Q1 2024 The Glimpse Group Inc Earnings Call

Good afternoon, ladies and gentlemen, please remain on the line here conference will begin momentarily. Please remain on the lines Your conference will begin momentarily.

[music].

Yeah.

Welcome to the glimpse script Q1 fiscal year 'twenty 'twenty four financial results webinar.

At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation.

As a reminder, this conference is being recorded.

The earnings release that accompanies this call is available on the investors section of the company's website at H T. T. P. S. I R.

Dot the glimpse group dotcom.

Before we get begin the formal presentation I'd like to remind everyone that statements made on today's call and webcast, including those regarding future financial results and industry prospects are forward looking and may be subject to a number of risks and uncertainties that could cause actual results to differ materially from those described.

During the call.

Please refer to the company's regulatory filings for a list of associated risks and we would also.

Refer you to the company's website for more supporting industry information.

I would now like to hand, the call over to Lauren Benjamin President and Chief.

Jewish.

Thank you everyone for joining us.

I'm pleased to welcome you to the Grinch groups first quarter fiscal year 2024 financial results Investor call for quarter ended September 32023.

This quarter was highlighted by our continued execution on our strategic realignment in place towards providing immersive enterprise software and services that are driven by spatial computing cloud and AI.

Q1, FY 'twenty for revenue of approximately $3 1, million% to 7% quarter over quarter increase compared to Q4, FY2023 revenue of approximately $2 9 million and a 22% decrease compared to the record revenue of approximately $3 nine 5 million.

Q1, FY2023.

We continue to make strong progress in our previously detailed strategic shifts to spatial computing cloud and AI driven immersive software solutions.

We also expected to announce significant contracts in the coming months.

In parallel we have been realigning the company, reducing head count and our investment in non core areas, while working on divesting non core assets.

As we make this transition we expect Q2 FY 'twenty for the quarter were in currently to have lower revenue, but also expect a rebound in Q3 FY 'twenty for calendar 'twenty for Q1 revenue as we begin to recognize revenue and growth relating to a sufficient core product.

And solutions.

As I discussed on our last earnings call. We strongly believe that for the most of the industry to reach its full potential and mass scale, it's must be untethered from the computing limitations of traditional devices.

They are VR headsets.

Tablets and phones space.

Special core developed by our subsidiary company Brightline Interactive is the technological engine that allows us to simultaneously integrate legacy immersive technology systems with state of the art cloud systems built on open standards for accelerated computing and large scale.

By harnessing the essentially infinite scale of GPU access provided by our partners in video and Microsoft's bright lines, creating powerful AI workflows for massive and quick compression of complex simulation and immersive experiences which are computed in the cloud in real time, and then the liberty to MTV.

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Live examples of this include robotic streaming digital twin based simulations rapid immersive content creation and multiple department of defense applications.

Special coal will be the growth engine of limbs and as such we are realigning the business to reflect that.

The divestiture or shutdown of noncore activities and subsidiaries.

The subsidiary companies definitely mean, primarily to real and in spite D are expecting it to be net positive cash contributors.

As Mcdonald will detail in his prepared remarks, we have taken significant steps to reduce our operating expense base recently raised capital and clean structure and continue to maintain a clean balance sheet.

With that I will now turn it over to me done wrong, James Simms, CFO and COO, who will review the financial results.

Thanks for your own I will limit my portion. So a summary review of our financial results. The full breakdown is available in our 10-Q and in the press release that were filed after market close today.

Please note that I'll refer to adjusted EBITDA and other non cash non-GAAP measures.

Consideration of adjusted EBITDA and other non-GAAP measures. Please refer to the MD&A section in our 10-Q filing which you can find on our website under SEC filings.

Revenue for the three months ended September 32023 was approximately $3 1 million compared to approximately 349 5 million for the three months ended September 30th 2022, a decrease of approximately 22%.

The decrease reflects Q1 fiscal year 'twenty, two being a record revenue quarter. In addition to the effects of our restructuring and a late ourselves cycle in general India immersive technology industry.

Gross margin for Q1 fiscal year 'twenty four was approximately 62% compared to 69% for Q1 fiscal year 'twenty three.

We expect our gross margins to continue to remain in the 60 to 70 per cent range, depending on the revenue mix in a specific quarter and we expect our margins to be at the higher end of the range in the second half of the fiscal year as our strategic shift comes into place.

Adjusted EBITDA loss for Q1 fiscal year 'twenty four it was approximately 1.29 million compared to an EBITDA loss of approximately 125 million for Q1 fiscal year, 'twenty, three which at a higher revenue base.

In the past year, we have reduced head count by approximately 40% and we will continue to do so as part as part of our strategic plan.

This win will enable us to going forward reached cash flow neutrality at approximately this quarters level of our.

Revenues annualized excluding growth investments just to illustrate a year ago, our cash breakeven point was approximately $20 million of annual revenue.

We are approaching cash breakeven.

Approximately $12 million of annual revenue.

After the closing of the previously reported registered direct financing on October 32023.

The company's cash position was in excess of $6 5 million.

As mentioned the company has no outstanding corporate debt convertible debt or preferred equity obligations.

Yeah.

On November 13th 2023, the board of directors authorized the company to enter into a common share purchase buyback plan of up to $2 million to be utilized over the next three years.

Since we are committed to investing in the growth opportunities in front of us and the operations of the business. We do not anticipate utilizing this plan once that haven't been put in place in the next week or so.

That being said, we may utilize the buyback in cases, where extraordinary circumstances regarding our stock price create exceptional value opportunity for the company.

I'd now like to pass it back to the wrong for some closing remarks, after which we will begin our Q&A session.

Yeah.

Okay.

Thank you Mike Dunn.

Our special core initiative has the potential to be a key enabler for the immersive industry's transformation from a hardware centric solutions to go was driven by cloud computing and AI.

We are all in August initiatives, focusing our R&D efforts on bringing solutions based on this technology to market in 2024.

With the other remaining gleam subsidiary company is expected to support these efforts by generating positive cash contributions we.

We continue to make strong progress in the development of the underlying special core technologies and in addition to the previously announced customer contracts, we expect significant contracts to materialize in the coming months.

In parallel we have made large strides towards reaching cash neutrality at the current level of revenues and have a clean balance sheet to support our growth investments.

Thank you all for your interest and support of games group and now I'll turn the call back over to the operator to take some questions.

Thank you Ron.

You'd like to submit a question you can either type it in the chat box below or raise your hand.

Let's start with any audio questions and follow that with some writing questions. As time allows if you would like to ask an audio question. Please press star one on your telephone keypad at this time if.

If youre using a speakerphone. Please pick up your handset for optimum sound Party. Please hold a few moments, while we poll for any audio questions.

There are no questions coming up we do have a question from Kishi, Ryan with West Park capital. Please pose your question your line of sight.

Hi, gentlemen, thanks for the update today.

I think when you announced the initial restructuring you were talking.

There are sort of multiple entities that you may be looking to do take strategic actions with do you have any update on that or any sense of like how much value. There is it knows where the opportunities are interest from other parties around and sort of what deemed as non core now moving forward.

Thank you for your question Casey So we're in the process of I'm looking at the companies, we have understanding which one of these should stay within blooms and continued to operate and as we mentioned in the prepared remarks generates cash flow that will drive.

Our company forward, and which ones are better off kind of being on the outside and then exploring the REIT structure. So we haven't kind of gotten to full decision point on those yet and we will update probably in the coming quarters of stellar progress around that.

Yeah.

Maybe my thinking with too short on the timeline of those so it sounds like maybe this is sort of a 12 month process not sort of a three month process I think.

But probably closer to three months and 12 months, but we just had our kind of strategic realignment call a month ago. So we're still working on that.

Yeah.

I tried to frustrate you, but I'm excited to get the update so.

And then the other question it sounds like you have some visibility into what the revenue shape looks like.

Is that a change or is that related to maybe one specific opportunity. They have high probability on I'm just sort of curious if like as you change the business and focus on them.

The spatial core opportunities.

Maybe maybe your visibility and sort of extending out in some fashion yes.

Yeah, No I actually think that as we transition the business, we will have more visibility.

Since some of these are engagements will be more of a long term nature.

And we will be able to see the revenue and the kind of they're the works that will be done over the periods.

So I do see kind of more visibility now than we had in previous quarters.

Okay, good well that's.

That's exciting that's it for me right now I'll jump back in the queue. Thanks for the update.

Thank you Casey.

At this time I will turn to some bright and questions again, if you'd like to ask a question. Please use the chat function.

I do not see any writing question. So I would like to thank each and every one of you for joining our earnings conference call. We look forward to continuing to update you on an ongoing progress and growth. If we were unable to answer any of your questions. Please reach out to us directly.

Thank you everyone.

Thank you. This does conclude today's webinar. Thank you for your participation and have a wonderful day you may just.

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