VirTra Q2 2025 Earnings Report

VirTra EPS Results

• Actual EPS: $0.02
• Consensus EPS: $0.03
• Beat/Miss: Missed by -$0.01
• One Year Ago EPS: N/A

VirTra Revenue Results

• Actual Revenue: $6.98 million
• Expected Revenue: $6.34 million
• Beat/Miss: Beat by +$639.00 thousand
• YoY Revenue Growth: N/A

VirTra Announcement Details

• Quarter: Q2 2025
• Date: 8/11/2025
• Time: After Market Closes
• Conference Call Date: Monday, August 11, 2025
• Conference Call Time: 4:30PM ET

VirTra (NASDAQ:VTSI) provides use of force training and firearms training simulators for the law enforcement, military, and commercial markets worldwide. Its patented technologies, software, and scenarios provide intense training for de-escalation, judgmental use-of-force, marksmanship, and related training that mimics real-world situations. It offers V-300 simulator, a 300 degree wrap-around screen for simulation training; V-180 simulator, a 180 degree screen for smaller spaces or budgets; V-100, a single-screen based simulator system; V-100 MIL, a single-screen based simulator system; and V-ST PRO, a realistic single screen firearms shooting and skills training simulator. The company also provides Virtual Interactive Coursework Training Academy (V-VICTA), which enables law enforcement agencies to teach, train, test, and sustain departmental training requirements; and Subscription Training Equipment Partnership, a program that allows agencies to utilize its simulator products, accessories, and V-VICTA interactive coursework on a subscription basis. In addition, it offers V-Author software that allows users to create, edit, and train with content specific to agency's objectives and environments; Simulated Recoil Kits, a range of realistic and reliable simulated recoil kits/weapons; Threat-Fire, a device that applies real-world stress on the trainees during simulation training; and TASER, an OC spray and low-light training devices that interact with its simulators for training. The company sells its simulators and related products through a direct sales force and distribution partners. The company was founded in 1993 and is headquartered in Chandler, Arizona.

VirTra Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: In Q2, VirTra delivered 15% year-over-year revenue growth to $7.0M and saw bookings rise 28% to $4.6M. The company maintained profitability and strengthened its cash position to $20.7M.
• Negative Sentiment: Federal and international funding delays continue to slow procurement cycles, leading to lighter sequential bookings, though management views these challenges as temporary.
• Positive Sentiment: The STEP program achieved over 95% renewal rates, with six early renewals and a shift to three-year agreements improving visibility into recurring revenue.
• Negative Sentiment: Gross profit margin declined to 69% from 91% in the prior year due to a higher mix of capital sales and the absence of capitalized labor benefits.
• Positive Sentiment: Interest in the VXR extended reality platform is growing across public safety, academic, and healthcare sectors, with strong pipelines and ongoing content conversion efforts.

Presentation

[Operator]

Afternoon, and welcome to VirTra's Second Quarter twenty twenty five Earnings Conference Call. My name is Ryan, and I will be your operator for today's call. Joining us for today's presentation are company's CEO, John Givens and CFO, Alana Borgrew. Following their remarks, we will open the call for questions. Before we begin the call, I would like to provide VirTra's Safe Harbor statement that includes cautions regarding forward looking statements made during this call.

[Operator]

During this presentation, management may discuss financial projections, information or expectations about the company's products and services or markets or otherwise make statements about the future, which are forward looking and subject to a number of risks and uncertainties that could cause actual results to differ materially from the statements made. The company does not undertake any obligation to update them as required by law. Finally, I'd like to remind everyone that this call will be made available for replay via a link in the Investor Relations section on the company's website at www.virtra.com. Now I would like to turn the call over to Vertra's CEO, mister John Givens. Thank you, and over to you, sir.

[John Givens, CEO & Board Chair at VirTra]

Thank you, operator, and thank you everyone for joining us this afternoon. After the market closed today, we issued a press release that provided our financial results for the second quarter and six months ended 06/30/2025, along with highlighted business accomplishments. In Q2, VirTra delivered year over year growth in both revenue and bookings, maintained profitability and strengthened our cash position. While bookings were lighter sequentially due to the timing of orders and the ongoing funding delays, our operational discipline and customer engagement strategies continue to position us well for the back half of the year and into 2026. We remain confident in the strength of our solutions, our reoccurring revenue programs, and our ability to execute as funding flows improve.

[John Givens, CEO & Board Chair at VirTra]

The operating environment remains shaped by the federal and international funding delays. Agency procurement cycles are still slower than normal, and in some cases, funding is being held back entirely until the fiscal year budget's reset. We believe these challenges are temporary, but they continue to influence our quarterly order patterns. That said, we are starting to see some movement. The Department of Justice COPS grant program reopened on June 1 and closed for submissions on June 30, a positive step that should help unlock some funding for agencies later in the year.

[John Givens, CEO & Board Chair at VirTra]

We've been actively engaged in Washington DC to help policymakers understand the value of immersive training and to support funding initiatives that benefit our customers. While the real impact of these programs will take time to flow through, we expect improved order activity in the quarters ahead. To this end, we continue to execute on our sales and marketing initiatives in the second quarter. Our marketing efforts remain a central focus with our redesigned website expected to launch in the coming weeks. We expect the new site to enhance lead capture, funnel visibility, and our conversion tracking.

[John Givens, CEO & Board Chair at VirTra]

Our regional sales model continues to improve accountability and responsiveness across all territories. We have made targeted personnel changes to ensure we have the right people in the right roles, strengthening our customer engagement and follow through. We also remain positioned to benefit from our reentry into the GSA procurement channel, which will streamline contracting for eligible agencies and shorten delivery time lines once live. Although this is expected to impact q four and beyond more meaningfully, it strengthens our long term go to market approach. STEP continues to be a strong selling point, especially in smaller markets.

[John Givens, CEO & Board Chair at VirTra]

Six customers renewed early in q two primarily for the v one eighty and the v 300 systems, signaling both the steps value and the customer satisfaction with our system's performance. These renewals combined with the transition to three year agreements, improved visibility into future reoccurring revenue. Interest in our v r VXR extended reality platform continues to grow with strong pipeline active active quotes across public safety, academic, and health care markets. Customers are recognizing the flexibility and immersive fidelity of the system, and we expect to announce new developments with strategic partners in the coming quarters. Content conversion from our scenario library to the XR platform is progressing well too.

[John Givens, CEO & Board Chair at VirTra]

Our robust library of certified content will further expand the appeal and applicability of the platform. Following on the VXR discussion, our commitment to product quality continues to be a key driver for VirTra's market position. In recent quarters, we have made deliberate investments to enhance our manufacturing processes, expand our reliability testing, and implement tighter quality control protocols. These actions combined with incorporating customer feedback directly into the product enhancements have meaningfully improved hardware durability, reliability, and overall performance. These improvements are being noticed in the field.

[John Givens, CEO & Board Chair at VirTra]

Customers consistently report that our systems not only deliver the superior training capabilities, but also withstand years of rigorous real world use. This validation reinforces our reputation as a trusted long term training partner and helps drive repeat business and renewals. We are sustaining these quality advancements while operating with efficiency, and this dynamic is allowing us to price our systems competitively without sacrificing performance or reliability. We continue to strengthen our value proposition, ensuring that VirTra remains well positioned to win and retain customers across multiple market segments. Our work on the IVAS program continues to advance.

[John Givens, CEO & Board Chair at VirTra]

We've completed additional recoil kit validations and reliability testing and remain in position for potential production opportunities. The recent innovation of the contract from Microsoft and or was a positive step in clarifying the program's future. We are also tracking broader DOD initiatives that emphasize modular, scalable systems, an area where VirTra solution is well aligned. Overall, q two built on a progress made earlier in the year. We continue to strengthen our operations and maintain positive momentum despite funding delays remaining a near term challenge.

[John Givens, CEO & Board Chair at VirTra]

Our strong cash position, stable reoccurring revenue base and disciplined execution provide a solid foundation for the remainder of 2025. As funding flows improve, we are well positioned to convert opportunities into growth. With that, I'll turn it over to Alana for a detailed financial review. Alana?

[Alanna Boudreau, CFO at VirTra]

Thank you, John, and good afternoon, everyone. Now let's review our unaudited financial results for the second quarter and six months ending 06/30/2025. Our total revenue for the second quarter was 7,000,000 compared to 6,100,000.0 in the prior year period. The 15% increase was primarily driven by the higher capital deliveries and stable reoccurring revenue from STEP and service contracts. Breaking this down by market, government revenue for the second quarter was 5,400,000.0 compared to 5,300,000.0 in the prior year period.

[Alanna Boudreau, CFO at VirTra]

International revenue for the second quarter was 1,400,000.0 compared to 600,000.0 in the prior year period. Our total revenue for the six months was 14,100,000.0 compared to 13,400,000.0 in the prior year period. This 5% increase was was driven as well by the higher capital deliveries, stable reoccurring revenue from step and service contracts. Our gross profit for the second quarter was $4,800,000 or 69% of total revenue compared to $5,500,000 or 91% of total revenue in the prior year period. Last year's unusually high gross margin reflected capitalized labor on the development of VXR and the IVAS program and a greater mix of high margin service and STEP revenue.

[Alanna Boudreau, CFO at VirTra]

Our gross profit for the first six months was $10,000,000 or 71% of total revenue compared to 10,200,000 or 76% of total revenue in the prior year period. The change in gross margin reflects a higher mix of capital sales in 2025 relative to service and stuff revenue as well as the absence of the unusually low cost of sales recorded in 2024 due to that capitalized labor on those development projects. Our net operating expense for the second quarter was 3,900,000.0, an 11% decrease from 4,000,000 in the prior year period. Our net operating expense for the first six months was 7,700,000.0, a 9% decrease from the 8,500,000.0 in the prior year period. These decreases reflect the disciplined cost management while maintaining investment in core growth initiatives.

[Alanna Boudreau, CFO at VirTra]

Our operating income for the second quarter was 900,000.0 compared to 1,100,000.0 for the prior year period, and our operating income for the first six months was 2,300,000.0 compared to 1,800,000.0 in the prior year period. Our net income for the second quarter was 200,000.0 or 1¢ per diluted share compared to 1,200,000.0 or 10¢ per diluted share in the prior year period. Our net income for the first six months was 1,400,000.0 or 12¢ per diluted share compared to 1,700,000.0 or 15¢ per diluted share in the prior year period. Our adjusted EBITDA, a non GAAP metric, was $700,000 for the second quarter and $2,400,000 for the first six months of twenty twenty five. As of June 30, cash and cash equivalents totaled 20,700,000.0 compared to 17,600,000.0 at March 31.

[Alanna Boudreau, CFO at VirTra]

Our working capital was 33,500,000.0, and we maintained a debt light balance sheet. VirTra defines bookings as the total of newly signed contracts, awarded RFPs, and purchase orders received in a given period. Bookings for the second quarter totaled 4,600,000.0, up from 3,600,000.0 in 2024, but down from the 6,400,000.0 in q one twenty twenty five. The sequential decline was driven by the timing of awards and customer related deferrals rather than lost opportunities. VirTra defines our backlog as the accumulation of bookings from signed contracts and purchase orders that are not yet started or are have incomplete performance obligations and therefore cannot be recognized as revenue until delivered in a future period.

[Alanna Boudreau, CFO at VirTra]

We segment this backlog into three primary categories, capital, which includes our simulators, our accessories, installation, training, custom content, and any design work. Our service is primarily our extended warranties and support contracts, and STEP is our long term subscription based program. Our backlog at 06/30/2025 stood at 18,800,000.0. This includes 7,100,000.0 in capital, 5,700,000.0 in service, and 6,000,000 in step contracts. Additionally, we continue to track renewable step contract options, which are not included in the backlog total.

[Alanna Boudreau, CFO at VirTra]

Most new capital bookings from the first half are expected to convert to revenue within the current calendar year, though some orders, particularly from international customers, have requested a deferred delivery into early twenty twenty six. As always, our ability to convert backlog into revenue remains dependent on customer driven installation timelines, which can shift based on factors outside of our control. So in review, our backlog remains solid, and the stability of our recurring revenue base combined with a strong balance sheet provides us flexibility as we move into the second half of the year. Looking forward, we believe the combination of our disciplined cost management, enhanced contract structures, and ongoing demand recovery will support continued progress. Our updated STEP program with its three year commitments and strong 95% renewal trends transform what was once optional renewal potential into high confidence recurring revenue.

[Alanna Boudreau, CFO at VirTra]

This not only strengthens our revenue visibility, but also reinforces long term customer relationships and positions VirTra for substantial growth. That concludes my prepared remarks. I'll now turn the call back over to John for his closing comments. John?

[John Givens, CEO & Board Chair at VirTra]

Thank you, Alana. As we move through 2025, our focus remains on both agile and discipline. While many of our customers are still working through funding complexities, their commitment to training and preparedness remains strong. We stand ready to deliver as budgets open up, and we are dedicated to earning trust through reliable execution. The strides we've made in sales, product innovation, operational efficiency strengthen our foundation each quarter, and we're confident in our ability to translate these efforts into growth as the year progresses and into 2026. That concludes my prepared remarks. Operator?

[Operator]

Thank you. Ladies and gentlemen, we will now begin the question and answer session. You may press star and two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. The first question comes from the line of Jason Smith from Lake Street Capital Markets. Please go ahead.

[Jason Smith, Analyst at Lake Street Capital]

Yes. Thanks for taking my questions. John, just wanna drill down a bit further on your comments on IVAS. And, obviously, with the move from Microsoft to Andro and sort of the headset getting reconfigured, just wanna make sure I'm clear that you guys still expect to be involved, or has your position in this program changed at all with the changes going on?

[John Givens, CEO & Board Chair at VirTra]

Yeah. That's a great question. There is a bit of confusion out there. So we completed our r and d effort with the government canceling the last of the testing because it performed, in air quotes, flawless. So our product stands ready to meet and be able to be produced in a production quantity and production level.

[John Givens, CEO & Board Chair at VirTra]

What's going on right now with IVAS, when they novated the contract from Microsoft to Andro, they still aren't happy with the headset. So they did release a new contract. It's under an OTA for one year, and they've opened it up, and it's just for the headset. So they have to produce and demo. I believe it's I don't have it in front of me.

[John Givens, CEO & Board Chair at VirTra]

I believe it's either March or April. They'll demo another headset, and we expect that to be closed like stated on previous calls by September. And then they would most likely issue a production contract, which would include the entire system or kit. So that's we're still there. They're just trying to work through the augmented reality and the headset goggles.

[John Givens, CEO & Board Chair at VirTra]

And just FYI, Andro and Meta have teamed together, and they're going to fund most of it as a customer funded. So we'll see where that competition goes. I'd I I would encourage everyone to watch that. And then as soon as that competition is over, it's for one year, and it's very aggressive. They're gonna announce the winners of that quite soon, I believe, in August.

[John Givens, CEO & Board Chair at VirTra]

So stay tuned for that. But VirTra is much still in has still been approved, and there isn't any competition for any further recoil kits.

[Jason Smith, Analyst at Lake Street Capital]

Okay. That's really helpful. And then just have a question here on recent news on the US Army, selecting sort of Bohemia and that virtual battle space. Just curious how that impacts you or what you guys think of that news.

[John Givens, CEO & Board Chair at VirTra]

Well, I think it's great for for Bohemia and BAE. I think it's also great for us. As I've reported since I got here, there is the virtual battle space, the product of Bohemia, is spread throughout probably a 132 countries around the world. So it's a great distribution network that we should be part of. All that does is that furthers our opportunities going in the future.

[John Givens, CEO & Board Chair at VirTra]

That doesn't mean they just automatically buy Virtua's system. Somebody has to have a need for a marksmanship trainer, and it would give us we wouldn't be out of the competition because there's other competitors that also are using VBS as well. But it puts us right in the forefront with the solid products that we have and now running VBS. We've announced it, and it's now running on our systems. And we've had inquiries from other military units for just such a system with VBS.

[John Givens, CEO & Board Chair at VirTra]

So they can leverage their current investment in the gaming engine. And now that it runs on ours, they all can connect, which is a big benefit for DOD.

[Jason Smith, Analyst at Lake Street Capital]

Gotcha. And then the last one from me, and I'll jump back in the queue. Just curious what you're seeing with the VXR and kinda customer traction there and customer conversations.

[John Givens, CEO & Board Chair at VirTra]

Yeah. So I've been a for a very long time being a platform instructor in the military, the VXR is great for many, many things. The one thing that it's not good at just yet is putting weapons in there because it creates a negative training effect. However, because VirTra leads in the certified training courses for law enforcement, it's an absolute need and a must. We have strong interest in multiple different sectors to include health care for just such a system.

[John Givens, CEO & Board Chair at VirTra]

It's very portable. They can get immersed, and they can get the certified training that they need and and then log and calculate or log and get credit for those training sessions. So the traction is there. People are now understanding what it does. They had a the industry had this perspective that they could just put on the headset and be just like being there and using the weapon.

[John Givens, CEO & Board Chair at VirTra]

And later, they found out that I talked about that negative training. It just didn't stand up to the rigors of actual platform training and meeting a mission need. So they backed away and now are seeing the capability where it really has its biggest benefit, and we're right there.

[Jason Smith, Analyst at Lake Street Capital]

Perfect. Thanks a lot, guys.

[John Givens, CEO & Board Chair at VirTra]

Thanks, Jason, for your questions.

[Operator]

Thank you. We take the next question from the line of Richard Baldry from Roth Capital Partners. Please go ahead.

[Richard Baldry, MD & Senior Research Analyst at Roth Capital Partners, LLC]

Thanks. Just talk about any changes you've seen on STEP renewal rates and the changes in the customer preferences between STEP versus your sort of your traditional acquisition model?

[John Givens, CEO & Board Chair at VirTra]

Yeah. I'm I'm gonna there'll be two parts to that. I'll let Alana answer it after I do. So we chain person VirTra as a company changed its model from the five year to the three year. Initially, there was a bit of a pushback because they had already some of the STEP programs that were coming due had already set their budgets up for those for those systems coming out five years versus three.

[John Givens, CEO & Board Chair at VirTra]

So it was initial hurdle. We we managed to navigated through that. The step and the capital, it just depends on how where they're getting their dollars and how they're getting their dollars. We wanted to take advantage of operational budgets as well as capital, We haven't seen any changes. And as we reported for the last several years, towards the '24, most '25 and into '26, we have a lot of the five year renewals coming up, and we're still seeing above a 95% renewal rate.

[John Givens, CEO & Board Chair at VirTra]

We have seen some conversions. We I think we have more than six that renewed early on the stem, and we have some that have converted to capital. And we've had some capital that's converted to the step program. It just depends on their funding and what appetite their financial groups in those areas, how they're getting that money. So we've seen it it's been a real mix, Richard.

[John Givens, CEO & Board Chair at VirTra]

But, yeah, great question. Alana, did you have anything else?

[Alanna Boudreau, CFO at VirTra]

No. I mean, you pretty much nailed what I was gonna say, which is I know we've been reporting about a 95% renewal rate, and that really hasn't changed. You know, we had a couple customers towards the beginning of when we started reporting that that didn't renew mostly because of their own budgets because they are a lot of smaller agencies that need this program. And everything in the last, you know, six months, we're just seeing renewals into those three year programs. And when John talks about the six that are renewed early, they renewed early because they want some of our new tech.

[Alanna Boudreau, CFO at VirTra]

Right? So they don't wanna wait a whole year. They wanna get renewed for that new three year contract so they can get the new stuff.

[Richard Baldry, MD & Senior Research Analyst at Roth Capital Partners, LLC]

Got it. Does the new accelerated depreciation accounting have any impact, do you think, or could it have any impact? I'm not sure, you know, how applicable that is across government sector versus private sector, but sort of curious your thoughts there.

[Alanna Boudreau, CFO at VirTra]

I don't think it's gonna have at this point, I don't think it's gonna have a a major effect on us, but I will let everyone know if it if we do we do see that.

[Richard Baldry, MD & Senior Research Analyst at Roth Capital Partners, LLC]

And then last for me. And where you were closing bookings in the quarter, is there any, you know, geographic end market, any other, you know, sort of trends inside of that, that that are sort of different or emerging? Thanks.

[Alanna Boudreau, CFO at VirTra]

I'm I'm not sure. Can you clarify that last question?

[Richard Baldry, MD & Senior Research Analyst at Roth Capital Partners, LLC]

You know, whether that was, you know, federal agencies, municipalities, any any sort of variability within the closings, you know, where you saw successes or not.

[John Givens, CEO & Board Chair at VirTra]

Oh, yeah. I can I understand that now? Yeah. We hadn't seen much of anything across any of those that require the federal funding. We are seeing the grants are opening now as as I mentioned.

[John Givens, CEO & Board Chair at VirTra]

So we have quite a few customers that were in that queue waiting that we assisted. We we produced a grant pamphlet and basically did everything we could to help them so that they could self file because that's a requirement, their applications. So we we did follow that quite a bit. As far as there are some other industries now that have changed some laws that we're starting to see a lot of inquiries. Washington State just all of the folks that do the concealed carry and security and all that need x number of training hours.

[John Givens, CEO & Board Chair at VirTra]

So we're starting to see different areas open up. But as far as all of the federal were frozen, grants are the ones on top. We are seeing some private investment with foundations that are trying to get some of the police departments in their areas in need systems. So it I would say grants are probably the biggest one that are starting to open up and show us the the positive signs. And international, I know you didn't mention that, Rich, but international is another one that is we've seen a lot of activity most recently. Hope that answers your question.

[Richard Baldry, MD & Senior Research Analyst at Roth Capital Partners, LLC]

Yeah. Great. Thank you.

[John Givens, CEO & Board Chair at VirTra]

You're welcome. Thank you, Rich, for the questions.

[Operator]

Thank you. Ladies and gentlemen, at this time, this concludes our question and answer session. I'd now like to turn the call back over to Mr. Givens for his closing remarks.

[John Givens, CEO & Board Chair at VirTra]

Yes. Thank you for joining us today and for your continued support of VirTra. We've made meaningful progress so far this year. We'll stay focused on execution, our customer success, and advance our growth initiatives. We appreciate your trust and look forward to updating you on our continued progress in the corners to come.

[John Givens, CEO & Board Chair at VirTra]

God bless all of you, and let's continue to make great strides together.

[Operator]

Thank you. Ladies and gentlemen, thank you for joining us today for Wordpress second quarter twenty twenty five conference call. You may now disconnect your lines.

Participants

Executives

• John Givens, CEO & Board Chair
• Alanna Boudreau, CFO

Analysts

• Jason Smith, Analyst at Lake Street Capital
• Richard Baldry, MD & Senior Research Analyst at Roth Capital Partners, LLC