Q4 2024 Genasys Inc Earnings Call
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Operator: Good day, ladies and gentlemen, and welcome to the Genasys, Inc. Fiscal Year 2024 conference call. All lines have been placed on a listen-only mode, and the floor will be open for questions and comments following the presentation. If you should require assistance throughout the conference, please press star zero to reach a live operator.
Speaker Change: Good day, ladies and gentlemen, and welcome to the Genesys, Inc. Fiscal year 2024 conference call. All lines have been placed on a listen only mode and the floor will be opened for questions and comments. Following the presentation. If you should require assistance throughout the conference. Please press star zero to reach.
Speaker Change: [noise] alive operator at this time it is my pleasure to turn the floor over to your host Brian Alger SVP Investor Relations and corporate development welcome Brian the floor is yours.
Operator: At this time, it is my pleasure to turn the floor over to your host, Brian Alger, SVP, Investor Relations and Corporate Development.
Operator: Welcome, Brian. The floor is yours.
Brian Alger: Good afternoon. Welcome to Genasys's fiscal 2024 fourth quarter and full year financial results conference call. I am Brian Alger, SVP Investor Relations and Corporate Development for Genasys.
Afternoon, welcome to Genesis fiscal 'twenty, 'twenty, four fourth quarter and full year financial results Conference call I am Brian Alger, SVP Investor Relations and corporate development for Genesis.
Brian Alger: With me on the call today are Richard Danforth, our CEO, and Dennis Klahn, the company's CFO. During today's call, management will make forward-looking statements regarding the company's plans, expectations, outlook, and future financial performance that involve certain risks and uncertainties. The company's results may differ materially from the projections described in these forward-looking statements. Factors that might cause such differences and other potential risks and uncertainties can be found in the Risk Factors section of the company's Form 10-K for the fiscal year ended September 30, 2023. Other than statements of historical facts, forward-looking statements made on this call are based solely on the information and management's expectations as of today, December 9, 2024.
Speaker Change: With me on the call today are Richard Danforth, our CEO and Dennis corn and the company's CFO.
During today's call management will make forward looking statements regarding the company's plans expectations outlook.
Speaker Change: And future financial performance that involve certain risks and uncertainties. The company's results may differ materially from the projections described in these forward looking statements.
Speaker Change: That might cause such differences and other potential risks and uncertainties can be found in the risk factors section of the company's Form 10-K for the fiscal year ended September 30th 2023.
Speaker Change: Other than statements of historical facts are forward looking statements made on this call are based solely on the information and managements expectations as of today December 19, 2024, we explicitly disclaim any intent or obligation to update those forward looking statements, except as otherwise specifically stated.
Brian Alger: We explicitly disclaim any intent or obligation to update those forward-looking statements, except as otherwise specifically stated.
Brian Alger: We will also discuss non-GAAP financial measures and operational metrics, including adjusted EBITDA, bookings, backlog, and adjusted net loss, which we believe provide helpful information to investors with respect to evaluating the company's performance. For reconciliation of adjusted EBITDA to GAAP financial metrics, please see the table in the press release issued by the company at the close of market today. We consider bookings and backlog leading indicators of future revenues and use these metrics to support production planning. Bookings is an internal operational metric that measures the total dollar value of customer purchase orders executed in a given period, regardless of the timing of the related revenue recognition.
We will also discuss non-GAAP financial measures and operational metrics, including adjusted EBITDA bookings backlog and adjusted net loss, which we believe provide helpful information to investors with respect to evaluating the company's performance.
Speaker Change: For a reconciliation of adjusted EBITDA to GAAP financial metrics. Please see the table in the press release issued by the company at the close of market today.
Speaker Change: We consider bookings and backlog, leading indicators of future revenues and use these metrics to support production planning.
Speaker Change: Bookings is an internal operational metric that measures. The total dollar value of customer purchase orders executed in a given period, regardless of the timing of the related revenue recognition.
Brian Alger: Faclog is a measure of purchase orders received that are scheduled to ship within the next 12 months.
Speaker Change: Backlog is a measure of purchase orders received that are scheduled to ship within the next 12 months.
Brian Alger: Finally, a replay of this call will be available in approximately four hours through the investor relations page on the company's website.
Speaker Change: Finally, a replay of this call will be available in approximately four hours through the Investor Relations page on the company's website.
Richard Danforth: At this time, it's my pleasure to turn the call over to Genasys' CEO, Richard Danforth.
At this time, it's my pleasure to turn the call over to Genesis as CEO, Richard Danforth Rich.
Speaker Change: Richard.
Richard Danforth: Thank you, Brian, and welcome, everyone. As Dennis will detail shortly, from a financial results standpoint, fiscal 2024 was extremely disappointing. While our software results track largely in line with our expectations, weak hardware revenues in the fourth quarter and throughout the year and the resulting losses were well below target.
Speaker Change: Thank you, Brian and welcome everyone.
As Dennis will detail shortly from a financial results standpoint fiscal 2024 was extremely disappointing.
While our software results track largely in line with our expectations weak hardware revenues in the fourth quarter and throughout the year and the resulting losses were well below target.
Richard Danforth: That said, fiscal 2024 proved to be a transformational year from a bookings perspective. So the Puerto Rico contract was the largest factor by far. I am more encouraged by the breadth of our bookings recovery. As many of you know, Genasys' international business eroded nearly completely during COVID. And while we had hoped that it would rebound in fiscal 2023, it wasn't until fiscal 2024 that the international bookings rebounded. International bookings were up 86% year over year. And although they were not quite back to the pre-COVID levels, the rebound came from all regions. And we are well on our way to restoring that portion of our business.
Speaker Change: That said fiscal 2024 proved to be a transformational year from a bookings perspective.
Speaker Change: So the Puerto Rico contract was the largest factor by far.
Speaker Change: I am more encouraged by the breadth of our bookings recovery as many of you know Genesys international business eroded nearly completely during COVID-19.
Speaker Change: And while we had hoped that it would rebound in fiscal 2023, it wasn't until fiscal 2024 that he international bookings rebounded.
Speaker Change: International bookings were up 86% year over year.
Speaker Change: No they were not quite back to the pre COVID-19 levels. The rebound came from all regions and we are well on our way to restoring that portion of our business.
Richard Danforth: Whether it is with European naval customers, African or Middle Eastern militaries, or our traditional AIPAC customers, each region is contributing to the international growth. This morning's announcement with the Indian Navy is the most recent example of the recovery in the International Hardware Process. Domestically, LRAD systems for law enforcement made a noticeable comeback. The acquisition of Evertel and the improving budget environment for law enforcement drove the improvements year over year. From large metropolitan police departments to small college campuses, our LRAD systems continue to deliver the best-in-class mobile communication solution. Critical infrastructure projection projects, like the Hoover Dam, the Port of Houston, and the Alabama Kushoota Tribe, are testaments to the diverse applications for our LRAT and acoustics equipment.
Whether it is and whether it is with European Naval customers Africa, and middle East and militaries or a traditional APAC customers. Each region is contributing to the international growth.
Speaker Change: This morning's announcement with the Indian Navy as the most recent example of the recovery in the international hardware bookings.
Speaker Change: Domestically our it systems for law enforcement made a noticeable come back.
The acquisition of <unk>, and the improving budget environment for law enforcement drove the improvements year over year.
Speaker Change: From large metropolitan police departments to small college campuses are.
Speaker Change: Alvarez systems continued to deliver the best in class Mobile communications solution.
Critical infrastructure infrastructure protection projects like the Hoover Dam Port of Houston, and the Alabama Cashew tribe are testaments to the diverse applications for El rat in acoustics equipment.
Richard Danforth: As we add marquee customer sites, our pipeline of new opportunities continues to expand with both public and private sector customers.
Speaker Change: As we add more key customer sites, our pipeline of new opportunities continues to expand with both public and private sector customers.
Richard Danforth: On the software front, we had record bookings that were up 46% year-over-year, with notable wins coming late in our fiscal year. The largest single deal of the year was our statewide EVAC contract with the Oregon Office of Resilience and Emergency Management. Notably, Los Angeles County's addition of Alert to the existing EVAC functionality now utilizes the complete Genasys Protect platform, making it our largest software customer, both on an ARR and a total contract value basis. These two customers are illustrative of two different sales motions that we are replicating across the country. In both cases, we were selected because of the demonstrated uniqueness and value provided by either.
Speaker Change: On the software front, we had a record bookings that were up 46% year over year with notable wins coming late in our fiscal year.
Speaker Change: The largest single deal of the year was our statewide <unk> contract with the Oregon office of resilience and emergency management.
Speaker Change: Notably Los Angeles County's addition of alert to the existing evac functionality now utilizes the complete Genesis protect platform, making it our largest software customer both on an IRR and a total contract value basis.
Speaker Change: These two customers are illustrative of two different sales motions that we are replicating across the country and.
Speaker Change: In both cases, we were selected because of the demonstrated uniqueness and value provided by evac.
Richard Danforth: In Los Angeles, the most populous county in the United States, EVAC was initially deployed in the urban interface areas, and then coverage was expanded to include the whole county. Rapidly following that implementation, Los Angeles County is moving to implement ALERT with the intent of bringing all 80 plus communities in the county onto a single communication platform. In Oregon, the initial Genasys EVAC sales were made a year ago in a couple of fire-prone counties. Then, shortly after the Lahaina tragedy, the state emergency managers took notice and a statewide solution was constructed. Like Los Angeles County, we are actively discussing additional ways for us to enable emergency managers and first responders in Oregon to move to more efficiently respond and protect their constituents.
Speaker Change: In Los Angeles, the most populous county in the United States <unk> was initially deployed in the urban interface areas and then coverage was expanded to include the whole county.
Speaker Change: Rapidly following that implementation in Los Angeles County is moving to implement alert with the intent to bringing all 80 plus communities in the county onto a single communication platform.
Speaker Change: In Oregon, the initial Genesis <unk> sales were made a year ago and a couple of fire prone counties.
Then shortly after the behind the tragedy the state of emergency managers took notice and a statewide solution was constructed.
Speaker Change: Like Los Angeles County, we are actively discussing additional ways for us to enable emergency managers and first responders in Oregon to move to more efficiently respond.
Speaker Change: And protect their constituents.
Richard Danforth: Whether it is starting with a large county and working down to the cities, or with a handful of small counties and expanding towards a statewide engagement, Genasys EVACT is driving improving sales cycle for Genasys Protect. Our software success has not just been on the West Coast. Significant progress is being made in Arizona, Utah, Colorado, Texas, and of course, Hawaii. Looking further east, we are making inroads with winds in Florida, North Carolina, New Hampshire, and Massachusetts. This, of course, is in addition to the largest Genasys Protect win to date for the region.
Speaker Change: Whether it is starting with a large county, and working down to the cities or with a handful of small counties and expanding towards a statewide engagement Genesis ebags is driving improving sales cycle for Genesis protect.
Speaker Change: Our software success has not just been on the West Coast significant progress is being made in Arizona, Utah, Colorado, Texas and of course, Hawaii book.
Speaker Change: Looking further east we are making inroads with wins in Florida, North Carolina, New Hampshire, and Massachusetts.
Speaker Change: This of course is in addition to the largest genesis protect win to date, Puerto Rico.
Richard Danforth: I am pleased to report that the $75 million project with the Puerto Rico Electric Power Authority, PREPA, is progressing well. Since signing the contract with PREPA in August, both parties have moved quickly As many of you know, the 37 dam projects have been divided into seven different groups, each with its own EOC. Each group is unique both in terms of the number of dams, but also the terrain and instrumentation required. The contract specifies after each group design approval. Genasys receives 60% of the sale value of that group. This deposit will allow us to procure all the necessary work-in-progress inventory and deliver the components to the island for installation.
Speaker Change: I am pleased to report that the $75 million project with the Puerto Rico Electric power Authority PREPA is progressing well.
Speaker Change: Since signing the contract with PREPA in August both parties have moved quickly.
Speaker Change: As many of you know the 37 dam projects had been divided into seven different groups each with its own yossi.
Speaker Change: Each group is unique both in terms of the number of dance, but also the terrific terrain and instrumentation required.
Speaker Change: The contract specifies after each group designed approval Gen.
Speaker Change: Genesis received 60% of the sale value of that group.
Speaker Change: This deposit will allow us to procure all the necessary work in product progress inventory and deliver the components to the island for installation.
Richard Danforth: Each DAN within a group will go through an acceptance process that will enable invoicing for the remaining 40% payment on a DAN by DAN basis. This, of course, is how the cash will flow, but revenue will be recognized on a percentage of completion basis, as is typical with projects of this scope and size. Where we stand today is our designs have been approved on the first three groups of dams. We have invoiced PREPA for the deposits on the first two groups, and after receiving the first deposit checks, we have begun placing orders for materials, staffing up local resources, and are preparing to break ground.
Speaker Change: Each stand within a group, who will go through and acceptance process that will enable invoicing for the remaining 40% payment on a damned by Dan basis.
Speaker Change: This of course is how the cash will flow, but revenue will be recognized on a percentage of completion basis as is typical with projects of this scope and size.
Speaker Change: Where we stand today as our designs have been approved on the first three groups of dams, we have invoiced PREPA for the deposits on the first two groups and after receiving the first deposit checks, we have begun placing orders for materials staffing up local resources and are preparing to break ground. The.
Richard Danforth: The total value of the first three approved groups is just over $35 million. It is our intention to install the emergency warning systems as quickly as possible. Until we get a couple of dams under our belt, however, it is impossible to predict exactly how long that will take. Regardless of the exact timing, Puerto Rico is serving as a tremendous example of the power of Genasys Protect as a complete system that combines planning and event management with unified communications, including our acoustic systems that operate when power and traditional communication networks fail.
Speaker Change: The total value of the first reapproved groups is just over $35 million. It is our intention to install the emergency warning systems as quickly as possible.
Until we get a couple of damps under our belt. However, it is impossible to predict exactly how long that will take.
Regardless of the exact timing, Puerto Rico is serving as a tremendous example of the power of Genesis protect as a complete system that combines planning and event management with unified communications, including our acoustic systems that operate one power and traditional communication networks fail.
Richard Danforth: Puerto Rico is not unique in its case, and we are pursuing similar opportunities both domestically and abroad.
Speaker Change: Puerto Rico is not unique in its case and we are pursuing similar opportunities both domestically and abroad.
Richard Danforth: Before I turn the call over to Dennis to discuss the financials, I want to provide an update on the AHDCRO's program of record. As we have discussed in the past, the AHD-CROWS requirement has existed for several years. And Fiscal 2024, adding LREDS to existing CROWS system, was finally funded with initial program appropriations totaling $20 million. We are actively working with the program office on detailed planning and scheduling. We will keep you all apprised of progress as it occurs.
Speaker Change: But before I turn the call over to Dennis to discuss the financials I want to provide an update on the AHD Crows program of record.
Speaker Change: As we have discussed in the past the AHD Crows requirement has existed for several years and.
Speaker Change: In fiscal 2024, adding <unk> to existing Crows system was finally funded with an initial operate initial program appropriations totaling $20 million.
Speaker Change: We are actively working with the program office on detailed planning and scheduling we will keep you all apprised of progress as it occurs.
Richard Danforth: Now, I will turn the call over to Dennis to go through the financials and outlook in greater detail.
Dennis Corn: Now I will turn the call over to Dennis to go through the financials and outlook in greater detail Dennis.
Dennis Klahn: Dennis. Thank you, Richard. In 2024, we successfully grew our recurring software each quarter. In the fourth quarter of fiscal 2024, recurring software revenue increased 110% year-over-year and 6% sequentially. on the full year, recurring software revenue for 115% versus the full year 2023. Excluding revenues from Evertel, now known as Connect, Fiscal 24 recurring revenue grew 84%.
Dennis Corn: Thank you Richard and 2024, we successfully grew our recurring software each quarter.
Dennis Corn: In the fourth quarter of fiscal 'twenty 'twenty four recurring software revenue increased 110% year over year and 6% sequentially.
Dennis Corn: On the full year recurring software revenue grew 115% versus the full year 2023.
Dennis Corn: Excluding revenues from ever tell now known as connect fiscal 'twenty four recurring revenue grew 84%.
Dennis Klahn: Revenues for the current fiscal year, fourth quarter, were $6.7 million, a decrease of 37% over the prior year's quarter. When compared to the same prior year period, total software revenue increased 92% to $2.1 million.
Revenues for the current fiscal year fourth quarter were $6 7 million a decrease of 37% over the prior year's quarter when.
Dennis Corn: When compared to the same prior year period total software revenue increased 92% to $2 1 billion.
Dennis Klahn: Harvard revenue decreased 52% to $4.6 million in the fourth quarter of fiscal 2020. Gross profit margin was 40.8% in the fiscal fourth quarter. roughly nine points below the prior year quarter primarily due to the reduced overhead absorbed Quarterly operating expenses were $9.9 million, up from $7.9 million in last year. on a gap basis, our fourth fiscal quarter operating loss was $7.1 million. compared to a loss of $2.6 million in the year-ago quarter. adjusted EBITDA, which excludes non-cash stock companies. was a negative $6 million compared to last year's negative $1.7 million. Gap net loss in this fiscal year's fourth quarter was $11.4 million, including $4.2 million of other expenses.
Dennis Corn: Hardware revenue decreased 52% to $4 6 million in the fourth quarter of fiscal 2024.
Dennis Corn: Gross profit margin was 48% in the fiscal fourth quarter, roughly nine points below the prior year quarter, primarily due to the reduced overhead absorption.
Dennis Corn: Quarterly operating expenses were $9 9 million up from $7 9 million in last year's quarter.
Dennis Corn: On a GAAP basis, our fourth fiscal quarter operating loss of $7 1 million compared.
Dennis Corn: Compared to a loss of $2 6 million and a year ago quarter.
Dennis Corn: Adjusted EBITDA, which excludes noncash stock compensation was a negative $6 million compared to last year's negative $1 7 billion.
Dennis Corn: GAAP net loss and this years in this fiscal year's fourth quarter was $11 4 million, including $4 2 million of other expense.
Dennis Klahn: This expense includes a $3.5 million non-cash loss on the change in the fair value of the warrants related to a term loss. This compares to last year's net loss of $10.1 million, which included a one-time, non-cash, deferred tax.
Dennis Corn: This expense includes a $3 5 million noncash loss on the change in the fair value of the warrants related to a term loan.
Dennis Corn: This compares to last year's net loss of $10 1 million, which included a onetime noncash deferred tax expense of $7 4 million.
Dennis Klahn: 7.4 million.
Dennis Klahn: Moving to the full fiscal year. For the full fiscal year, total revenue was $24 million, a 49% decrease from fiscal 2023 revenues of $46.7 million. Hardware revenues decreased 61% to $16.7 million. compared to fiscal 2023, which benefited from $22 million of revenue from a program of record that was completed last year.
Dennis Corn: Moving to the full fiscal year.
Dennis Corn: For the full fiscal year total revenue was 24 million% to 49% decrease from fiscal 2023 revenues of $46 7 million.
Dennis Corn: Hardware revenues decreased 61% to $16 7 million compared to fiscal 2023, which benefited from $22 million of revenue from a program of record that was completed last year.
Brian Alger: Thank you, Brian, and welcome, everyone.
Speaker Change: Thank you, Brian and welcome everyone.
Richard Danforth: As Dennis will detail shortly, from a financial results standpoint, fiscal 2024 was extremely disappointing. That's wrong. While our software results track largely in line with our expectations, weak hardware revenues in the fourth quarter and throughout the year are resulting in...
Speaker Change: As Dennis will detail shortly from a financial results standpoint fiscal 2024 was extremely disappointing that's wrong, while our software results track largely in line with our expectations, we card where revenues in the fourth quarter until about a year, a resulting ready to read Ritchie Scott.
Operator: Ready to read, Richard.
Operator: Stop.
Dennis Klahn: on the full fiscal year, gross margins for 40.
Speaker Change: On the full fiscal year gross margins were 42.
Speaker Change: Okay.
Speaker Change: Okay.
Okay.
Brian Alger: Mr. Alger, the floor is now yours. Hi, everyone. Sorry about that. We obviously had some mistakes with the splicing of the recording. Dennis is going to pick up where we are leaving off.
Speaker Change: Mr Al everyone floor is now yours.
Speaker Change: Hi, everyone, sorry about that we obviously had some mistakes with the splicing of the recording Dennis is going to pick up where we are leaving off tenants can you go ahead.
Dennis Klahn: Dennis, can you go ahead?
Dennis Klahn: Thanks, Brian.
Dennis Corn: Thanks, Brian I'll start with default fiscal year total revenue was 24 million% to 49% decrease from fiscal 'twenty three revenues of $46 7 million hardware revenues decreased 61% to $16 7 million compared to fiscal 'twenty, three which benefited from $22 million.
Dennis Klahn: I'll start with the full fiscal year. Total revenue was $24 million, a 49% decrease from fiscal 23 revenues of $46.7 million. Hardware revenues decreased 61% to $16.7 million compared to fiscal 23, which benefited from $22 million of revenue from a program of record that was completed last year. This was partially offset by a 93% increase in software revenue, which included the addition of Evertel, known as Connect, and significant new customers that went live this year, including Los Angeles County, San Diego County, Santa Barbara County, and the states of Oregon and New Hampshire. on the full fiscal year gross margins for 42.4%.
Dennis Corn: Of revenue from the program of record that was completed last year.
This was partially offset by a 93% increase in software revenue, which included the addition of <unk> known as <unk> and significant new customers that went live this year, including Los Angeles County, San Diego County, Santa Barbara County, and the states of Oregon, and New Hampshire.
Dennis Corn: On a full fiscal year gross margins were 42, 4%.
Dennis Klahn: So overall gross margins were negatively impacted by the depressed hardware contract. software gross margins improved throughout fiscal 2024. On the full fiscal year, operating expenses grew $4.2 million to $36.9 million. The year-over-year increase is largely due to incremental spending on professional services and the addition of Evertel. For the full fiscal year, our 24 gap operating loss was $26.7 million compared to Fiscal 23's $11 million operating loss. fiscal 2024 adjusted EBITDA was a negative $22.1 million compared to last year's negative $6.7 million. Gap net loss for fiscal 24 was $31.7 million, including $5.4 million of other expense.
Dennis Corn: So overall gross margins were negatively impacted by the depressed hardware contribution software gross margins improve throughout fiscal 'twenty 'twenty four.
Dennis Corn: On the full fiscal year operating expenses grew $4 2 million to $36 9 million.
Dennis Corn: The year over year increase is largely due to incremental spending on professional services and the addition of <unk>.
For the full fiscal year are 24, GAAP operating loss was $26 7 million compared to fiscal 'twenty threes 11 million operating loss.
Dennis Corn: Fiscal 'twenty 'twenty four adjusted EBITDA was a negative $22.1 million compared to last year's negative $6 7 million.
Dennis Corn: GAAP net loss for fiscal 'twenty, four was 31.7 million <unk>.
Dennis Corn: Including $5 4 million of other expense.
Dennis Klahn: Other expense includes expenses related to securing the term loan, interest expense, and non-cash expense for changes in the valuation of the warrants associated with the term loan and related interest. The fiscal 23 gap net loss was $18.4 million, including the $7.4 million deferred tax valuation allowance.
Dennis Corn: Other expense includes expenses related to securing the term loan.
Dennis Corn: Interest expense and noncash expense for changes in the valuation of the warrants associated with the term loan and related interest.
Dennis Corn: The fiscal 'twenty three GAAP net loss was $18 4 million, including the 7.4 million deferred tax valuation allowance.
Dennis Klahn: Moving to the balance sheet. Cash, cash equivalents, and marketable securities totaled $13.1 million as of September 30, 2024, compared with $10.1 million as of the prior year end. Cash used in operating activities in the fiscal year was $19.5 million. Net cash provided by financing activities, including the equity offering in October of 2023, and the senior secured debt financing in May of 2024 was $23.9 million.
Moving to the balance sheet.
Dennis Corn: Cash cash equivalents and marketable securities totaled $13 1 million as of September 32024, compared with $10 1 million as of the prior year end.
Dennis Corn: Cash used in operating activities in the fiscal year was $19.5 million.
Dennis Corn: Net cash provided by financing activities, including the equity offering in October of 2023 and is senior secured debt financing in may of 'twenty 'twenty four was $23 9 million.
Dennis Klahn: As Richard mentioned, in the first two, excuse me, two months of fiscal year 2025, the company received a deposit on the first group of dams in Puerto Rico. In addition, we invoiced the customer for the deposit on the second group of dams. With our current backlog, including our starting software ARR of 8.3 million and the strong hardware bookings in fiscal 2024, we are substantially better positioned than we were just a year ago. on recurring software revenue growth will likely moderate from the triple-digit levels of fiscal 2024. We do expect continued improvement throughout the year. Having the hardware backlog that we do, we are confident that we will deliver substantial growth on the full year.
Speaker Change: As Richard mentioned in the first two months excuse me two months of fiscal year 2025. The company received a deposit on the first group of Dan's in Puerto Rico.
Speaker Change: In addition, we invoiced the customer, but the deposit on the second group of dams.
Speaker Change: With our current backlog and quoting are starting software a R. R of $8 3 million and the strong hardware bookings in fiscal 'twenty 'twenty four we're substantially better position than we were just a year ago.
Speaker Change: Our recurring software revenue growth will likely moderate from the triple digit levels of fiscal 'twenty 'twenty four we do expect continued improvement throughout the year.
Speaker Change: Having the hardware backlog that we do we are confident that we will deliver substantial growth on the full year.
Dennis Klahn: That said, timing of purchase orders, grants, and uncertainty pertaining to the installation process in Puerto Rico prevents specific financial guidance.
Speaker Change: That said timing of purchase orders grants and uncertainty pertaining to the installation process in Puerto Rico prevent specific financial guidance.
Richard Danforth: And now Richard will make some closing remarks before we open the call for Q&A.
Richard: Now Richard will make some closing remarks before we open the call for Q&A.
Richard Danforth: Richard. Thank you, Dennis. As Dennis just detailed, fiscal 2024 was a very disappointing year on a financial basis. We started fiscal 2024 with less than $7 million in total backlog. We were able to book and bill $17 million of business in the year, but this was still way short of our expectation, and it was reflected in the bottom line results for the year. Compared to this time last year, our business is looking dramatically better. In fiscal 2024, we booked $111 million in new business. Our 12-month backlog is $40-plus million, and we expect additional bookings and resulting revenue throughout the year.
Sure.
Richard: Thank you Dennis.
Speaker Change: As Dennis just detailed fiscal 'twenty 'twenty four was very disappointing year on a financial basis.
Speaker Change: We started fiscal 'twenty 'twenty, four with less than $7 million in total backlog.
Speaker Change: We were able to book and Bill 17 million of business in the year, but this was still way short of our expectation and it was reflected in the bottom line results for the year.
Compared to this time last year, our business is looking dramatically better.
In fiscal 'twenty 'twenty, four we booked $111 million in new business.
Speaker Change: Our 12 month backlog, our backlog is 40 plus million dollars and we expect additional bookings and resulting revenue throughout the year.
Richard Danforth: Our software business is starting fiscal 2025 with an ARR of $8.3 million plus large contracts that have already been awarded but not yet contributing revenue. It is worth noting, again, that the Genasys Protect software enabled the $73 million in hardware-related bookings in Puerto Rico. We expect that software will continue to drive hardware sales. In summary, Genasys is starting fiscal 2025 with tremendous momentum, aggressively moving to take advantage of our position. We are excited to deliver results that rewards the support shareholders have afforded us.
Our software business is starting fiscal 2025 with an E. R. R of $8 3 million plus large contracts that have already been awarded but not yet contributing revenues.
Speaker Change: It is worth noting again that the Genesis protect software enabled the $73 million and hardware related bookings in Puerto Rico.
We expect that software will continue to drive hardware sales and.
Speaker Change: In summary, Genesis, starting fiscal 2025 with tremendous momentum aggressively moving to take advantage of our position.
Speaker Change: We are excited to deliver results that rewards the support shareholders have afforded us I also want to thank the entire Genesis team for its steadfast commitment to delivering a larger more balanced global business with increasingly predictable revenues and profitability.
Richard Danforth: I also want to thank the entire Genasys team for its steadfast commitment to delivering a larger, more balanced global business with increasingly predictable revenues and profitability.
Operator: Now I would like to open up the call for Q&A.
Speaker Change: Now I would like to open up the call for Q&A operator.
Operator: Operator? Thank you.
Speaker Change: Thank you ladies and gentlemen, the floor is now open for questions. If you do have a <unk>.
Operator: Ladies and gentlemen, the floor is now open for questions. If you do have a question, please press star 1 on your telephone keypad at this time. Again, that's star 1 if you have a question or comment.
Speaker Change: Question. Please press star one on your telephone keypad at this time again that star one if you have a question or comment.
Scott Searle: And we'll take our first question from Scott Searle from Roth Capital. Please go ahead, Scott. Hey, good afternoon. Thanks for taking my questions. Nice to see the progress on the PREPA front in terms of moving into the third group.
Speaker Change: And we will take our first question from Scott thoroughly from Roth Capital. Please go ahead Scott.
Hey, good afternoon. Thanks for taking my questions nice to see the progress on the PREPA front in terms of moving into the third group.
Richard Danforth: Maybe along those lines, Richard, you know, could you give some more color? I know you had some comments around PREPA, but the timeline of when we should start to expect the first revenue contribution, is that in the March quarter, given what you're seeing right now? And when would you expect to see some of the deposits and coming in, I guess, on the third grouping? Yes, March quarter is a reasonable expectation, Scott. As Dennis mentioned, we've invoiced for the second group. The third group we'll be invoicing for shortly, and the fourth and fifth are scheduled out in I think Dennis, the fourth is scheduled out in this fiscal year as well.
Speaker Change: Maybe along those lines Richard.
Speaker Change: Could you give some more color I know you had some comments around PREPA, but the timeline of when we should start to expect the first revenue contribution is that in the March quarter, given what youre seeing right now.
Speaker Change: And when would you expect to see some of the deposits and coming in I guess on the third grouping.
Speaker Change: Yes March quarter is a reasonable expectation Scott.
Speaker Change: Tennis mentioned, we've invoiced for the second group the third group will be invoicing for shortly.
Speaker Change: In the fourth and fifth the scheduled out in.
Speaker Change: I think that is the fourth is scheduled out in this fiscal year as well is that towards the end up towards the end of the year.
Richard Danforth: Towards the end of it. Yeah, towards the end of the year. Gotcha. Helpful.
Speaker Change: Gotcha helpful and just in terms of the lead times I'm wondering if you could talk us through some of the elements now that are presenting some of the headwinds.
Richard Danforth: And just in terms of the lead times, I'm wondering if you could talk us through some of the elements now that are presenting some of the headwinds. And once you get into a cadence, how should we be thinking about the progress, how quickly you can be installing dams? Yeah, that's still a bit unknown. There's a lot of variabilities once you get on the island. I would look at it this way, Scott, the all of the equipment to support our obligations in Puerto Rico. Almost all of that is going to come right through here, so that's really the easy part of this.
Speaker Change: And once you get into a cadence how should we be thinking about the progress how quickly you can be.
Speaker Change: Installing dams.
Speaker Change: Yes, that's still a bit unknown.
Speaker Change: There's a lot of variability is once you get on the island.
Speaker Change: I would look at it this way Scott.
Speaker Change: All of the equipment to support our obligations in Puerto Rico.
Speaker Change: Almost all of that is going to come right through here. So that's really the easy part of this.
Richard Danforth: and it's also where most of the money is. The installation process. is complicated. There's five different owners of the 37 dams, including private owners and municipalities, the water company, the electric company, the Puerto Rico Department of Natural Environmental Resources, and all of them have certain challenges.
And it's also where most of the money is.
Speaker Change: The installation process.
Speaker Change: As complicated there's five different owners of the 37, dan's, including private owners and municipalities the water company the electric company.
The Puerto Rico Department of natural environmental resources and.
Speaker Change: And all of them have certain challenges, so I'm going to defer to directly answer your question until we get a little more experience with these five different owners.
Richard Danforth: So I'm going to defer to directly answer your question until we get a little more experience with these five different owners. Everybody, I will say, is anxious to get going and get this done as soon as possible.
Speaker Change: Everybody I will say is anxious to get going and get this done as soon as possible.
Richard Danforth: Richard, let me ask you on that front, though, because the dams were sort of an initial entry point to some potentially larger opportunities, not just for that infrastructure, but other infrastructure throughout the island. Has there been any progress on that front, or have you guys been just so occupied with trying to advance the existing PREPA contract? No, we expect an RFP for... for additional hardware on an unrelated application later this fiscal year. Gotcha.
Speaker Change: Let me ask you on that front, though because the dams, where we're sort of an initial entry point to some potentially larger opportunities not just for that infrastructure, but other infrastructure throughout the island has there been any progress on that front have you guys been just so occupied with trying to vinci existing profit contract.
No we expect an RFP for.
Speaker Change: For additional hardware on an unrelated.
Speaker Change: Application later this fiscal year.
Richard Danforth: And then maybe shifting over to Kuros, I know you had some comments on the call. I'm wondering if you expect resolution or revenue at some point this year, and just how the current functionality of the existing government and continuing resolution issues are impacting you or not impacting you? Now, the current C.E.R. has no impact, Scott, at this time, as you recall. The current fiscal year 24's federal budget wasn't passed until the March time frame of last year, and that's, in my opinion, where we're headed this year. The incoming administration seems to be more friendly towards defense.
Speaker Change: Gotcha, and then maybe shifting over to Crows I know you had some comments in the call I'm wondering if you expect resolution or revenue at some point this year and just how the current functionality of the existing government continuing resolution issues are impacting you or not impacting you.
Now the current CER has.
Speaker Change: No impact Scott at this time as you recall.
Speaker Change: The current fiscal year 'twenty pause fit our federal budget was passed until the March timeframe of last year and that's in my opinion, where we're headed this year.
Speaker Change:
Speaker Change: The incoming administration seems to be more friendly towards defense.
Richard Danforth: So that leaves us optimist. Gotcha.
So that leaves us optimistic.
Got you and lastly, if I could.
Scott Searle: And lastly, if I could, you had some comments about Evertel or ConnectNow. I'm wondering if there are any other metrics that you guys are willing to share on the front. You know, you're talking about ARR, broadly speaking, on the recurring side of the business, but are there a number of users or subscribers with, you know, our first responders and public safety on the Evertel front that you guys would talk about or help us size that business since you guys have acquired it? Thanks. Thanks, Scott. So the customer account continues to grow. I think the last number we gave you was a little over 400.
Speaker Change: You had some comments about ever tell or connect al I'm wondering if there are any other metrics that you guys are willing to share on that front you you're talking about a R are broadly speaking on the recurring side of the business, but are there a number of users or subscribers with.
Speaker Change: Our first responders and public safety on the hotel front that you guys would talk about or help us size that business. Since you guys have acquired it. Thanks.
Speaker Change: Yeah. Thanks, Scott So the customer count continues to grow I think the last number we gave you was a little over 400.
Scott Searle: There's a huge huge variance in terms of the size of those customers. You know, at the largest size, obviously, we have Oregon with the entire state as a customer, right? And then that goes down to your really small law enforcement agencies that might only have one or two sworn officers that have a software license at five bucks a month, right? So the size of the customers vary, and therefore your average revenue per customer is quite different. Also, your traditional metrics for CAC and the timing are all over the place. We need to get to more scale before we can start giving you numbers that matter, but we are tracking those.
Speaker Change: And a huge.
Speaker Change: Huge variance in terms of the size of those customers.
Speaker Change: The largest size, obviously, we have Oregon with the entire state of the customer right and then that goes down to you're really small law enforcement agencies that might only have one or two sworn officers that have our software license of five bucks a month right. So the size of the customers vary and therefore your average revenue per customer is quite different.
Speaker Change: Also your traditional metrics for CAC.
Speaker Change: And the timing are all over the place we need to get to more scale before we can start giving you numbers that matter, but we are tracking those and.
Scott Searle: And certainly from a customer account and from an ARR standpoint, they're trending in the right direction. Okay, helpful.
Speaker Change: Certainly from a customer count and from an IRR standpoint, they're trending in the right direction.
Scott Searle: And maybe one more, if I could, then on the ARR front, you're an 8.3 million, you've won some other business that hasn't started to contribute yet. I'm wondering if there's a number you feel comfortable with exiting fiscal 25 in terms of what that ARR number will look like. Thanks. You know, we have plans. Scott, and expectations based on bookings and goal lives of where the ARR will end up in 2025. We haven't shared that with anybody at this time, but. We continue to expect to see significant growth in our SaaS business. The pipeline is very good.
Speaker Change: Very helpful and maybe one more if I could then on the HR front.
Speaker Change: And $8 $3 million you want some other business that hasnt started to contribute yet im wondering if theres a number you feel comfortable with exiting fiscal 'twenty five in terms of what that number will look like thanks.
Speaker Change: Yes, we have plans.
Speaker Change: Scott and expectations based on bookings and go lives of where the where the arrow ended up at 2025.
Speaker Change: We haven't shared that with anybody at this time, but.
Speaker Change: We continue to expect to see significant growth in our SaaS business. The pipeline is very good the closure rates are very good.
Scott Searle: The closure rates are very good. There's a great deal of optimism in the SaaS side of the world. Great, thanks. I'll get back in the queue.
Speaker Change:
Speaker Change: There's a great deal of optimism in the SaaS side of the world.
Speaker Change: Yeah.
Speaker Change: Great. Thanks, I'll get back in the queue.
Edward Woo: Thank you and we'll take our next question from Ed Woo from Ascendian Capital. Please go ahead Ed. Yeah, congratulations on all your progress. As you guys start to collect from the Puerto Rico contract, which will be a lot of money, and your balance sheet is very strong right now, it's a time, are you guys considering, you know, potential acquisitions? And what does the acquisition landscape look like right now? And we don't have any current plans for acquisition, and I think you know this, but all of our acquisitions have been opportunistic. If we come by something that looks...
Thank you and we will take our next question from Ed Woo from <unk> Capital. Please go ahead Ed.
Ed Woo: Yes, congratulations on all your progress as you guys start to collect on the Puerto Rico contract, which will be a lot of money.
Speaker Change: Your balance sheet is very strong right now is the time to I guess considering.
Speaker Change: Actual acquisitions and what does the acquisition landscape looks like right now.
Speaker Change: We don't have any current plans for acquisition and I think you know this but all of our acquisitions had been opportunistic.
Speaker Change: If something if we can buy something that looks.
Richard Danforth: like it to significantly add to our product offering, our software offering. When the price is right, then we'll deal with it at that time. Do you feel that you guys are in a good shape if they're opportunistic based on completing the integrations of your prior acquisitions? The integrations are complete. So there's no ongoing integration. There's always software development going on. We operate as Genasys as one company.
Speaker Change: Like it to significantly add to our product offering our software offering.
And the price is right then we'll deal with it at that time.
Speaker Change: Do you feel that you guys are in a good shape. If there are opportunistic based on completing.
The integration of your prior acquisitions.
Speaker Change: The integrations are complete.
Speaker Change: So there's no ongoing integration, there's always software development going on as an output.
We operate as Genesis as one company.
Edward Woo: Great, thanks for answering my questions and I wish you guys good luck. Thank you.
Speaker Change: Great. Thanks for answering my questions and I wish you guys. Good luck.
Speaker Change: Thank you.
Mike Latimore: Once again, that's star one if you have a question or comment. And we'll take our next question from Mike Latimore from Northland Capital. Please go ahead, Mike.
Speaker Change: Once again Thats Star one if you have a question or comment.
Speaker Change: We'll take our next question from Mike Latimore from Northland Capital. Please go ahead Mike.
Mike Latimore: Hi this is Vijay Devar for Michael Latimore. A good quarter. A couple of quick questions. On the prep-up, could you just tell me how much is prep-I in your overall backlog as of now? We're not breaking that down right now. It is obviously the biggest portion of that $40 million in backlog. Also included in there as a sizable portion is the ARR of 8.3 in terms of software, but we're not going to give you a breakdown on the backlog today. Understood.
Speaker Change: Yeah, Hi, this is Vijay there for Mike Latimore.
Speaker Change: A good quarter a couple of quick questions on the Pep up could you just tell me how much is kind of pie in your overall backlog as of now.
Speaker Change: We're not breaking that down right now.
Speaker Change: It is obviously the biggest portion of that $40 million in backlog.
Speaker Change: Also included in there is a sizable portion is the <unk> of $8 three in terms of the tougher, but we're not going to give you a breakdown on the backlog today.
Speaker Change: On district and.
Mike Latimore: And yeah, I think you're not giving the exit AR for software for the fiscal year 25, but do you have any plans for increasing your software sales force for the next year? We do. We have been increasing our SaaS software sales team throughout fiscal 2024, and I think we have five or six additional open recs that we are endeavoring to fill. Thank you.
Speaker Change: Yeah, well I think you've not given the exit AAR for software for the fiscal year 'twenty five but do you have any plans for increasing software sales force out for the next year.
Speaker Change: We do.
Speaker Change: We have <unk>.
Speaker Change: <unk> been increasing our software as a SaaS software sales team throughout fiscal 'twenty 'twenty four and.
Speaker Change: I think we have five or six additional open racks that we are deferring to Phil.
Speaker Change: Got it thank.
Speaker Change: Thank you.
Operator: And there are no further questions at this time.
Speaker Change: And there are no further questions at this time I'd like to turn the floor back to Brian Alger for closing remarks.
Brian Alger: I'd like to turn the floor back to Brian Alger for closing remarks. Great. Thank you, everyone. Appreciate your attendance.
Speaker Change: Okay.
Brian Alger: Great. Thank you everyone. Appreciate your attendance and we look forward to speaking with you again after the next quarterly conference call and early February.
Operator: And we look forward to speaking with you again after the next quarterly conference call in early February. Good evening.
Speaker Change: Good evening.
Operator: Thank you.
Speaker Change: Thank you ladies and gentlemen, this does conclude today's teleconference. We thank you for your participation you may disconnect. Your lines at this time and have a great day.
Operator: Ladies and gentlemen, this does conclude today's teleconference. We thank you for your participation. You may disconnect your lines at this time and have a great day. Thank you.
Speaker Change: [music].