Genasys NASDAQ: GNSS reported a fiscal second-quarter profit and sharply higher revenue, with management describing the period as an “inflection point” driven by the Puerto Rico Dam Emergency Warning System project, stronger hardware sales and improved operating discipline.
The protective communications company said revenue for the quarter ended March 31, 2026, rose 124% year over year to $15.5 million. Chief Executive Officer Richard Danforth said $10.3 million of that total was associated with the Puerto Rico project, which remains on schedule. He said the company has completed groups three, five and six, with group one expected to finish in June.
“This quarter represented a meaningful inflection point for Genasys,” Danforth said. “We delivered GAAP net income profitability and strong gross margins, reflecting the impact of disciplined execution, operational right-sizing, and improved sales execution across the organization.”
Profitability improves as gross margin reaches 63.3%
Chief Financial Officer Cassandra Hernandez-Monteon said Genasys generated a 63.3% gross margin in the quarter, helped by product mix, revenue recognition tied to the Puerto Rico project and increased software sales. The company expects to deliver gross margins above 50% on an annualized basis.
Hardware revenue grew roughly 180% from the year-earlier period, including the Puerto Rico contribution. Total software revenue increased 6% year over year to $2.4 million and rose about 5% sequentially.
Operating expenses were $8.5 million, down 4% from the second quarter of fiscal 2025 and flat sequentially. Hernandez-Monteon said expenses are expected to normalize around that level, with the organization “right-sized and well-equipped” to execute on projects and scale.
Genasys reported GAAP net income of $600,000, compared with a GAAP net loss of $6.1 million in the prior-year quarter. Operating income was $1.3 million, compared with an operating loss of $6.3 million a year earlier. Adjusted EBITDA was $2.5 million, versus negative $5.1 million in the year-ago period.
Puerto Rico receivables tied to debt repayment
Danforth opened the call by addressing an 8-K filing announcing a 60-day extension for repayment of the company’s debt. Hernandez-Monteon said the term loan maturity was extended to July 13, 2026, to better align the maturity with expected cash receipts.
Danforth said Genasys is owed approximately $13 million related to the Puerto Rico project. While payments have been slower than expected, he said the company remains confident the receivables will be collected. He said he recently traveled to Puerto Rico and met with partners regarding the project and payment process.
“In fact, we received payment of $1.8 million last week and anticipate receiving the remaining balances shortly,” Danforth said. He added that receivables from the Puerto Rico project are expected to be used to retire the company’s debt.
Genasys ended the quarter with $1 million in cash equivalents and marketable securities. Hernandez-Monteon said the debt extension reflects timing rather than business performance and said the company has “ample cash for the day-to-day operations.”
Backlog and hardware programs support outlook
Backlog ended the quarter at $58 million, which Danforth said reflected strong execution and continued replenishment from new bookings.
Genasys also began production under its $9 million CROWS AHD technology refresh program and expects to complete the initial order within the current fiscal year. Danforth said deliveries are expected largely in the third and fourth quarters. He described the program as a longer-term opportunity, noting that roughly 5,000 CROWS units need the technology refit and that the addressable market could be $175 million. The company expects additional production orders in the second half of the fiscal year.
The company also cited demand in critical infrastructure protection. Danforth said Genasys recently completed installation of four LRAD 950NXT systems at a critical substation for a large U.S. utility, calling it the first substation of many expected to be equipped. He said the company expects orders for 26 additional NXT units from that utility.
Asked by Lake Street Capital Markets analyst Jaeson Schmidt about the size of the energy and utilities market for Genasys today, Danforth said it remains relatively small. He said the utility booking and revenue he referenced was “probably $2 million,” and that the balance of expected bookings from the same utility would be substantially higher.
Software pipeline includes repeat California wins
On the software side, Danforth said demand continued to expand as states, counties and enterprises prioritize reliable and secure communications. He said Genasys is seeing sustained inbound interest across Evertel and Genasys Protect, supported by recent wins in new geographies.
During the question-and-answer portion, Schmidt asked about five new wins in California. Danforth clarified that the wins were tied to Santa Clara County communities. He said Santa Clara County previously provided Genasys Protect software to communities inside the county, but those communities have since returned to buy their own Genasys Protect offerings.
“They’re not new customers, but they’re repeat customers,” Danforth said.
Danforth said the software pipeline is strong, with sales teams focusing on larger deals. He noted that larger deals tend to have longer sales cycles but said he believes Genasys will see closures in the second half.
Roth Capital Partners analyst Scott Searle asked about larger potential opportunities similar to the Puerto Rico project. Danforth said one international competitive opportunity is at the final stage from an award perspective, with the company expecting to hear “within the coming days.”
Management expects record fiscal 2026 revenue
Looking ahead, Danforth said Genasys remains on pace for record revenue in fiscal 2026 and expects meaningful year-over-year revenue growth, annualized gross margins above 50%, and both operating income and GAAP net income profitability for the year.
In response to Searle’s question on near-term revenue cadence, Danforth said he expects fiscal third-quarter revenue to be higher than the second quarter, followed by a “little lower” fourth quarter.
Asked by Ascendiant analyst Ed Woo about competition, Danforth said he has not noticed meaningful changes. He said Puerto Rico-style system projects often involve construction companies as competitors, while LRAD faces little competition and Genasys Protect and Evertel remain differentiated offerings.
“The second half of the year is shaping up to be a defining stretch for Genasys,” Danforth said, citing a right-sized organization, an expanding pipeline and global demand for integrated protective communication solutions.
About Genasys NASDAQ: GNSS
Genasys, Inc NASDAQ: GNSS specializes in mission-critical communications and emergency mass notification solutions designed to keep organizations and communities connected during high-stress events. The company's core offerings include a multi-channel alerting platform that integrates SMS, email, voice, sirens, public address systems and social media outlets. By combining hardware and cloud-based software, Genasys delivers robust, scalable systems that can push targeted warnings and status updates to millions of recipients in seconds.
In addition to its flagship Smart Mass Notification System, Genasys provides hardened private LTE networks, satellite communications terminals and interoperable radio systems tailored for government agencies, defense customers, utilities, energy producers and remote industrial operations.
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