installation work on the first of 19 dams currently approved. Substantially, all of the materials for the first three groups have either been received or are on order. In Puerto Rico, since the March, we have been expecting the down payment for the third group of DAMs. Speaker 200:03:24The designs have been approved, our invoices for the down payment have been delivered and approved, all of the authorizations for the payment have been made. We have not yet received the deposit, however. To be clear, this has absolutely nothing to do with FEMA or anything else occurring in Washington, DC. The FEMA money for the development and installation of the early warning system for the identified 37 dams in Puerto Rico was funded in early twenty twenty four. We have received multiple assurances from our customer that the payment will be made shortly. Speaker 200:03:59That said, management and the board made the decision to obtain additional capital to maintain momentum and enable Genesis to capture the opportunity at our doorstep. Because of the timing and various provisions within our existing secured debt agreement, we signed a $4,000,000 first amendment to the term loan with our creditor, White Box. This smaller loan comes at the same interest rate as the original debt, but is intended to be very short term. In fact, it expires at the end of this calendar year. Additionally, the agreement comes with a statement for the availability of an additional 4,000,000 to be made at Genesis request. Speaker 200:04:41Suffice it to say, if we had received the down payment for the third group, we would not have sourced the bridge capital. We continue to drive to an aggressive timeline that delivers all of the hardware for the first three groups to the island by the end of this fiscal year, with installation schedules already underway. Dennis will go into the revenue recognition in much greater detail, but hitting the schedule as it stands today, result in record quarterly revenue in the fourth quarter this fiscal year. Beyond the project in Puerto Rico, bookings for our LRAD business continue to track ahead of our last year, driving further improvements in our twelve month backlog. This is in spite of a handful of opportunities slipping, including the one I just referenced. Speaker 200:05:28International and domestic demand continues to improve for both critical infrastructure as well as military needs. New use cases continue to emerge like a recent article that described the use of LRAD units on autonomous surface vessels in Singapore, or the upgrading of physical security systems like the one we recently announced for the SIP 14 electrical substation here in The US. Looking out a bit further, the project award in Puerto Rico is providing a meaningful proof point in a number of countries looking to provide citizens with reliable emergency communication link. Finally, I wanna take a moment to talk about Crow's AHD program. Like its predecessor, this program is expected to span multiple years with eventual deliveries of thousands of LRAD units. Speaker 200:06:19Based on our conversations with the Army Program Office, we expect to receive the initial production order under this program this fiscal year. Given that we don't yet have the purchase order, we cannot state for certain the size of the order, nor our ability to complete deliveries against that order this fiscal year. However, the importance of this milestone is critical, as it should serve as ballast to our LRAD business for the next several years. We look forward to updating you further, purchase order is issued. Now I would like to shift gears and speak a little about our software business. Speaker 200:06:55As you all are aware, we had a major proof point this past January. While that won't convert into instant lift in revenues, it has contributed Since the fires within LA County alone, we are in various stages of discussion with three separate communities for implementation of evac and acoustic systems. Nationwide, the performance of the system during the LA Complex of fires, as well as the high profile events in Oklahoma, North Carolina, New Jersey, and even Long Island contributing to an expanding pipeline. But still a ways from closing and being converted to revenue, this pipeline measurement has increased more than 100% since the beginning of fiscal twenty twenty five. Many of you are aware of Congressman Garcia's recently released a report regarding lessons from the Kenneth Fire false alerts. Speaker 200:07:50The event highlighted a breakdown in alert targeting that originated from within a complex environment of rapidly evolving conditions, overlapping systems, and high stake decision making during a historic disaster. Importantly, what has not been covered by this investigation, nor in any media reports, are the dramatic improvements Genesis software enabled in quickly disseminating evacuation notices to the public. During previous devastating wildfires, the elapsed time from first responder requesting evacuations to evacuation alerts being issued averaged forty to sixty minutes. Using the Genesis Protect platform, LA County reduced the average time to six minutes. This significant improvement likely saved hundreds and possibly thousands of lives. Speaker 200:08:40What we witnessed was more than just technology at work, it was a culmination of dedication, preparation, and coordination across multiple agencies. Emergency teams sent over 400 zone status changes to critical life saving situations through Genesys Protect, all in record time. As the report mentioned, a local network level disruption interfered with data transfer to a federal alerting backbone IPOS. The alert was correctly configured by the operator and properly localized across all channels. Intermittent network issue prevented the targeted area from registering in one channel, resulting in a broader than intended warning. Speaker 200:09:22This wasn't a software failure, it was a breakdown in connectivity in the middle of a crisis. Networks are strained with the unprecedented condition around Los Angeles County. Since that initial incident, we have taken the following actions, implementing new safeguards, strengthening cross channel validation, and introducing fail safes to ensure that geotargeting data is fully aligned or any alert is sent. These enhancements were live within forty eight hours of the original occurrence. Our technology remains the most widely deployed multi channel alerting platform in California, and continues to expand nationwide. Speaker 200:10:04We remain the trusted targeted communication partner to agencies across 39 states with Genesis Protect, and we are expanding rapidly. Our platform is stronger, smarter, and more resilient because of what we have learned, and we're only accelerating from here. In addition to the tailwinds for EVAC that have come in the wake of the LA Fires, our Connect software is rapidly gaining traction, with even greater awareness being fueled by the signal gate disclosures. Most Connect deals are relatively small from a revenue standpoint. Recently, however, we have been engaged with a number of larger organizations. Speaker 200:10:42One is a federal agency, another is a combination of regional agencies in one of the highest populated cities in The United States. Each of these opportunities are currently in trial and are expected to progress to contract. As strong as the momentum and growth in our pipeline is, we do have to acknowledge that fewer deals are closing. The opportunities are not going away, but rather being delayed. This is particularly true at the state level, where access to federal grant money is in question. Speaker 200:11:13While some deals are closing, many of the larger Genesis Protect deals, including those with Acoustics, have slowed. Up until last Monday, grant payments from the $553,000,000,000 Urban Area Security Initiative and the $374,000,000,000 State Homeland Security Program were frozen. Our expectation is that that funding becomes more certain, deals that are further in our pipeline will accelerate through closing. With that said, we still expect sequential growth in our software business over the remainder of fiscal twenty twenty five. At the macro level, Genesis is not being impacted by the ongoing tariff and trade negotiations. Speaker 200:11:57The administration's rapid pace of change is affecting procurement processes in that it introduces uncertainty into an already complicated process of securing funding, as not only do federal decisions affect federal agencies, but many state budgets rely heavily on the funds from the federal government, thus affecting state appropriation priorities. In summary, fiscal twenty twenty five is challenging to forecast and precisely predict, but is still on course for substantial growth and improvement in profitability, particularly in the fiscal fourth quarter. Beyond 2025, the outlook continues to improve with a broadening pipeline for both our hardware and software offerings, ultimately delivering increased visibility and predictability. Now I will turn the call over to Dennis to go through the financials and outlook in greater details. Dennis? Speaker 300:12:51Thank you, Richard. Before I begin to review the operational and financial details of the quarter, I would like to speak about my decision to retire. I've been fortunate to work with companies doing exciting things and learn something new in every organization I served in my forty five year career. Genesys has been an amazing opportunity, both personally and professionally, with rapid organic growth, multiple acquisitions, worldwide expansion, and essentially growing a new software company out of a hardware company. Genesys has a great team of passionate, hardworking, and dedicated employees that have made it a joy to come to the office every day. Speaker 300:13:32I want to thank Richard, the board, and the Genesis team for the opportunity to serve as Genesis CFO for the past eight years. I have some travel plans this year, but I'm available to assist the new CFO as needed to ensure that there's a smooth and orderly transition. In the second quarter of fiscal twenty twenty five, Genesis generated roughly flat revenues sequentially and 21% growth compared to the prior year quarter. Hardware revenues grew slightly sequentially and were up 17% year over year. Total software revenue in the quarter grew 29% year over year, but were down 3% or $64,000 sequentially as a few customers chose not to renew their expiring agreements. Speaker 300:14:24Gross profit margin was 37.7% in the March, effectively flat with the prior year's period, but down nearly eight points from December. Sequentially, this is primarily due to a mix of lower margin hardware revenue and the significantly higher volume network and messaging costs linked to software platform usage during the LA fire event. Quarterly operating expenses were 8,900,000.0 versus $9,100,000 in the December and $9,200,000 in last year's second quarter. Sequentially, the improvement is seen in SG and A, while on a year over year comparison, R and D is down slightly. On a GAAP basis, our second fiscal quarter operating loss was $6,300,000 compared to a loss of $7,000,000 in the year ago quarter and a loss of $5,900,000 in the December. Speaker 300:15:25Adjusted EBITDA, which also excludes non cash stock compensation, was a negative $5,100,000 an improvement from the negative $5,700,000 in the second quarter of twenty twenty four, but down slightly from the $4,800,000 in the December. GAAP net loss in this fiscal year's second quarter was 6,100,000.0 which compares to last year's second quarter net loss of $7,000,000 and the first quarter of fiscal year twenty twenty five's '4 point '1 million dollars net loss, which benefited from $2,200,000 of non cash other income related to the quarterly adjustment to the fair value of the warrants issued with the term loan last May. Cash, cash equivalents and marketable securities at the March totaled $7,200,000 down from $13,900,000 on 12/31/2024. Cash used in operating activities in the second fiscal quarter was 6,300,000.0 including a $973,000 use of cash from changes in operating assets and liabilities. Subsequent to quarter end, we'd expected to receive the deposit for the third group of Puerto Rico dams. Speaker 300:16:51The receipt is believed to be imminent, management and the Board of Directors chose to shore up the balance sheet with $4,000,000 bridge loan announced in the earnings release today. With the bridge financing in place and the third deposit expected shortly, we look forward to delivering on the growth investors have been waiting for. Third quarter revenues are expected to recognize initial shipments of materials to Puerto Rico, as well as improved other LRAD orders. As pertains to the Puerto Rico project, percentage of completion accounting requires that we record hardware material revenues initially at cost and then only after installation and the profit on the material be recognized. Thus, gross margins will initially be compressed before accelerating through installation and implementation of the systems. Speaker 300:17:48Initially, will precede revenue and profit recognition during the Puerto Rico project. At 03/31/2025, we've received a net $9,700,000 of customer deposits, net of local taxes and revenue recognized to date for the first two groups of dams on this project. The final 40% of cash is expected to be received upon customer acceptance of each dam. As Richard indicated, we achieved our first milestones with the project and initial revenues were recorded in the second fiscal quarter with more significant revenue recognition coming in the June and the broader deliveries and implementation on the first group gets underway. As we have stated from the beginning of this fiscal year, we expect to recognize significantly more revenues in the second half of this fiscal year than the first. Speaker 300:18:46Once revenue recognition on the completion of dams begins, we anticipate relatively steady contribution through project completion. With a twelve month backlog that has grown to $50,000,000 including ARR of $8,600,000 and an expanding pipeline of opportunities, Genesis financial turnaround is well underway. Now I'd like to turn the call back to Richard for some final remarks. Speaker 200:19:15Thank you, Dennis. On behalf of myself, the Board of Directors and all of the employees of Genesis, I would like to express heartfelt gratitude for all you have done for Genesis over the past eight years. You have been instrumental in transforming this company from a small hardware business with 45 employees to a much more diversified technology leader with more than 200 employees and customers spanning the globe. Although we are all saddened by your retirement, after forty five years it is well deserved. I wish you all the best as you went to this next phase, and thank you for all you have done for me personally and for Genesis. Speaker 200:19:56Now I would like to open it up for Q and A. Operator? Speaker 400:19:59Here we go. Operator00:20:00Thank you. Ladies and gentlemen, the floor is now open for questions. And we'll take our first question from Scott Searle from Roth Capital. Please go ahead, Scott. Speaker 500:20:27Good afternoon. Thanks for taking the questions. Dennis, congratulations and good luck on your retirement. Speaker 400:20:32Thank you. Speaker 500:20:33May maybe just to dive in quickly to start on prep up, you know, rev rec issues are it sounds like it's a change, but in terms of things progressing, it seems on track. Just wanna make sure I understand a couple of things for starters that the initial material shipment were basically at cost. So we're looking at zero gross margin before we start to see the rev rec kick in and then much, much higher gross margins on the remaining portion of the contract as you hit those, installed milestones. Is that correct? Speaker 300:21:03Yes. I mean, the the theory is that, you know, when you ship the materials, that's part of a solution, but the only way to really measure the percentage of completion of the project is by the level of installation cost and hours that have been have already been expended against what the total project dam by dam is anticipated to be. Speaker 500:21:29Gotcha. Okay. And then moving beyond the first three groups, I think there are seven groups in total. I'm wondering what the progress is, you know, on on groups four to seven at this point in time. Speaker 200:21:42Scott, this is Richard. The third group has been approved. That means all the designs have been signed off, we're ready to go notwithstanding the deposit hasn't arrived yet. The next group of dams, we will begin the detailed design process here shortly and then continue that until the fourth group I'm sorry. The seventh group is complete. Speaker 500:22:05Gotcha. Okay. And moving on to the impact of of federal budgets in terms of what they contribute to your your state agencies and state customers. I'm wondering if there's a number in terms of that opportunity pipeline, you know, that is dependent on those federal funds. Just kind of, you know, a number of ballpark in terms of percentage. Speaker 500:22:29And I'm not sure if you provided a total for the opportunity pipeline other than saying it was it was growing pretty significantly. Speaker 200:22:37Yeah. I don't think we put an absolute on it, Scott. And in terms of your first question, it's all over the map. I can't give you a specific percentage, Speaker 400:22:47but Speaker 200:22:50particularly in our software world, they're they are frequently dependent on grants. Speaker 500:23:00Okay. And moving over to CROs, it sounds like you don't have an order in hand yet, but you're getting close. I think, in terms of how you size the opportunity before in terms of thousands of vehicles, that the CROs opportunity would be larger than it historically represented before the old program expired. I'm wondering if that still holds, and you would expect this to annualize out at some point in time of 10 to 15,000,000 or so a year. Speaker 200:23:27That's exactly right. Speaker 500:23:30Gotcha. And and finally, and then I'll jump back in the queue. It seems like there's a lot of announcements that that go outside of, I'll call it, your traditional core base in terms of, you know, local, state, and federal agencies starting to see more utilities. You also announced a a Quake product in the last week or so. I'm I'm wondering if you could just give us a a quick update in terms of what's going on in those nontraditional markets and opportunities if you're starting to gain some momentum on that front? Speaker 500:23:55Thanks. Speaker 200:23:57So, Scott, much like Puerto Rico, the the software enabled us to secure a $73,000,000 hardware opportunity. The ShakeAlert thing that we released is a similar kind of deal that, when all else fails, the acoustic devices will work and will be able to have, emergency messages go out when traditional channels no longer work. So I think a software piece is driving us into different markets for our hardware. Speaker 500:24:33That's and and let me just throw one last in supply chains. I know you had some comments on tariffs not being meaningful, but there were some long lead time items in terms of polls and other things as related to the proper contract. I'm just wondering if you're seeing any other pressures on that front. Thanks. Speaker 200:24:49No. It's the simple answer. And the polls the polls are moving their way to Puerto Rico as we speak. Speaker 500:24:58Great. Thanks so much. Operator00:25:01Thank you. And we'll take our next question from Mike Latimore from Northland Capital. Speaker 400:25:11Congratulations and great work going with you over several years here. I guess just on the supplies for the Puerto Rico deal. I think you said you've received some and some are on order. Can you just kind of give an update on what percent of the total amount you've received? What percent on order? Speaker 400:25:31And for those that are on order, when do you expect to receive them? Speaker 200:25:36So a % is either on order or received for the three groups. All of those materials are expected to deliver to the island before the end of this fiscal year. Speaker 400:25:49Okay. Is that different? I thought they were there was a large tranche in the supposed to be in mid May here. Speaker 200:26:01Material is starting to flow to the island, but, you know, the the large numbers will happen later in our third quarter and and into our fourth. Speaker 400:26:11Okay. Got it. Can you talk about recognizing the hardware at cost in the third quarter? I assume the there's a similar dynamic in the fourth quarter as well, given you'll get some of the hardware supplies in the fourth quarter? How do we think about the balance there? Speaker 300:26:33No. Yes. That's correct. I mean, there will be a similar, as we start new dams in the fourth quarter, those materials initially will go in at cost. However, the materials that are shipped in the third quarter, presumably, there will be installation costs and implementation. Speaker 300:26:50Dams will start to be completed. So as that that installation percentage of installation is increases, that's when we'll be picking up more margin. So there should be more a higher level of margin than than the cost once you get over that initial material cost at revenue at cost. Speaker 400:27:14Mhmm. Got it. And then over the course of this program, you you still expect the same level of EBITDA and cash flow as always? Speaker 300:27:25Yes. Yes. That has not changed. Speaker 400:27:27Okay. Great. Thank you. Operator00:27:35Then we'll take our next question from Ed Woo from Ascendiant Capital. Please go ahead, Ed. Speaker 600:27:41Yeah. I also like to congratulate you, Dennis. Hope you enjoy retirement. My question is, you know, you mentioned that in The US because of some of the federal budget issues, have you noticed any longer lead times with any international opportunities? Speaker 200:27:59No. You know, Ed, the international opportunities usually take longer by its very nature, but, no, we're not experiencing any additional increased time to close. Speaker 600:28:14Great. Well, that's all the questions I have. I wish you guys good luck, and congratulations again, Dennis. Good luck. Speaker 300:28:19Right. Thank you, Ed. Operator00:28:22Once again, star one if you do have a question or a comment. And there appear to be no further questions at this time. I'd like to turn the floor back to Brian Alger for closing remarks. Speaker 700:28:40All right. Thank you, everyone. Thank you for participating in today's conference call. A replay of the call will be available on our website shortly. For additional information and up to date news and activity regarding Genesis, our products, and the customers we serve, we strongly recommend you follow the company and Genesis for deck on your social networks, particularly LinkedIn and ads where we actively post and comment events as they're happening. Speaker 700:29:02And as we saw yesterday, keep an eye on our website for blog posts where we often respond to breaking news as it happens. We look forward to speaking with each of you again next quarter when we report fiscal third quarter twenty twenty five results. Speaker 400:29:15And with that, good night. Operator00:29:19Thank you. Ladies and gentlemen, this does conclude today's teleconference. We thank you for your participation. You may disconnect your lines at this time, and have a great day.Read morePowered by