Q2 2025 The Glimpse Group Inc Earnings Call
Good morning, and thank you for your patience. This call will begin shortly once again. Thank you for your patience on this call will begin shortly.
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Speaker Change: Welcome to the glimpse scraped second quarter fiscal year 2025 financial results weapon all.
Speaker Change: At this time all participants are in a listen only mode.
Speaker Change: <unk> and answer session will follow the formal presentation. As a reminder, this conference is being recorded.
Speaker Change: The earnings release that accompanies this call is available on the investors section of the company's website at IR dot the glimpse green Dot com, that's IR dot the glimpse green Dot com.
Speaker Change: Before we 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 maybe subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in the <unk>.
Speaker Change: Paul.
Speaker Change: 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.
Speaker Change: I would now like to hand, the call over to Lee, Ron Bernstein, President and CEO al stipulate scraped clearone the flow issues.
Speaker Change: Thank you Jenny and thank you everyone for joining us.
Speaker Change: I'm pleased to welcome you to the Grinch groups Q2 fiscal year of 2025 financial results Investor call for quarter ended December 31st 2024.
Speaker Change: I am very proud to announce that in addition to continued strong revenue growth. This quarter, we achieved positive EBITDA positive cash flow and positive net income.
Speaker Change: This is the first time, we've achieved positive EBITDA in our history as a public company and is a direct result of our strategic and operational restructuring over the past several quarters.
Speaker Change: With our strategic transition to focus on especially core mostly complete and with the increasingly incorporation of enabling AI elements of course, our product base.
Speaker Change: We are well positioned to capture the vast potential indeed immersive technology space over the coming years as the immersive technology cycle gets closer to mass adoption.
Speaker Change: There are tremendous opportunities in front of us and to facilitate.
Speaker Change: December we raised $6 8 million in net proceeds from one investor in registered direct equity offering weaker.
Speaker Change: We currently have approximately $8 5 million in cash and a very clean capital structure.
Speaker Change: During the quarter, our subsidiary company Brightline Interactive delivered the second phase of its large D O D contract.
Speaker Change: Achievement of significant performance and technological milestone.
Speaker Change: Dale I entered into an initial contract with the U S. Navy for an immersive AI driven simulator systems to be delivered in the coming months, but I think the ground for potential follow on contracts in 2025 and beyond.
Speaker Change: Do you lie delivered this scalable immersive solution to a global government service integrator positioning itself as a leading middle ware for processing and visualizing complex inflammation in the studio space and it's something we're watching believe has the potential to become an industry standard.
Speaker Change: They continue.
Speaker Change: And then.
Speaker Change: For 2025 has delayed the potential awarding of multiple government and deal with the opportunities. We hope this will be resolved promptly in March 2025, when the current continuing resolution.
Speaker Change: And with the New administration and Congress now in place.
Speaker Change: Led by our subsidiary Foretold reality, we continue to make strong progress on commercializing, our AI driven immersive training product and I've experienced an encouraging initial traction with our customers and partners.
Speaker Change: We have a long a strong long term revenue pipeline and expected contract, but putting that aside we're already have a reasonable visibility as to reminder of.
Speaker Change: Fiscal year 2025, ending in June 32025.
Speaker Change: Driven by the timing of existing contracts revenue recognition for Q3, FY 'twenty five we expect a decline in revenue and negative adjusted EBITDA to be more than offset by a very strong Q4, FY 'twenty five with significant revenue growth Paul.
Speaker Change: Adjusted EBITDA and profitability.
Speaker Change: For the full fiscal year 'twenty five ending June 32025, we expect aggregate revenue to significantly exceed our FY 'twenty for revenue and to be about EBITDA breakeven for the full fiscal year versus a significant adjusted EBITDA loss in the prior fiscal year.
Speaker Change: With that I will now turn it over to me downwards Bloom Jameson as CFO and COO to review the financial results and he does.
Speaker Change: Thanks for the ROI.
Speaker Change: I will limit my portions of salary review of our financial results a full breakdown is available in our 10-Q and press release that were filed before.
Speaker Change: Market open today.
Speaker Change: Please note that all the parts are adjusted EBITDA and other non-GAAP measures.
Speaker Change: Calculation of adjusted EBITDA and other 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: Q2 fiscal year 'twenty fives.
Speaker Change: Our revenue of approximately $3, one 7 million reflecting a.
Speaker Change: 52% increase compared to Q2 fiscal year 'twenty four.
Speaker Change: Our agenda at December 31, 2023 revenue of approximately 2.08 million and D. A 30% increase compared to Q1 fiscal year 'twenty five.
Speaker Change: Before the end of September 32020 for revenue of approximately 2.44 million the.
The increase in both comparative periods was primarily driven by an increase in special core revenues as well as growth in our other businesses.
Speaker Change: Gross margin for Q2 fiscal year 'twenty five was approximately 64%.
Speaker Change: That's a 68% for Q2 fiscal year 'twenty for the decrease was driven by revenue mix, which tend to oscillate a bit between the quarters.
Speaker Change: On average we expect to see our going forward gross margins continue.
Speaker Change: To be in the 60% to 70% range.
Speaker Change: Yeah.
Speaker Change: Q2 fiscal year 'twenty five positive adjusted EBITDA.
Speaker Change: Approximately 0.2 8 million compared to an adjusted EBITDA loss of approximately negative 1.33 million for Q2 fiscal year 'twenty four.
Speaker Change: Net operating cash provided from operations for Q2 fiscal year 'twenty five was approximately 0.1 7 million compared to a net operating cash loss of approximately negative 168 million for Q2 fiscal year 'twenty four.
Speaker Change: Importantly, as Leon mentioned this is the first profitable EBITDA quarter in the company's history as a publicly traded company.
Leon: Reflecting our significant restructuring efforts over the past few quarters combined with revenue growth.
Speaker Change: So specifics regarding visibility I'll be wrong magic.
Speaker Change: For Q3, that's when you're 25, we expect a decline in revenue.
Speaker Change: So a range of one and half to $2 million with a negative adjusted EBITA.
Speaker Change: To be more than offset by a strong Q4 fiscal year 'twenty five.
Speaker Change: With expected revenue range of between three three and $4 million and positive adjusted EBITDA.
Speaker Change: For our fiscal year 'twenty five ending June 32025.
Speaker Change: Aggregate revenues to exceed $11 million compared to $8 8 million for fiscal year 'twenty four.
Speaker Change: 25% plus increase in annual revenue and breakeven adjusted EBITDA for the fiscal year versus significant adjusted EBITDA loss in the prior fiscal year.
Speaker Change: Our current cash operating expense base fee revenue is now less than $9 million per month.
Speaker Change: Given our contracted and projected revenue cashin going forward, we expect to generate positive cash flow in each of the remaining quarters for fiscal year 'twenty five.
Speaker Change: Companys cash and equivalent position as of December 31, 2024 was approximately $8 5 million.
Speaker Change: With an additional $1 4 million of accounts receivable.
Speaker Change: The increase in our cash position was primarily a result of our December 24.
Speaker Change: Registered direct equity financing in which we raised $7 3 million in gross cash proceeds from one investor and a clean structure.
Speaker Change: We continue to maintain a clean capital structure with no debt no convertible debt and no preferred equity.
Speaker Change: Lastly on December 24, 2024 received written notice from NASDAQ and forming a company, but they have regained compliance with NASDAQ listing.
Speaker Change: Which requires listening securities.
Speaker Change: To maintain a minimum bid.
Speaker Change: All right.
Speaker Change: One dollar per share this closes the matter that originated on September three 2024.
Speaker Change: I'd now like to pass it back we'll be wrong for some closing remarks, after which we will begin our Q&A session.
Speaker Change: Yeah.
Speaker Change: Thank you Danny.
Speaker Change: As we guided in previous quarters, we continue to make.
Speaker Change: Chris in our strategic plan.
Speaker Change: Have achieved strategic and operational restructuring revenue growth with profitable operations major contracts in key technological developments in the area of AI spatial computing cloud anymore technologies.
Speaker Change: In parallel we have walked through.
Speaker Change: And are well positioned to execute on our growth strategy and the huge opportunities in front of us.
Speaker Change: Thank you all for your interest in and support of the games group.
Speaker Change: Now I'll turn the call back over to the operator to take some questions Jenny.
Speaker Change: Thank you leave on if you'd like to submit a question you can either say by typing in the chat box below or raise your hand, we'll start with any audio questions and follow that with some write in questions. As time allows us if you would like to ask an audio question on the phone lines. Please press.
Speaker Change: Star one on your phone key Pat now a confirmation tone will indicate that Youll line isn't Nicky you May press star two if you would like to remove your question from Nicky.
Speaker Change: Now our first audio question is coming from Casey Ryan of West Park Capital Casey Your line is life.
Casey Ryan: Thank you good morning, great quarter gentlemen.
It looks really good I had a couple of questions just the high level would you care to frame for everybody or for me I guess.
Casey Ryan: What the revenue split looks like between commercial and government and what you think the shape of that looks like moving forward. It feels like Theres a lot of positive activity, obviously around the D O D and government opportunities, but I'm. Just wondering if you can give us some sense of the of the split for revenues.
Speaker Change: Good morning, Casey and.
Speaker Change: Thank you at this point, we're probably around 40% ish a government 60% commercial.
Speaker Change: Okay.
Speaker Change:
Speaker Change: And.
Speaker Change: What do you imagine as you look forward, maybe just for the remainder of this fiscal year does that.
Speaker Change: Feel like it'll stay steady or do you think that'll change in some meaningful ways as we go forward.
Speaker Change: I think for the remainder of our fiscal year, and we will be kind of a round ups range and then as we look into 2025.
Speaker Change: We're hoping to increase the the government defense services.
Speaker Change: Some of that business comes in.
Speaker Change: Yeah, Okay, alright, terrific and then.
Speaker Change: Tell me what your perspective is it feels like there's a lot of.
Speaker Change: Very clear use cases, now being talked about around D O D and maybe other government and the military application specifically for your solutions.
Speaker Change: What's the development at the end customer I guess commercial versus government do you feel like the commercial opportunities are or use cases are is clearly defined I guess.
Speaker Change: For the commercial space.
Speaker Change: Yeah, No I think that you've kind of the the applications on the kind of the kind of military defense sides.
Speaker Change: We are going to lead to even further or kind of larger opportunities on the commercial side.
Speaker Change: So were definitely less.
Speaker Change: The work we're doing on the kind of defense side to then put solutions in France.
Speaker Change: It will take time.
Speaker Change: The commercial side, but those will be very significant applications over the same technologies.
Speaker Change: Okay terrific.
Speaker Change: And then my third question is just around the operating expense line I think it is.
Speaker Change: There was a lot of progress or a big you know a big reduction there on the Opex line.
Speaker Change: Versus last year, but even versus.
Speaker Change: The prior quarter made on I think you had mentioned a 900000 per month is sort of an opex run rate, but correct me if I misheard that.
Speaker Change: Are we thinking that opex will be.
Speaker Change: In the same range per quarter, moving forward and but I think my math is sort of $1 9 million type of number per quarter or do we think that those levels will start to rise a little bit as we move into the end of the year.
Speaker Change: Yeah.
Speaker Change: I assume that.
Speaker Change: Is correct I think there'll be a stable going forward.
Speaker Change: Or certainly the remainder of the year, we'll see what happens going forward. You know, we do have some capacity runway under that it really depends on the timing of some of these.
Speaker Change: Larger contracts that Oh.
Speaker Change: And in the coming months, so, we'll wait and see but at the current level of of revenue.
Speaker Change: This is unexpected operating base going forward.
Speaker Change: Okay.
Speaker Change: Alright, terrific and then.
Speaker Change: Just to sort of round out on things that we talked about in the past I guess has there been anything any meaningful and maybe there hasn't been because you didn't include them in the press release, but.
Speaker Change: You know opportunities in terms of divestitures and then I guess on the other side of the coin are there any opportunities that you see to potentially acquire important are new assets out. There that you guys are maybe working on in terms of business development.
Speaker Change: The answer to both is yes, we see kind of opportunities to <unk>.
Speaker Change: Monetize and divest pieces of our business that we see is less critical for what we're doing and kind of we're exploring some of those avenues.
Speaker Change: And on the same time, we're seeing a lot of interesting opportunities on the outside.
Speaker Change: And we're always looking to see how we can structure deals that are accretive to the company and then productive in our kind of path forward. So there's opportunities on both sides, but we're not going to rush into anything that doesn't make sense for shareholders.
Speaker Change: Okay, but I'm not putting any timing, it's something that we should continue to pay attention to as being potentially positive both ways in terms of monetizing assets and potentially acquiring new assets as we move forward.
Speaker Change: Yes, that's definitely a something to pay attention to.
Speaker Change: Okay, good well terrific quarter. Thank you for the time and the questions.
Speaker Change: Thank you Casey.
Speaker Change: Thank you very much. Your next question is coming from Jack Rubinstein of Descartes Partners, Josh Your line is live.
Alright.
Speaker Change: Hello, guys I Hope you can hear me.
Speaker Change: Anyway, I wanted to just go down to the basics to get an understanding of what.
Speaker Change: Your immersive technology is.
Speaker Change: From what.
Speaker Change: I gather.
Speaker Change: The use of artificial intelligence.
Speaker Change: Is the use of it is a predictive.
Speaker Change: Science, so using artificial intelligence you ask questions.
Speaker Change: We'll roll that Glynn place is in order to answer those questions one was simulate.
Speaker Change: Possible outcomes. So for instance in the military area, yes, there's they issue a place for instance, where do I place My fleet.
Speaker Change: So on and so forth.
Speaker Change: Is there AI creates questions creates predictions as to possibilities and bright your vision answers those questions visa various simulations is that eight eight.
Speaker Change: Proper.
Speaker Change: And now or just description and AI.
Speaker Change: Gross do we get more and more questions and that leads to the growth of more and more immersive simulations.
Speaker Change: Thank you.
Speaker Change: Very good question and and description, let me try and put a little bit of color of Jack into kind of some of our AI integration and kind of I'll use a couple of kind of examples are obviously on the kind of the dod's slides that will be very kind of vague for obvious reasons.
Speaker Change: I'll try and be more specific kind of little bit on some of the commercial kind of utilization of AI in what we're doing so on the military side. If you think about inflammation and inflammation that exists right now in the military it is mostly confined to PD.
Speaker Change: And.
Speaker Change: And just kind of you've got a lot of sources of information that is coming in a variety of ways. Some of it is visual some of this is a data driven some of it is in a variety of kind of bands.
Speaker Change: Of ultrasound and other elements and what we're kind of basically doing is helping.
Speaker Change: The D O D J.
Speaker Change: Take all this information and converting that to the information into actionable three the inflammation that then AI can interact with and then humans can interact with and and then other non N. P. C elements can interact with to kind of create value for the for the industry.
Speaker Change: I left it vague, but kind of people that understand is getting really kind of.
Speaker Change: Visualized, where it's going.
Speaker Change: On the commercial side one of the things. We're working right now is we've integrated AI into our multi person platform, allowing you to simulate any scenario with a AI. So imagine you're trying to simulate a sales call or a challenging HR.
Speaker Change: Asian, or a doctor that has to use bad news to a patient.
Speaker Change: Our environments puts you in that in this room, you can be the Doctor and you have a patient and you have to give them bad news and the AI will act with you are based on information, we're providing it allowing you to really kind of get that experience before you go do it and to realize so hopefully that gave you a little bit of color.
Speaker Change: Yes. Thank you very much yet and that obviously is a huge lead growing field. So I mean, if you maintain your.
Speaker Change: You're a preeminent position in the field that's a good thing for clips.
Speaker Change: Okay.
Speaker Change: Yes definitely.
Speaker Change: Yeah.
Speaker Change: Okay. Thank you very much Robby don't appear to have any more questions on the phone lines.
Speaker Change: I can hand back to that to lever.
Speaker Change: You've got any questions through the webcast.
Speaker Change: Thank you Jenny said Theres two questions in the webcast and I'll read them and try and answer them a little bit.
Speaker Change: And one of them kind of ties to what Jack just asked about so the first one is how do you plan to integrate AI into your offering in 2025 and beyond.
Speaker Change: I think that ties very well to Jack's question. We just answer there is kind of the immersive world and AI kind of fully integrated kind of end.
Speaker Change: I believe that the progress we've seen in AI over the last few years has really taken the ability to have all these interactions coming to life using our immersive technologies virtual reality and augmented reality and what we see is integrating AI into our full product set.
Speaker Change: As we're kind of evolving and finding all these use cases across.
Speaker Change: Military and defense health care education, and and commercial businesses and integrating that into there.
Speaker Change: The next question I have is would the company be involved in more government contracts soon.
Speaker Change: I certainly hope so we've.
Speaker Change: We've been kind of working on building a pretty significant pipeline of opportunities that we are executing on and obviously that requires the government to have a budget for 2025, which hopefully will be resolved.
Speaker Change: In the coming weeks as the continuing resolution expires in March and once the budget is set.
Speaker Change: Hopefully you kind of the opportunities that we're working on will be budgeted and then kind of a we will hear positive news and thats what kind of drives.
Our increase in our government business in 2025.
Leon: Okay. Leon do you have any emailed question.
Speaker Change: I think that's what I have.
Leon: Hey.
Speaker Change: Now I will turn back over to you for your closing remarks.
Speaker Change: So before we go to closing remarks made done a sense that theres. Another question, maybe if you can read that I don't see it on my own label trials.
Speaker Change: If someone has a what kind of actions are you taking against the competitors and what makes me are they are better than any other company in the field.
Speaker Change: I I I I don't like to brag and I see this as a great opportunity I see kind of competitors in the space those partners in building immersive technology I think this industry has significant growth potential ahead of it obviously we have ours.
Speaker Change: Outages in each one of our kind of solutions and technologies and we've built over the last nine years kind of what is one of the largest immersive technology companies in the world, but I think the growth is not by kind of a beating our competitors by by kind of helping build the industry and the use cases and death.
Speaker Change: We will create significant opportunities for all of us.
Speaker Change: There's another question what is the timeframe for your project execution.
Speaker Change: So we are continuing to execute on all of the opportunities if.
Speaker Change: We are referring to the large Dod contracts that would be executed and finalized the first period of performance by our the second the fourth quarter and our fiscal year Q2 calendar year.
Speaker Change: There was another question is what can be a bit of thousands of dollars I mean governments.
Speaker Change: So in Germany are delivering outcomes from contractor buildings.
Speaker Change: So I think there is a potentially positive impact from our from that because there are diverting our government spend from areas that have not been very efficient to future technology.
Speaker Change: Boosting kind of the.
Speaker Change: The New administration was already kind of a highlight.
Speaker Change: Highlighting a I was one of the initiatives that it's pushing and I expect us to have a positive impact on us in the mid to long term rather than the a negative impact.
Speaker Change: I would like to thank each and every one of you for joining our earnings conference call.
Speaker Change: We look forward to continuing to update you on an ongoing process and if we have any questions that have not been able to answer please reach out to us directly.
Speaker Change: Thank you. This does conclude today's webinar. Thank you for your participation and have a wonderful day.