Release Date: August 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Genasys Inc (GNSS, Financial) is set to receive $75 million in revenue from the fully funded Puerto Rico Dam project by FEMA, with cash inflows preceding revenue recognition.
- The company's software business is experiencing significant growth, with recurring revenues up 138% year-over-year and ARR reaching $7.6 million, a 135% increase.
- International hardware bookings have increased by 117% year-over-year for the first three quarters of fiscal 2024, indicating a strong recovery post-COVID.
- Genasys Inc (GNSS) has secured several years of significant hardware revenues from the Puerto Rico Dam project and the US Army CROWS-AHD Program, totaling over $200 million.
- The company is seeing strong customer growth in its CONNECT and LRAD hardware sales, with law enforcement hardware bookings nearly 50% higher than the fiscal 2023 total.
Negative Points
- Revenues for the third quarter were $7.2 million, a decrease of 50% compared to the prior year's third quarter, primarily due to lower hardware revenue.
- The company reported a GAAP operating loss of $5.4 million for the third fiscal quarter, compared to a loss of $1.4 million in the same quarter last year.
- Adjusted EBITDA was negative $4.3 million, a decline from last year's negative $0.4 million, due to lower hardware revenues and higher operating expenses.
- Hardware revenue decreased by 62% to $5.1 million in the third quarter, despite an 8% year-over-year increase in hardware sales excluding the Army Program of Record.
- Genasys Inc (GNSS) started fiscal 2024 with an exceptionally low hardware backlog, impacting revenue recognition and financial performance.
Q & A Highlights
Q: Could you provide more details on the Puerto Rico project and its expected revenue for this fiscal year?
A: We are not in a position to give guidance at this point, which is consistent with what we discussed in the last quarter. - Dennis Klahn, Controller
Q: What is the expected exit ARR for the fiscal year 2025?
A: Our expectation is that it will at least be double last year's. - Dennis Klahn, Controller
Q: Can you comment on the expected hardware bookings for the fourth quarter?
A: The expectation for bookings in the fourth quarter of this fiscal year is expected to be exceptionally strong, especially with the inclusion of Puerto Rico. International bookings are also up 117% for the first three quarters of this year. - Brian Alger, SVP of Investor Relations and Corporate Development
Q: How might a recession impact the demand or timing of deployments?
A: A significant recession is unlikely to have a big impact on our business. Our best revenue years occurred during COVID, indicating resilience. - Dennis Klahn, Controller
Q: Could you provide more details on the CROWS contract and its potential size?
A: Sizing it on a go-forward basis of $10 million to $15 million a year is reasonable. The FY 2024 defense budget for the AHD for CROWS includes $15 million. - Richard Danforth, CEO
Q: How is the competitive landscape affected by Everbridge's acquisition by Thoma Bravo?
A: Everbridge focuses more on enterprise than state and local government, which is our focus. So, we don't see any impact from their acquisition. - Richard Danforth, CEO
Q: What does your international pipeline look like?
A: It has been growing significantly, and we expect to reach more normal levels of bookings from international customers, similar to pre-pandemic levels, this year. - Richard Danforth, CEO
Q: Can you quantify the pipeline of opportunities for CONNECT and EVAC?
A: The opportunity set and TAM are hard to calculate as we often sell to the same population base multiple times. In aggregate, the Genasys Protect software suite represents hundreds of millions of dollars, with critical infrastructure protection being a much larger global opportunity. - Brian Alger, SVP of Investor Relations and Corporate Development
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
