Q1 2025 The Glimpse Group Inc Earnings Call
Good afternoon, ladies and gentlemen, please remain on the line your conference will begin in the next few moments. Please remain on the line. Your conference will begin in the next few moments.
[music].
Welcome to the glimpse groups first quarter fiscal year, 'twenty 25 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 died glimpse groups dot com before.
Before we begin the formal presentation I would like to remind everyone that statements made on today's call and webcast, including those regarding future financial results and the industry industry prospects are forward looking and maybe subject to a number of risks and uncertainties that could cause actual results to differ materially from those described.
In the call.
Please refer to the company's regulatory finding fillings filings for a list of associated risks and we would also refer you to the company's website for more supporting industry information.
Speaker Change: I would now like to hand, the call over to Lee Ron bent to them President and CEO of the glimpse trip there.
The floor is yours.
Speaker Change: Thank you Kelly and thank you everyone for joining us.
Speaker Change: I'm pleased to welcome you to the claims group's Q1 fiscal year 2025 financial results Investor call for quarter ended September 32024.
Speaker Change: During the quarter, we delivered the first phase of a large D O D construct.
Speaker Change: Made significant progress towards securing several multimillion dollar enterprise scale spatial computing cloud and AI driven immersive software solutions, okay. So called contracts with multiple government D O D and large enterprise customers.
Speaker Change: The short term aggregates all year, so those contractors in the $5 million to $10 million range.
Speaker Change: We expect to get confirmation on one of these contract in December 2024 and to receive additional information in early 2025 due to budgetary delays.
Speaker Change: In parallel with a special core or other immersive businesses continue their positive momentum from the previous quarter.
Speaker Change: Some recent examples.
Speaker Change: We entered into a mid six figure contract with a large global water and hygiene infrastructural company for an augmented reality solutions.
We entered into a mid six figure contract with a global energy company for immersive content.
Speaker Change: We entered into a multiyear mid six figure contract with the state district for immersive education.
Speaker Change: Our subsidiary curious saw a significant increase in revenue driven by demand for its large largest customer for air lenses and <unk> models.
Speaker Change: While the nursing industry and it leaves a significant participant in it.
Face challenging headwinds in the past few years, we have successfully transformed and stabilize our business and are now seeing and experiencing quite.
Speaker Change: Also deemed growth indicators.
Speaker Change: As such we expect revenues to continue to increase in the coming quarters based on signed contracts and our advanced revenue pipeline.
Speaker Change: We also expect to be cash flow positive in the current quarter and the quarters after which will result in an increased cash balance without the need for capital raise.
Speaker Change: Alright.
Speaker Change: Transformation and positive developments achieved in recent months has not been reflected in our stock price, creating what we believe is a significant disconnect between our intrinsic value and our public company valuation.
Speaker Change: To illustrate where our company was the most of this technology.
Speaker Change: And cloud driven revenues large enterprises in D. O D customers strong pipeline of revenues positive cash flow going forward and a clean balance sheet, yet has a ridiculous low market cap nominal trading volume and consistent selling for sure even when we put out is very positive news.
Speaker Change: This valuation disconnect has had and continues to have a substantial negative effect on our ability to execute on our growth strategy.
Speaker Change: As such the board of directors of the company is exploring various aggressive strategic options to enable the business to be in a position to invest in its growth while unlocking the value inherent in our business and for assets and may pursue such options during the fiscal year.
Speaker Change: As part of this strategic review process, and our previously announced strategic realignment and divestiture of non core assets effective on October one 2024, we divested the business of cereal and it's related to Turkey based operating entity.
Speaker Change: Some of the key elements of this divestiture includes.
Cereal was one of the original glimpse businesses acquired upon our inception in 2016, we.
Speaker Change: We believe the Kuriles virtual try on business has a greater growth and success potential as an independently funded entity outside of these potentially creating a significant equity value for games and shareholders in excess of materials current equity value within the groups.
The divesture creates approximately $4 million of expected net cash value to glaze over the next two years inclusive of one two to $1 5 million in annual cash savings.
Speaker Change: Excuse me the upsides potential home our equity position in the domestic entity.
Or from the repayment of our senior notes.
Speaker Change: The divestiture of simplifies and streamlines Jameson, so operations approximate approximately 60 less employees and eliminates the turkeys country risk.
Speaker Change: No material changes expected.
Speaker Change: Foreign revenues for fiscal year, 2025, and 2026 as against retains the revenues. Thank you rose largest customer in full until such time that nims are collected and retained.
Speaker Change: Just 1.35 million in net cash in aggregate after taking into account all related operating expenses and fees.
Speaker Change: After such as functional the milestone glynis will receive a monthly cash revenue share for an additional period of 18 months in relation to any revenues generated from this same customer.
Speaker Change: Glimpse was issued a 1.56 million senior secured convertible notes and the new independent entity Newco that will operate gyros virtual try on business.
And then in your Crystal ball payback is tied directly to revenue collected by didn't even call separately from the milestone with answer bot.
Speaker Change: Newco has raise outside capital and Glynis was issued a minority equity stake in the company.
Speaker Change: With that I will now turn it over to me down to watch a movie and interim CFO and CFO to review the financial results.
Speaker Change: Thanks for your own I will limit my forced me into a summary review of our financial results and a full breakdown is available in our 10-Q and press release that were filed after market close today.
Please note that I'll refer to adjusted EBITDA and other non-GAAP measures.
Speaker Change: Calculation of adjusted EBITDA and other non cash non-GAAP measures. Please refer to the MD&A section of our 10-Q filings, which you can find on our website under SEC filings.
Speaker Change: Q1 fiscal year 'twenty five revenue of approximately 2.44 million, reflecting a 44% increase compared to Q4.
Speaker Change: Fiscal year 'twenty four.
Speaker Change: The quarter ended June 30 of 2020 for revenue of approximately 1.7 million.
Speaker Change: Quarter over quarter increase was primarily primarily driven by an increase in special core revenues and B 21 decreased 28% decrease in.
Speaker Change: In revenue compared to Q1 fiscal year 'twenty for the quarter ended September 32023.
Speaker Change: Revenue of approximately $3 1 million.
Speaker Change: Year over year decrease was primarily driven by our strategic alignment over the last nine months, which led to a turnover in our legacy customer base and consolidation divestiture of some of our businesses.
We expect revenue in the next.
Speaker Change: Three upcoming quarters to exceed $3 million on average per quarter in aggregate revenue for fiscal year 'twenty fives.
Speaker Change: Ending June 32025 to be in the $11 million to $12 million range compared to $8 8 million for fiscal year 'twenty four which is the year that ended on June 32024, representing a 25% to 35% increase in annual revenue.
Speaker Change: This expected growth will be primarily driven by an increase in spatial core revenues as well as a potential growth in our other businesses.
Speaker Change: Gross margin for Q1 fiscal year 'twenty five was approximately 79% compared to 62% for Q1 fiscal year 'twenty four.
Speaker Change: The increase in gross margin was driven by an increase in surgical revenues and higher software license revenues this quarter.
Speaker Change: On average we expect our going forward gross margin to be in the 60% to 70% range.
Speaker Change: Adjusted EBITDA loss for Q1 fiscal year 'twenty five was approximately.
Speaker Change: 0.4 dollars 6 million compared to an adjusted EBITDA loss of approximately 1.29 million for Q1 2000.
Speaker Change: Q1 fiscal year 'twenty four.
Our current cash operating expense base pre revenue is now less than $1 million per month.
Speaker Change: Given all of our projected revenues going forward, we expect to generate positive cash flow in each of the three remaining quarters of fiscal year 'twenty five.
Speaker Change: The company's cash and.
Speaker Change: An equivalent position as of September 30 of 2024 was approximately $1.4 million with an additional <unk> 9 million and accounts receivable.
Speaker Change: We do not intend to raise capital in the foreseeable future, especially since we expect our operations to generate positive cash flow and grow our cash balance we.
Speaker Change: We continue to maintain a clean capital structure with no debt no convertible debt and preferred equity.
I'd now like to pass it back from your own for some closing remarks, after which we will begin our Q&A session.
my daughter: Thank you my daughter.
Speaker Change: We've made major strides over the past year in repositioning and restructuring the company strategically and operationally.
Speaker Change: We are positioned as a provider of AI and cloud based enterprise immersive software and services and poised for revenue growth and cash flow stability.
Speaker Change: However, this is yet to be reflected in our stock price the great determinant of our growth potential and shareholders.
Speaker Change: Going forward, we're going to continue to focus on profitable growth and in parallel aggressively explore all strategic options with the cold unlocking the value of our business and or underlying assets.
Thank you all for your interest in and support of the games group and now I'll turn the call back over to the operator to take some questions.
Speaker Change: Thank you Lou Anne if you'd like to submit a question you can eat type it in the chat box below or raise your hand, we'll start with any audio questions and follow that with some writing questions. As time allows for audio questions. Please press star one to enter the queue. Please hold just a few months, while we poll for any questions.
Speaker Change: Your first question is coming from Casey Ryan with West Park capital. Please pose your question your line is live.
Casey Ryan: Good afternoon gentlemen.
Speaker Change: Exciting quarter with the queue real news.
Before we talk about that can we talk a little bit about your discussion around the operating expense level, which I think you said was going to be a millionaire a little loss per quarter.
Speaker Change:
Speaker Change: Does that include.
Speaker Change: The cost savings I guess related to Q real I was trying to understand how to marry.
Speaker Change: Threes opex versus versus whats going forward or is it basically just saying taking 400000 out and then saying it's roughly a million.
Yeah. So it kind of say if you look forward based on where we are right now and obviously, we can always it's always a moving target as we add and subtract based on what we need right now we're run rating at under $1 billion of.
Speaker Change: Monthly costs.
Okay. Okay.
Speaker Change: Okay terrific. Thank you for that clarification, that's good and so a lot of the new customer opportunities are pretty exciting one thing I'm, noting as you know it's pretty diversified you know youre looking at that sort of water infrastructure and government in D. O D work in other areas.
Speaker Change: How are you finding customer opportunities I'm curious if people are coming to you or if you have you know some channel help outside of your direct sales efforts, but I'm impressed by the revenue or by the industry diversity in terms of you know winning opportunities.
Speaker Change: Yeah. So so if you think of if I'm doing this for a kind of eight plus years of gluten since all of our subsidiaries all been doing this for a couple of years longer than that so we've got kind of a good network of relationships with customers and channel partners are many of the customers are coming to us with needs and obviously kind of are.
Speaker Change: Our leaders and deserved people are constantly talking to customers understanding where they are what they need and how our solutions kind of address what those are.
Speaker Change: Okay. Good.
So given that structure that theres some inbound it sort of suggests that there's potentially upside as we go forward as people continue to evaluate and adopt.
Speaker Change: Your core technologies.
Speaker Change: We certainly hope so yeah, that's right well.
Speaker Change: We will just sort of go ahead and expect that so our last question software license.
That revenue segment I know, it's not the bulk of the business, but have doubled in the quarter and I'm. Just curious if that sort of a one time event or or if that sort of a more durable. You know 200000 is kind of a durable quarterly run rate for us to think about moving forward.
Speaker Change: Dan do you want to take that.
Dan: Hey, Oh, yes, I think that is more or less a reasonable number to expect going forward based on you know some of the things that we have on our spatial core which.
Dan: If those come through fruition there are significant follow on activities.
Dan: For my follow on contracts that are have a stronger recurring nature in them of a software licenses, but also some of the stuff that we mentioned.
Dan: With other when businesses. So okay. It's good because it looks like that's a reasonable number going forward.
Okay.
Dan: And so it sounds like we should expect that to grow maybe in in line with like the overall business growing because it sounds like.
Dan: That sort of piece of the revenue line gets pulled in as the contracts get bigger and there's recurring work to be done and sort of customer help to be provided so there.
Dan: It was definitely growth that's hurting it.
On a quarterly basis, it can fluctuate, but it's kind of the trend is up.
Speaker Change: Okay, Good alright, well terrific and then just.
Speaker Change: Just on the government contracts that you mentioned were those part of the fiscal year I guess fiscal year 'twenty five for the federal government. So so tied to the last budgetary process of war or is there something new.
Speaker Change: Budgetary work.
Speaker Change: That those contracts are tied to.
Speaker Change: So kind of as you know the government has basically decided they don't kind of Congress not to approve our budget for 2025, just yet so or kind of and given the results of the election. It feels like kind of where we will have to wait until the new Congress is in for them to I assume very quickly put together a budget. So.
Speaker Change: I expect that to happen early in 2025, I think by law they have to do it by March and once that happens.
Speaker Change: Things take a while to trickle down from the budget being approved to a series of about certain things, but they'll start flowing in that direction.
Yeah, Okay. So.
Speaker Change: We're actually still on that continuing resolution is what you're telling me so I shouldn't pick up the politics section of the newspaper and get caught up on that but listen I think Hollywood commentary very entertaining these days.
Speaker Change: [laughter] Ah well listen overall very exciting I think it's terrific to get the upside and the optionality on queue real so that feels like a real asset for the business you know that like doesn't absorb current resources and and and you know your management focus. So overall it looks like a very good quarter. So we look forward to what's.
Speaker Change: Coming next so thank you for taking my questions.
Speaker Change: Youre welcome.
Speaker Change: At this time I'll turn over to some bright and questions again, if he would like to ask a question. Please use the chat function.
Speaker Change: Please hold them on that while we poll for any questions.
Speaker Change: I am not seeing any questions neuron did you have any email questions that you would like to ask.
Speaker Change: And now they're not in those questions.
Speaker Change: Okay. Thank you all of you.
Speaker Change: Go ahead Kelly.
Kelly: I'd just like to call turn the call back over to you for any closing remarks.
Kelly: I would like to thank each and every one of you for joining our earnings call.
Speaker Change: Well look to continue.
Speaker Change: Cool.
Speaker Change: Mhm.
Speaker Change: Feel free to reach out to us directly.
Thank you everyone. This does conclude today's webinar. Thank you for your participation and have a wonderful day.