Senstar Technologies Q1 2025 Earnings Call Transcript

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May 27, 2025

Key Takeaways

  • Senstar delivered 12.5% revenue growth to $8.4 million in Q1 2025, driven by strong demand in the energy, logistics and corrections verticals.
  • Gross margin expanded to 67.2% from 59.6% a year ago, reflecting favorable product mix, component and design cost optimizations.
  • EBITDA rose to $1.2 million with a 14.3% margin versus 1.5% in Q1 2024, underscoring the scalability of Senstar’s operating model.
  • Regional performance was mixed: Canada grew 58%, APAC 40% and EMEA 19%, while U.S. sales dipped 2% on contract timing and LATAM remained under pressure.
  • The launch of Cascade Plus for multi-sensor perimeter security has expanded the product pipeline with new design wins expected in critical infrastructure.
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Earnings Conference Call
Senstar Technologies Q1 2025
00:00 / 00:00

Transcript Sections

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Senstar Technologies First Quarter twenty twenty five Results Conference Call. All participants are at present in a listen only mode. Following management's formal presentation, instructions will be given for the question and answer session. As a reminder, this conference is being recorded.

Operator

I would now like to hand over the call to Corbin Woodhull of Hayden IR. Corbin, would you like to begin?

Corbin Woodhull
Managing Director, Global Advisory at Hayden IR

Thank you, Shamali. I would like to welcome everyone to the conference call and thank Senstar Technologies management for hosting today's call. With us on the call today are Mr. Fabien Hobert, CEO of Senstar Technologies and Ms. Alicia Kelly, the CFO.

Corbin Woodhull
Managing Director, Global Advisory at Hayden IR

Fabian will summarize key financial and business highlights followed by Alicia, who will review Senstar's financial results for the first quarter of twenty twenty five. We will then open the call up for a question and answer session. Before we start, I'd like point out that the conference call may contain projections or other forward looking statements regarding future events or the company's future performance. These statements are only predictions and Senstar cannot guarantee that they will in fact occur. Senstar does not assume any obligation to update that information.

Corbin Woodhull
Managing Director, Global Advisory at Hayden IR

Actual events or results may differ materially from those projected including as a result of changing market trends, reduced demand and the competitive nature of the security systems industry, the unanticipated and unknown effect of the coronavirus including on our operations and our clients as well as other risks identified in documents filed by the company with the Securities and Exchange Commission. In addition, during the course of this conference call, we will describe certain non GAAP financial measures, which should be considered in addition to and not in lieu of comparable GAAP financial measures. Please note that in our press release, we have reconciled our non GAAP financial measures to the most directly comparable GAAP measures in accordance with Reg G requirements. You can also refer to the company's website at www.senstar.com for the most directly comparable financial measures and related reconciliations. And with that, I will now hand the call over to Fabian. Fabian, please go ahead.

Fabien Haubert
Fabien Haubert
Chief Executive Officer at Senstar Technologies

Thank you, Corbin. Thank you for joining us today to review SensStar Technology first quarter twenty twenty five financial results. We delivered strong first quarter results marked by solid execution and a well managed balance between growth and profitability. Our four core verticals increased by 33% in aggregate year over year, which led to 12.5% revenue growth and a robust expansion in both growth and EBITDA margin. Now moving to a review of quarterly highlights.

Fabien Haubert
Fabien Haubert
Chief Executive Officer at Senstar Technologies

Revenue in the first quarter was driven by the well balanced mix of products with notable vertical market strength from energy, logistics and corrections. This performance reflects the sustained customer demand and combined with our focus on design cost optimizations, drove the material growth margin expansion to 67.2 in the first quarter, comfortably above our targets. We're continuing to invest for the long term growth of the company, while also focusing on cost control measures and monitoring headcount efficiency, which are contributing in a meaningful way to sustainable profitability. In the first quarter, operating expenses increased by 2% year over year and declined to 55% of revenue compared to the 61% in the prior year quarter. Based on double digit revenue growth, margin expansion and strict cost monitoring, EBITDA rose to $1,200,000 and EBITDA margin reached 14.3%.

Fabien Haubert
Fabien Haubert
Chief Executive Officer at Senstar Technologies

TENSA global diversification continues to strengthen, with North America EMEA and APAC delivering broad based gains across our key verticals. In North America, our largest market as a percentage of sales, revenue increased by 6% in the first quarter, mainly due to the solid performance in Corrections and Utilities. Of particular note is the performance of Canada during the quarter, which increased revenue by 58% on strong demand for our utilities and corrections offering. In EMEA, also one of our largest markets, revenue increased by 19% in the first quarter. Market demand in the region remained strong, especially in the logistics and energy verticals.

Fabien Haubert
Fabien Haubert
Chief Executive Officer at Senstar Technologies

Exiting last year, we made several strategic hires focused on business developments in our three main regions: Americas, EMEA and APAC. The team is now fully integrated with incentives aligned towards profitable growth in our core verticals. As a result of SENSA sustained investments in Europe, in previous years, the EMEA region now represents 30% of total revenue, up from 28% in the year ago period. In Asia Pacific, our revenue grew by 40% compared to the previous year's first quarter, the strongest regional growth rates among our covert markets. The powerful performance in the quarter was primarily driven by increasing perimeter security requirements in energy and logistics.

Fabien Haubert
Fabien Haubert
Chief Executive Officer at Senstar Technologies

Asia Pacific also increased revenue contribution in the quarter to 17% compared to 14% in the year ago period. In LATAM, the region declined as a percentage of revenue in the quarter, but we continue to identify new opportunities in these important markets. Our international strategy remains focused on regions where our solutions can deliver the greatest value, specifically in markets prioritizing security modernization. Looking at revenue contribution per verticals, our four key verticals grew 33% in aggregate in the first quarter, driven primarily by strong performance in correction, energy and logistics. Interest and activity in data centers and alternative energy facilities continued to accelerate, reflecting their growing momentum.

Fabien Haubert
Fabien Haubert
Chief Executive Officer at Senstar Technologies

I would like to reiterate the high priority we placed on technological innovation, a key differentiator for Senstar. Multi sensor continues to gain traction and generate growing interest. Increased market awareness of its innovative capability has led to high levels of customer engagements and expanded testing and validation activity. We recently launched a new version of the product under the name Cascade Plus, which supports daisy chaining, enabling scalable deployments across complex environments. Our pipeline of new opportunities with new and existing customers is expanding and we expect to secure new design wins for MultiCenter in the coming months, particularly among our customers who operate critical infrastructure.

Fabien Haubert
Fabien Haubert
Chief Executive Officer at Senstar Technologies

In summary, our first quarter results demonstrate meaningful progress in both top line growth and margin expansion, underscoring the successful execution of our strategy to grow market share in key verticals and demonstrating the scalability of Sensor's operating model. Thank you for your attention. I will now turn the call over to Alicia for a review of the financial results in more detail.

Alicia Kelly
Alicia Kelly
Chief Financial Officer at Senstar Technologies

Thank you, Fabian. Our revenue for the first quarter of twenty twenty five was $8,400,000 representing a 12.5% increase compared to $7,500,000 in the first quarter twenty twenty four. This growth was driven by widespread strong performance across our key geographic and vertical markets. Canada led the geographic regions with 58% year over year revenue growth. Strategic wins and expanded relationships with both new and existing clients contributed to the significant uptick, particularly in corrections and utility verticals.

Alicia Kelly
Alicia Kelly
Chief Financial Officer at Senstar Technologies

The APAC region followed with a 40% increase in revenue, fueled by the increasing perimeter security requirements in energy, logistics and correctional projects. EMEA delivered a solid 19% revenue growth, supported by expanded adoption in the energy and logistics sectors. In contrast, sales in The US were down slightly by 2% year over year, primarily as a result of the timing of contract awards, which can fluctuate quarter to quarter. As Fabienne commented, LATAM faced pressures in the quarter, but we continue to believe this market represents a significant opportunity to capture given its growing demand for security modernization. The geographical breakdown as a percentage of revenue for the first quarter of twenty twenty five compared with the prior year's quarter is as follows: North America 40 9 Percent versus 52% EMEA thirty % versus 28% APAC seventeen % versus 14% Latin America three % versus 5% and all other regions were immaterial for both periods.

Alicia Kelly
Alicia Kelly
Chief Financial Officer at Senstar Technologies

First quarter gross margin was 67.2% compared to 59.6% in the year ago quarter. The seven fifty two basis point margin improvement was primarily the result of a more favorable product mix, components and design cost optimization, and efficiency gain from headcount streamlining. Our operating expenses were $4,600,000 up 2% compared to $4,500,000 in the prior year's first quarter. The increases were driven by targeted marketing and selling spend in core growth verticals and markets, with a positive offset from research and development investment optimization. Strong revenue and a sizable increase in gross margin drove our operating income for the first quarter to $1,000,000 a significant improvement compared to the operating loss of $73,000 in a year ago period.

Alicia Kelly
Alicia Kelly
Chief Financial Officer at Senstar Technologies

The company's EBITDA for the first quarter was $1,200,000 compared to $114,000 in the first quarter of last year, with margins expanding to 14.3% from 1.5% in the year ago quarter. These gains highlight the scalability of Sunstar's operating model. Financial income was $269,000 in the first quarter of this year compared to $54,000 in the first quarter of last year. This is mainly a non cash accounting effect we regularly report due to adjustments to the valuation of our monetary assets and liabilities denominated in currencies other than the functional currency of the operational entities in the group, in accordance with GAAP. Net income attributable to Sensor Technologies shareholders in the first quarter was $1,000,000 or $04 per share compared to a net loss of $746,000 or negative 3¢ per share in the first quarter of last year.

Alicia Kelly
Alicia Kelly
Chief Financial Officer at Senstar Technologies

Added to Sensor's operational contribution are the public platform expenses and amortization of intangible assets from historical acquisitions. The corporate costs for the first quarter were approximately $494,000 Turning back to our balance sheet, cash and cash equivalents and short term bank deposits as of 03/31/2025 were $22,000,000 or $0.94 per share. This compares to $20,600,000 or $0.88 per share as of 12/31/2024. The company had zero debt as of 03/31/2025. This concludes my remarks.

Alicia Kelly
Alicia Kelly
Chief Financial Officer at Senstar Technologies

Operator, can you please open the call for questions now?

Operator

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your yourself from the queue.

Operator

For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. We also ask each person asking the question to only limit themselves to two questions. One moment please while we poll for questions. Our first question comes from the line of Mike Dissler with AMNX. Please proceed with your question.

Analyst

Yes. Good afternoon all. Thanks for taking my call question. I was just wondering if you could just briefly skirt over the tariff issue and how it may or may not affect you. I can't imagine materially it will now versus it might have two or three years ago under the other structure that you had.

Analyst

And just any comment on that, a little color would be great. Thank you.

Fabien Haubert
Fabien Haubert
Chief Executive Officer at Senstar Technologies

Okay, thank you very much for your question. So regarding tariffs of day to day, we're not impacted in the sense that we're produced most of our goods in Canada and the only tariff would be of course in The US. And we're not facing today any tariff from Canada to The US. That being said, we've been working on the plan to be able basically to moving forward have an assembly produce basically in The US to basically be able to mitigate those tariffs to next to zero. So we're having basically those things so far under control.

Fabien Haubert
Fabien Haubert
Chief Executive Officer at Senstar Technologies

As per the current situation, no impact. Would a 25% tariff come? We have already worked on plan to mitigate next to zero those impacts. One I cannot predict, if it were to be different, then we would have to do our homework again.

Analyst

Right. I'm hopeful that you won't. You for clarifying that and continued success, Fabienne. I appreciate it. Take care.

Operator

Thank you

Fabien Haubert
Fabien Haubert
Chief Executive Officer at Senstar Technologies

so much for your support and trust.

Analyst

Yes, thank you.

Operator

Thank you. And we have reached the end of the question and answer session. I would like to turn the floor back over to CEO Fabienne Haubert for closing remarks.

Fabien Haubert
Fabien Haubert
Chief Executive Officer at Senstar Technologies

On behalf of Sensors management, I would like to thank our investors for their interest and long term support of our business. Have a great day.

Operator

Thank you. And this concludes today's conference. You may disconnect your lines at this time. We thank you for your participation and have a great day.

Executives
    • Fabien Haubert
      Fabien Haubert
      Chief Executive Officer
    • Alicia Kelly
      Alicia Kelly
      Chief Financial Officer
Analysts
    • Corbin Woodhull
      Managing Director, Global Advisory at Hayden IR
    • Analyst
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