Haivision Q4 2025 Haivision Systems Inc Earnings Call | AllMind AI Earnings | AllMind AI
Q4 2025 Haivision Systems Inc Earnings Call
Speaker #2: Ladies and gentlemen, this is the operator. Today's conference is scheduled to begin momentarily. Until that time, your lines will again be placed on music hold.
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Speaker #1: Hello, and thank you for
Speaker #2: Standing by. My name is Tiffany, and I will be your conference operator today. At this time, I would like to welcome everyone to the Haivision Fourth Quarter 2025 earnings call.
Speaker #2: All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during that time, simply press star, then the number one on your telephone keypad.
Speaker #2: I would now like to turn the call over to Mirko Wicha, President and Chief Financial Officer. Sir, please go ahead.
Operator: I would now like to turn the call over to Mirko Wicha, President and Chief Financial Officer. Sir, please go ahead. Thank you, Tiffany. Just to make a correction, I am the Chief Executive Officer, Dan is the CFO, but that's okay. I will steal all his thunder anyways. So thank you, everyone on the call, for joining us today to discuss the fourth quarter of our fiscal year 2025, which ended 31 October. As mentioned in our previous calls, we are now well into our two-year strategic plan as we continue to deliver the double-digit revenue growth we have been promising. Today, I'm very happy to report that we achieved a Haivision record quarterly revenue in Q4, eclipsing CAD 40 million for the first time ever in any quarter. We also delivered a 17.6% EBITDA margin performance.
I would now like to turn the call over to Mirko Wicha, President and Chief Financial Officer. Sir, please go ahead.
Mirko Wicha: Thank you, Tiffany. Just to make a correction, I am the Chief Executive Officer, Dan is the CFO, but that's okay. I will steal all his thunder anyways. So thank you, everyone on the call, for joining us today to discuss the fourth quarter of our fiscal year 2025, which ended 31 October. As mentioned in our previous calls, we are now well into our two-year strategic plan as we continue to deliver the double-digit revenue growth we have been promising. Today, I'm very happy to report that we achieved a Haivision record quarterly revenue in Q4, eclipsing CAD 40 million for the first time ever in any quarter. We also delivered a 17.6% EBITDA margin performance.
Speaker #3: Thank you, Tiffany. Just to make a correction, I am the Chief Executive Officer; Dan is the CFO, but that's okay. I will steal all his thunder anyway.
Speaker #3: So, thank you, everyone, on the call for joining us today to discuss the fourth quarter of our fiscal year 2025, which ended October 31.
Speaker #3: As mentioned in our previous calls, we are now well into our two-year strategic plan as we continue to deliver the double-digit revenue growth we have been promising.
Speaker #3: Today, I'm very happy to report that we achieved a Haivision record quarterly revenue in Q4, eclipsing $40 million for the first time ever in any quarter.
Speaker #3: We also delivered a 17.6% EBITDA margin performance, and we have always said that to achieve 20% plus EBITDA performance, we will need to be at scale—around the $150 million, $160 million range.
Operator: We have always said that to achieve 20% plus EBITDA performance, we will need to be at scale, around the CAD 150 to 160 million range. I believe we are very close to delivering on this targeted EBITDA range and demonstrate the full earnings potential of Haivision. Our continued double-digit revenue growth is part of our long-term plan to bring us to our historical CAGR growth rate of approximately 20% per year since the founding of Haivision. The focus this year and the next year is all about cementing the foundation for our long-term, consistent high-revenue growth. I believe we're in a good place right now and on the right path to deliver this long-term growth. We have seen the bottom of the revenue curve back in January 2025, which is now over a year ago.
We have always said that to achieve 20% plus EBITDA performance, we will need to be at scale, around the CAD 150 to 160 million range. I believe we are very close to delivering on this targeted EBITDA range and demonstrate the full earnings potential of Haivision. Our continued double-digit revenue growth is part of our long-term plan to bring us to our historical CAGR growth rate of approximately 20% per year since the founding of Haivision. The focus this year and the next year is all about cementing the foundation for our long-term, consistent high-revenue growth. I believe we're in a good place right now and on the right path to deliver this long-term growth. We have seen the bottom of the revenue curve back in January 2025, which is now over a year ago.
Speaker #3: I believe we are very close to delivering on this targeted EBITDA range and demonstrating the full earnings potential of Haivision. Our continued double-digit revenue growth is part of our long-term plan to bring us to our historical CAGR growth rate of approximately 20% per year since the founding of Haivision.
Speaker #3: The focus this year and the next year is all about cementing the foundation for our long-term, consistent, high revenue growth. I believe we're in a good place right now and on the right path to deliver this long-term growth.
Speaker #3: Now, we have seen the bottom of the revenue curve back in January of '25, which is now over a year ago. Our key fundamental business model for the control room market, which was the move away from being an integrator to a manufacturer, has been complete for several quarters now.
Operator: Our key fundamental business model for the control room market, which was the move away from being an integrator to manufacturer, has been complete for several quarters now. We are seeing a continued increase in our long-term sales pipeline. Our business forecast is compelling, and we are seeing strong demand in this market, not just in the US, but worldwide. As I also mentioned before, we have been investing in many new product development initiatives and introductions throughout 2025, and some which are yet to be announced. Back in May, if you remember, we launched the exciting next-generation AI-based hardware tactical edge processor for the defense, military, and ISR markets called the Kraken X1 or the KX1. It has been extremely well received as it delivers incredible computing performance for AI-enabled encoding in real time, utilizing the latest NVIDIA chip technology.
Our key fundamental business model for the control room market, which was the move away from being an integrator to manufacturer, has been complete for several quarters now. We are seeing a continued increase in our long-term sales pipeline. Our business forecast is compelling, and we are seeing strong demand in this market, not just in the US, but worldwide. As I also mentioned before, we have been investing in many new product development initiatives and introductions throughout 2025, and some which are yet to be announced. Back in May, if you remember, we launched the exciting next-generation AI-based hardware tactical edge processor for the defense, military, and ISR markets called the Kraken X1 or the KX1. It has been extremely well received as it delivers incredible computing performance for AI-enabled encoding in real time, utilizing the latest NVIDIA chip technology.
Speaker #3: We are seeing a continued increase in our long-term sales pipeline, our business forecast is compelling, and we are seeing strong demand in this market—not just in the US, but worldwide.
Speaker #3: As I also mentioned before, we have been investing in many new product development initiatives and introductions throughout 2025, some of which are yet to be announced.
Speaker #3: But back in May, if you remember, we launched the exciting next-generation AI-based hardware tactical edge processor for the defense, military, and ISR markets called the Kraken X1, or the KX1.
Speaker #3: It has been extremely well received, as it delivers incredible computing performance for AI-enabled encoding in real time, utilizing the latest NVIDIA chip technology. It's already creating lots of excitement within the ISR and defense community.
Operator: It's already creating lots of excitement within the ISR and defense community. We have also successfully showcased our next-generation transmitter platform called the Falcon X2 at the NAB Show back in April, and are now shipping the product in volume. The early demand is already outstripping our initially planned production, and we are increasing our inventory supply chain significantly to handle the strong demand. In fact, the Falcon has been the most successful product launch in the history of the company, and the product is performing very well in the field. Customers are embracing our innovations on 5G networks and more efficient MIMO antennas, especially in our European markets. The compact Falcon transmitter is changing the ballgame for single-camera contribution in the market and upping the standard for quality.
It's already creating lots of excitement within the ISR and defense community. We have also successfully showcased our next-generation transmitter platform called the Falcon X2 at the NAB Show back in April, and are now shipping the product in volume. The early demand is already outstripping our initially planned production, and we are increasing our inventory supply chain significantly to handle the strong demand. In fact, the Falcon has been the most successful product launch in the history of the company, and the product is performing very well in the field. Customers are embracing our innovations on 5G networks and more efficient MIMO antennas, especially in our European markets. The compact Falcon transmitter is changing the ballgame for single-camera contribution in the market and upping the standard for quality.
Speaker #3: We have also successfully showcased our next-generation transmitter platform, called the Falcon X2, at the interview show back in April, and are now shipping the product in volume.
Speaker #3: The early demand is already outstripping our initially planned production, and we are increasing our inventory supply chain significantly to handle the strong demand. In fact, the Falcon has been the most successful product launch in the history of the company, and a product that's performing very well in the field.
Speaker #3: Customers are embracing our innovations on 5G networks and more efficient MIMO antennas, especially in our European markets. The compact Falcon transmitter is changing the ballgame for single camera contribution in the market and upping the standard for quality.
Speaker #3: Now, speaking of ballgames, while we have been introducing a transmitter product line into our traditional Makita customers, we are by no means taking the focus off the very important fixed contribution part of our business.
Operator: Now, speaking of ballgames, while we have been introducing a transmitter product line into our traditional Makito customers, we are by no means taking the focus off the very important fixed contribution part of our business. I'm very pleased to announce here today that Haivision has been selected as the official video encoder of Minor League Baseball. As a technology partner of Minor League Baseball, Makito will be playing a key role in contribution from minor league stadiums and the delivery of over 8,000 games for streaming and TV. This partnership represents a major vote of confidence in Haivision from a globally recognized brand. It expands our reach into the world of baseball across North America. Our reputation, driven by leadership across globally recognized brands like the SRT protocol and Makito platform, now joined by Falcon, continues to strengthen in industry and open amazing doors for Haivision.
Now, speaking of ballgames, while we have been introducing a transmitter product line into our traditional Makito customers, we are by no means taking the focus off the very important fixed contribution part of our business. I'm very pleased to announce here today that Haivision has been selected as the official video encoder of Minor League Baseball. As a technology partner of Minor League Baseball, Makito will be playing a key role in contribution from minor league stadiums and the delivery of over 8,000 games for streaming and TV. This partnership represents a major vote of confidence in Haivision from a globally recognized brand. It expands our reach into the world of baseball across North America. Our reputation, driven by leadership across globally recognized brands like the SRT protocol and Makito platform, now joined by Falcon, continues to strengthen in industry and open amazing doors for Haivision.
Speaker #3: I'm very pleased to announce here today that Haivision has been selected as the official video encoder of Minor League Baseball. As a technology partner of Minor League Baseball, Makita will be playing a key role in contribution from Minor League stadiums and the delivery of over 8,000 games for streaming and TV.
Speaker #3: Now, this partnership represents a major vote of confidence in Haivision from a globally recognized brand that expands our reach into the world of baseball across North America.
Speaker #3: Our reputation, driven by leadership across globally recognized brands like the SRT protocol and Makita platform, now joined by Falcon, continues to strengthen in the industry and open amazing doors for Haivision.
Speaker #3: Now, strategically, the company is landing landmark defense contracts, installing large multinational operational control room deployments, demonstrating clear leadership in private 5G networking, and gaining industry recognition for our technology leadership.
Operator: Now, strategically, the company is landing landmark defense contracts, installing large multinational operational control room deployments, demonstrating clear leadership in Private 5G networking, and gaining industry recognition for our technology leadership. All these efforts are already bearing fruit, as seen from our Q3 and now Q4 results, and will continue throughout our fiscal 2026 and beyond. Let me try to be more clear and direct on why we are so bullish on our business for the foreseeable future, meaning at least the next three to five plus years. All, and I mean all of our mission-critical focus markets are performing well, and we don't see any slowing down for quite a long time. Let me be more specific. Our mission business, which represents two-thirds of our revenue, we only see increased spending and growth for the next five, 10 years within every defense, military, and government in the world.
Now, strategically, the company is landing landmark defense contracts, installing large multinational operational control room deployments, demonstrating clear leadership in Private 5G networking, and gaining industry recognition for our technology leadership. All these efforts are already bearing fruit, as seen from our Q3 and now Q4 results, and will continue throughout our fiscal 2026 and beyond. Let me try to be more clear and direct on why we are so bullish on our business for the foreseeable future, meaning at least the next three to five plus years. All, and I mean all of our mission-critical focus markets are performing well, and we don't see any slowing down for quite a long time. Let me be more specific. Our mission business, which represents two-thirds of our revenue, we only see increased spending and growth for the next five, 10 years within every defense, military, and government in the world.
Speaker #3: All these efforts are already bearing fruit, as seen from our Q3 and now Q4 results, and will continue throughout our fiscal '26 and beyond.
Speaker #3: Now, let me try to be more clear and direct on why we are so bullish on our business for the foreseeable future—meaning at least the next three to five-plus years.
Speaker #3: All—and I mean all—of our mission-critical focus markets are performing well, and we don't see any slowing down for quite a long time.
Speaker #3: Let me be more specific. Our mission business, which represents two-thirds of our revenue, we only see increased spending and growth for the next five, ten years, with every defense, military, and government in the world.
Speaker #3: This is not stopping. And Haivision is an important and trusted vendor providing solutions for this industry. Border security is only getting more attention, and it's not going to stop given what we see in the world today.
Operator: This is not stopping, and Haivision is an important and trusted vendor providing solutions for this industry. Border security is only getting more attention, and it's not going to stop given what we see in the world today. Our products are the gold standard deployed globally in defense, military, ISR, and security operations. This is a market that will continue to grow for a long time, one that Haivision is also very strong in. Police forces and emergency response teams everywhere need more reliable and secure platforms more than ever. Global unrest is unfortunately not slowing down, and public safety is a massive future growth market. This is another big focus for Haivision technology and one that we're very successful in.
This is not stopping, and Haivision is an important and trusted vendor providing solutions for this industry. Border security is only getting more attention, and it's not going to stop given what we see in the world today. Our products are the gold standard deployed globally in defense, military, ISR, and security operations. This is a market that will continue to grow for a long time, one that Haivision is also very strong in. Police forces and emergency response teams everywhere need more reliable and secure platforms more than ever. Global unrest is unfortunately not slowing down, and public safety is a massive future growth market. This is another big focus for Haivision technology and one that we're very successful in.
Speaker #3: Our products are the gold standard deployed globally in defense, military ISR, and security operations. This is a market that will continue to grow for a long time.
Speaker #3: One that Haivision is also very strong in. Police forces and emergency response teams everywhere need more reliable and secure platforms more than ever. Global unrest is unfortunately not slowing down, and public safety is a massive future growth market.
Speaker #3: This is another big focus for Haivision technology, and one that we're very successful in. In the control room market, enterprises, banks, utilities, military, and governments are all in desperate need to install and implement sophisticated, powerful, and secure monitoring systems to protect their assets, their people, their facilities, and to address the ever-increasing levels of global cybersecurity threats.
Operator: In the control room market, enterprises, banks, utilities, military, and governments are all in desperate need to install and implement sophisticated, powerful, and secure monitoring systems to protect their assets, their people, their facilities, and the ever-increasing levels of global cybersecurity threats. The need for centralized, real-time secure video operational rooms is simply going to keep increasing for many years to come. It's not slowing down. This is another area where Haivision is positioned to be a global leader. Now, in our broadcast vertical, which represents about 1/3 of our revenue, Haivision focuses actually on the most cool and exciting part, the live sports events and live news. These are the most exciting but fastest-growing areas within the large broadcast vertical. These are the areas that are responsible for all the money, advertising, and it's only increasing and not slowing down.
In the control room market, enterprises, banks, utilities, military, and governments are all in desperate need to install and implement sophisticated, powerful, and secure monitoring systems to protect their assets, their people, their facilities, and the ever-increasing levels of global cybersecurity threats. The need for centralized, real-time secure video operational rooms is simply going to keep increasing for many years to come. It's not slowing down. This is another area where Haivision is positioned to be a global leader. Now, in our broadcast vertical, which represents about 1/3 of our revenue, Haivision focuses actually on the most cool and exciting part, the live sports events and live news. These are the most exciting but fastest-growing areas within the large broadcast vertical. These are the areas that are responsible for all the money, advertising, and it's only increasing and not slowing down.
Speaker #3: The need for centralized, real-time, secure video operational rooms is simply going to keep increasing for many years to come. It's not slowing down. This is another area where Haivision is positioned to be a global leader.
Speaker #3: Now, in our broadcast vertical, which represents about a third of our revenue, Haivision focuses actually on the most cool and exciting part: the live sports events and live news.
Speaker #3: Now, these are the most exciting but fastest-growing areas within the large broadcast vertical. These are the areas that are responsible for all the money, advertising, and it's only increasing and not slowing down.
Speaker #3: So, Haivision is well positioned as a leader in both the wired and wireless 5G space, providing the lowest latency, highest quality, most reliable, and most secure video technology on the planet.
Operator: So Haivision is well-positioned as a leader in both the wired and wireless 5G space, providing the lowest latency, highest quality, most reliable, and most secure video technology on the planet. This is what Haivision stands for, and this is what customers need and are asking for. The strong reputation of success of the Makito and SRT, combined with the new private 5G Falcon, provides a significant competitive advantage for Haivision for the foreseeable future. Thus, all our markets are bullish with no signs of slowing down anytime soon. This is why we are confident on our long-term potential and see double-digit revenue growth for years to come. I couldn't be happier with our record Q4 revenue performance, and I would like to reiterate our continued focus and attention on revenue growth and higher profitability.
So Haivision is well-positioned as a leader in both the wired and wireless 5G space, providing the lowest latency, highest quality, most reliable, and most secure video technology on the planet. This is what Haivision stands for, and this is what customers need and are asking for. The strong reputation of success of the Makito and SRT, combined with the new private 5G Falcon, provides a significant competitive advantage for Haivision for the foreseeable future. Thus, all our markets are bullish with no signs of slowing down anytime soon. This is why we are confident on our long-term potential and see double-digit revenue growth for years to come. I couldn't be happier with our record Q4 revenue performance, and I would like to reiterate our continued focus and attention on revenue growth and higher profitability.
Speaker #3: This is what Haivision stands for. And this is what customers need and are asking for. The strong reputation of success of the Makita, and SRT, combined with the new private 5G Falcon, provides a significant competitive advantage for Haivision for the foreseeable future.
Speaker #3: Thus, all our markets are bullish, with no signs of slowing down anytime soon. Now, this is why we are confident in our long-term potential and see double-digit revenue growth for years to come.
Speaker #3: And I couldn't be happier with our record Q4 revenue performance, and I would like to reiterate our continued focus and attention on revenue growth and higher profitability.
Speaker #3: And in closing, I would just like to strongly reconfirm our fiscal 2026 guidance, which Dan will be able to discuss later, of delivering $150 million-plus in revenue in 2026.
Operator: In closing, I would just like to strongly reconfirm our fiscal 2026 guidance, which Dan will be able to discuss later, of delivering CAD 150 million+ in revenue in 2026. Our plan is to maintain pretty much a flat OpEx over 2025 while delivering double-digit revenue growth, meaning and resulting in a 50%+ increase to our overall EBITDA over 2025, as our cost structure and gross margins are well in control. So double-digit EBITDA and double-digit revenue growth is what we expect for 2026 and well beyond. This is what we have been working hard towards the past 18 to 24 months, and we see this year as a significant inflection point for Haivision. Dan, please continue with the detailed financials. Thank you, Mirko. Good evening, everyone, and thank you for joining us today.
In closing, I would just like to strongly reconfirm our fiscal 2026 guidance, which Dan will be able to discuss later, of delivering CAD 150 million+ in revenue in 2026. Our plan is to maintain pretty much a flat OpEx over 2025 while delivering double-digit revenue growth, meaning and resulting in a 50%+ increase to our overall EBITDA over 2025, as our cost structure and gross margins are well in control. So double-digit EBITDA and double-digit revenue growth is what we expect for 2026 and well beyond. This is what we have been working hard towards the past 18 to 24 months, and we see this year as a significant inflection point for Haivision. Dan, please continue with the detailed financials.
Speaker #3: Our plan is to maintain pretty much a flat opex over 2025 while delivering double-digit revenue growth, meaning and resulting in a 50% plus increase to our overall EBITDA over '25.
Speaker #3: As our cost structure and gross margins are well in control, double-digit EBITDA and double-digit revenue growth is what we expect for 2026 and well beyond.
Speaker #3: This is what we have been working hard towards over the past 18 to 24 months, and we see this year as a significant inflection point for Haivision.
Speaker #3: Dan, please continue with the detailed financials.
Dan Rabinowitz: Thank you, Mirko. Good evening, everyone, and thank you for joining us today.
Speaker #2: Thank you, Mirko. Good evening, everyone, and thank you for joining us today. On our last call, I suggested that we are beginning to see the sales momentum reflected in our financial results.
Operator: On our last call, I suggested that we are beginning to see the sales momentum reflected in our financial results. This quarter, we have solidified that position with our second consecutive quarter of double-digit revenue growth and very sound adjusted EBITDA margins. By all measures, our fourth quarter performance was compelling. So let's begin with the top line. Fourth quarter fiscal 2025 revenues were $40.2 million. That's up 33 1/3%, or $10 million over last year. For the full fiscal year, revenue was $137.6 million. That exceeded the prior year by 6.2%, or $8.1 million. We made up a lot of ground from the weak first quarter and the relatively flattish second quarter. Both Q3 and Q4 significantly exceeded prior year revenue levels.
On our last call, I suggested that we are beginning to see the sales momentum reflected in our financial results. This quarter, we have solidified that position with our second consecutive quarter of double-digit revenue growth and very sound adjusted EBITDA margins. By all measures, our fourth quarter performance was compelling. So let's begin with the top line. Fourth quarter fiscal 2025 revenues were $40.2 million. That's up 33 1/3%, or $10 million over last year. For the full fiscal year, revenue was $137.6 million. That exceeded the prior year by 6.2%, or $8.1 million. We made up a lot of ground from the weak first quarter and the relatively flattish second quarter. Both Q3 and Q4 significantly exceeded prior year revenue levels.
Speaker #2: This quarter, we have solidified that position with our second consecutive quarter of double-digit revenue growth and very sound adjusted EBITDA margins. By all measures, our fourth quarter performance was compelling.
Speaker #2: So let's begin with the top line. Fourth quarter fiscal 2025 revenues were $40.2 million. That's up 33 and a third percent, or $10 million, over last year.
Speaker #2: For the full fiscal year, revenue was $137.6 million. That exceeded the prior year by 6.2%, or $8.1 million. We made up a lot of ground from the weak first quarter and the relatively flattish second quarter.
Speaker #2: Both Q3 and Q4 significantly exceeded prior year revenue levels. Exchange rates, which helped us in the first and second quarter by about 4%, normalized in the third and the fourth quarter, and we were impacted and their impact was half of that of the first half.
Operator: Exchange rates, which helped us in the first and second quarter by about 4%, normalized in the third and the fourth quarter, and their impact was half of that of the first half. So we're talking about solid organic growth in the second half of the year. Our year-over-year growth is even more impressive as revenue from our control room solutions, excluding third-party components, are soundly surpassing last year's levels, which included those components. Control room sales for the year increased by over 35%, whereas sales of third-party components declined by another 20%. Remember, the Navy contract is a legacy systems integration model and will continue to include third-party components. And given the nature of the business overall, we will not be able to avoid third-party components entirely. Our recurring revenue from maintenance support contracts and cloud services continues to grow year over year.
Exchange rates, which helped us in the first and second quarter by about 4%, normalized in the third and the fourth quarter, and their impact was half of that of the first half. So we're talking about solid organic growth in the second half of the year. Our year-over-year growth is even more impressive as revenue from our control room solutions, excluding third-party components, are soundly surpassing last year's levels, which included those components. Control room sales for the year increased by over 35%, whereas sales of third-party components declined by another 20%. Remember, the Navy contract is a legacy systems integration model and will continue to include third-party components. And given the nature of the business overall, we will not be able to avoid third-party components entirely. Our recurring revenue from maintenance support contracts and cloud services continues to grow year over year.
Speaker #2: Thus, we were talking about solid organic growth in the second half of the year. Our year-over-year growth is even more impressive, as revenue from our control room solutions, excluding third-party components, is soundly surpassing last year's levels, which included those components.
Speaker #2: Control room sales for the year increased by over 35%, whereas sales of third-party components declined by another 20%. Remember, the Navy contract is a legacy systems integration model and will continue to include third-party components.
Speaker #2: And given the nature of the business overall, we will not be able to avoid third-party components entirely. Our recurring revenue from maintenance and support contracts, and cloud services, continues to grow year over year.
Speaker #2: In our fourth quarter, recurring revenues were $7.3 million. That's up 8.6% year over year. For the full fiscal year, recurring revenues were $28.9 million, an increase of 10.2%, a rate higher than our full fiscal year revenue.
Operator: In our Q4, recurring revenues were CAD 7.3 million. That's up 8.6% year over year. For the full fiscal year, recurring revenues were CAD 28.9 million and an increase of 10.2%, a rate higher than our full fiscal year revenue. Recurring revenues now represent about 21% of full year revenue, and an even more impressive outcome considering the tremendous growth in product revenue we saw in Q4. We expect to continue to see sound year-over-year growth in recurring revenue as total revenues continue to build. Recurring revenue is not only sticky, but provides stability. Combining recurring revenue with programmatic revenue, which includes multi-year deliveries, gives us really good visibility to overall fiscal year revenue. Gross margins in our Q4 were 73%, consistent with the prior year.
In our Q4, recurring revenues were CAD 7.3 million. That's up 8.6% year over year. For the full fiscal year, recurring revenues were CAD 28.9 million and an increase of 10.2%, a rate higher than our full fiscal year revenue. Recurring revenues now represent about 21% of full year revenue, and an even more impressive outcome considering the tremendous growth in product revenue we saw in Q4. We expect to continue to see sound year-over-year growth in recurring revenue as total revenues continue to build. Recurring revenue is not only sticky, but provides stability. Combining recurring revenue with programmatic revenue, which includes multi-year deliveries, gives us really good visibility to overall fiscal year revenue. Gross margins in our Q4 were 73%, consistent with the prior year.
Speaker #2: Recurring revenues now represent about 21% of full-year revenue, an even more impressive outcome considering the tremendous growth in product revenue we saw in the fourth quarter.
Speaker #2: We expect to continue to see sound year-over-year growth in recurring revenue as total revenues continue to build. Recurring revenue is not only sticky, but provides stability.
Speaker #2: And combining recurring revenue with programmatic revenue, which includes multi-year deliveries, gives us really good visibility to overall fiscal year revenue. Gross margins in our fourth quarter were 73%, consistent with the prior year.
Speaker #2: Now, gross margins are impacted by the overall magnitude of sales, which enable us to leverage.
Operator: Now, gross margins are impacted by the overall magnitude of sales, which enable us to leverage the fixed component of cost of sales, like production labor, fixed technology licenses, and reserve costs. On the side, we typically see higher gross margins in our fourth quarter, which is commensurate with the US government year-end and typically is the largest quarter in any given fiscal year. Now, gross margins are also impacted by the timing of deliveries under our US Navy contract, as that Navy contract is a legacy systems integration contract, including certain third-party components. We also are impacted by seasonality in the mix of product shift and software-only or virtual machine deployments, which have higher than average gross margins. On a year-to-date basis, margins were 72.5%, in line with our long-term expected average, and only slightly below last year's rate of 73.1%. Total expenses this quarter were CAD 25.4 million.
Now, gross margins are impacted by the overall magnitude of sales, which enable us to leverage the fixed component of cost of sales, like production labor, fixed technology licenses, and reserve costs. On the side, we typically see higher gross margins in our fourth quarter, which is commensurate with the US government year-end and typically is the largest quarter in any given fiscal year. Now, gross margins are also impacted by the timing of deliveries under our US Navy contract, as that Navy contract is a legacy systems integration contract, including certain third-party components. We also are impacted by seasonality in the mix of product shift and software-only or virtual machine deployments, which have higher than average gross margins. On a year-to-date basis, margins were 72.5%, in line with our long-term expected average, and only slightly below last year's rate of 73.1%. Total expenses this quarter were CAD 25.4 million.
Speaker #1: The fixed component of the cost of production, sales like labour, fixed technology licences, and reserve costs, and on the side, we typically see higher gross margins.
Speaker #1: fourth quarter , which is In our commensurate with the US government and reserve costs . And on the side , we typically see higher gross margins in our fourth quarter , which commensurate with is government the US year end and typically is the largest quarter in any given fiscal year .
Speaker #1: Gross margins were also impacted by the timing of deliveries under our US Navy contract, as that Navy contract is a legacy integration contract, with systems including certain third-party components.
Speaker #1: We also are impacted by the mix of product seasonality in , ship's shift and software only or virtual machine deployments , which margins have average gross higher than on a year to date basis , 72.5% , in margins line with our long term were expected only below slightly last year's rate of 73.1% .
Operator: That is up CAD 3.6 million from last year. As had been communicated on prior calls, we made incremental investments in sales and marketing, and research and development to exploit the opportunities that are presented to us and to groom the company for double-digit revenue growth. Thus, the main drivers to the quarterly increase in expenses include about CAD 1.2 million in sales compensation, including variable compensation related to higher than expected revenues, roughly CAD 1.1 million in additional R&D investments, consistent with our plan to add engineering resources for new products and business opportunities. Approximately half a million is related to differences in foreign exchange rates, and then another CAD 400,000 from non-cash share-based payments, which can vary based on the nature and the timing of those grants. Looking forward, this August will be our five-year anniversary of the Haivision MCS acquisition.
That is up CAD 3.6 million from last year. As had been communicated on prior calls, we made incremental investments in sales and marketing, and research and development to exploit the opportunities that are presented to us and to groom the company for double-digit revenue growth. Thus, the main drivers to the quarterly increase in expenses include about CAD 1.2 million in sales compensation, including variable compensation related to higher than expected revenues, roughly CAD 1.1 million in additional R&D investments, consistent with our plan to add engineering resources for new products and business opportunities. Approximately half a million is related to differences in foreign exchange rates, and then another CAD 400,000 from non-cash share-based payments, which can vary based on the nature and the timing of those grants. Looking forward, this August will be our five-year anniversary of the Haivision MCS acquisition.
Speaker #1: Total expenses this quarter were $25.4 million. That is up year-over-year $3.6 million from last, as had been communicated on prior calls.
Speaker #1: We made incremental sales and marketing investments, research, and development to exploit the opportunities that are presented to us and to groom the company for double-digit revenue growth.
Speaker #1: Thus, the main drivers quarterly to the increase in expenses include about $1.2 million in sales compensation, including variable related compensation due to higher than expected revenues, and roughly $1.1 million in additional R&D investments.
Speaker #1: Consistent with our plan to add engineering resources for new products and business opportunities, approximately half a million is related to differences in foreign exchange rates.
Speaker #1: And then another $400,000 from non-cash-based share payments, which can vary based on the nature and the timing of those grants. Looking forward.
Speaker #1: forward , Looking this August will be our five year anniversary of the high vision mix acquisition . Thus , technology purchased as part of the acquisition will be fully amortized , reducing total expenses by $600,000 per quarter about .
Operator: Thus, technology purchases part of the acquisition will be fully amortized, reducing total expenses by about $600,000 per quarter. The following April will be the five-year anniversary of Haivision France. Thus, technology purchases part of the acquisition will be fully amortized, reducing total expenses by another $350,000 per quarter. With the exception of amortization expenses, which will decline, and the timing of trade shows, which can shift from quarter to quarter, the underlying expense base is becoming relatively fixed. For the full year, expenses totaled $101 million, up 11.8 million from last year. The increase reflects a couple of things. $2.1 million comes from currency impacts. We have launched hedging programs on euro-denominated assets and liabilities to reduce the Canadian dollar exposure to such fluctuations. This is in addition to the hedging program for US-denominated assets and liabilities.
Thus, technology purchases part of the acquisition will be fully amortized, reducing total expenses by about $600,000 per quarter. The following April will be the five-year anniversary of Haivision France. Thus, technology purchases part of the acquisition will be fully amortized, reducing total expenses by another $350,000 per quarter. With the exception of amortization expenses, which will decline, and the timing of trade shows, which can shift from quarter to quarter, the underlying expense base is becoming relatively fixed. For the full year, expenses totaled $101 million, up 11.8 million from last year. The increase reflects a couple of things. $2.1 million comes from currency impacts. We have launched hedging programs on euro-denominated assets and liabilities to reduce the Canadian dollar exposure to such fluctuations. This is in addition to the hedging program for US-denominated assets and liabilities.
Speaker #1: The following April will be the five year high Vision anniversary of France . Thus , technology purchased as part of the will be acquisition fully amortized , reducing total expenses another by 350,000 per quarter exception of , with the amortization decline and expenses , which the timing of trade shows , quarter .
Speaker #1: The underlying expense base is becoming relatively fixed. For the full year, expenses totaled $101 million, up $11.8 million from last year. From this quarter to the next, we can shift.
Speaker #1: The increase reflects a couple of things . 2.1 million comes from currency impacts have . lodged We launched hedging programs on euro denominated assets and liabilities to reduce the Canadian dollar exposure to such fluctuations .
Operator: $1.7 million of the increase is a non-recurring litigation expense related to the VITEC case. The reward represents just a fraction of their original claim. Now, VITEC has appealed the judge's ruling. Nevertheless, we've already recorded the full liability, including damages, interest, and trial costs. $1.2 million of the increase is from non-cash share-based payments, which can vary based on the nature and the timing of those grants. In some respects, these expenses, which make up $5 million in the increase when compared to prior year, are outside of our control. But the remaining increase represents investments we chose to make. Normalized for the foreign exchange implications, we spent an incremental $2.9 million in operations and support, a million of which is related to our cost of our internal technology staff. The rest of the increase is largely people costs to support the numerous product introductions and the US.
$1.7 million of the increase is a non-recurring litigation expense related to the VITEC case. The reward represents just a fraction of their original claim. Now, VITEC has appealed the judge's ruling. Nevertheless, we've already recorded the full liability, including damages, interest, and trial costs. $1.2 million of the increase is from non-cash share-based payments, which can vary based on the nature and the timing of those grants. In some respects, these expenses, which make up $5 million in the increase when compared to prior year, are outside of our control. But the remaining increase represents investments we chose to make. Normalized for the foreign exchange implications, we spent an incremental $2.9 million in operations and support, a million of which is related to our cost of our internal technology staff. The rest of the increase is largely people costs to support the numerous product introductions and the US.
Speaker #1: This is an addition to the hedging program for US-denominated assets and liabilities. $1.7 million of the increase is a non-recurring litigation expense related to the Vitek case.
Speaker #1: The reward represents just a fraction of their original claim . Now , Vitek has appealed the judge's ruling . Nevertheless , we've already recorded the full liability , including damages , interest and trial costs .
Speaker #1: 1.2 million of the increase is from non-cash share-based payments, which can vary based on the nature and the timing of those grants.
Speaker #1: In some respects, these expenses, which make up $5 million in the increase when compared to the prior year, are outside of our control.
Speaker #1: But the remaining increase represents investments we chose to make, normalized for the implications. We spent an incremental $2.9 million in operations and support, a million of which is related to our cost of our internal technology stack.
Operator: Navy deal. We spent an incremental $2.4 million in sales and marketing, again, largely in people costs to facilitate our double-digit revenue growth initiatives. But you should note that variable compensation in fiscal year 2024 was not as buoyant as it was in fiscal year 2025. Thus, the year-over-year comparisons may not be completely fair. Variable compensation to the sales organization represented, in and of itself, about $1 million of the increase. We also spent $1.9 million in research and development, largely in people costs and cost of materials to assist in product realization. Now, as you've heard in past calls, these investments have resulted in some new products in 2025 and will secure the timely availability of new products in fiscal 2026 as well. So higher revenue in our fourth quarter contributed to an incremental $7.3 million of gross profit.
Navy deal. We spent an incremental $2.4 million in sales and marketing, again, largely in people costs to facilitate our double-digit revenue growth initiatives. But you should note that variable compensation in fiscal year 2024 was not as buoyant as it was in fiscal year 2025. Thus, the year-over-year comparisons may not be completely fair. Variable compensation to the sales organization represented, in and of itself, about $1 million of the increase. We also spent $1.9 million in research and development, largely in people costs and cost of materials to assist in product realization. Now, as you've heard in past calls, these investments have resulted in some new products in 2025 and will secure the timely availability of new products in fiscal 2026 as well. So higher revenue in our fourth quarter contributed to an incremental $7.3 million of gross profit.
Speaker #1: The rest, the increase is largely people cost due to numerous product introductions and the US Navy deal. We spent an incremental $2.4 million in sales and marketing, again largely in people costs to facilitate our double-digit revenue growth initiatives.
Speaker #1: But you should note variable that compensation in fiscal year 2024 was not as as it buoyant was in fiscal year 2025 . year over Thus , the year comparisons may not be completely fair .
Speaker #1: Variable compensation to the sales organization represented in and of itself , about $1 million of the increase . We also spent 1.9 million in research and development , largely in people , cost and cost of materials to assist in product realization .
Speaker #1: Now, as you've heard in past calls, these have resulted in some investment products in 2025 and will secure the timely availability of new products in fiscal 2026 as well.
Speaker #1: So higher revenue in our fourth quarter contributed to an incremental 7.3 million of gross profit . And with expenses up only by 3.7 , our operating profit 3.9 million , was exceeding last year by 3.6 million .
Operator: With expenses up only by $3.7 million, our operating profit was $3.9 million, exceeding last year by $3.6 million. For the full fiscal year, the $8.1 million in incremental revenue resulted in incremental gross profit of $5.1 million. Thus, for the reasons outlined earlier, our total expenses rose by $11.8 million and our operating profit of $5.5 million. I'm sorry, our operating loss for the year was $1.2 million compared to an operating profit of $5.5 million, which is a swing of $6.7 million. But as most of you know, we really focus on adjusted EBITDA as it gives us a clearer view of our performance by stripping out the non-cash, the non-recurring items like depreciation, amortization, share-based payments, and the cost of legal settlements. For Q4, our adjusted EBITDA was $7.1 million compared to only $2.9 million last year.
With expenses up only by $3.7 million, our operating profit was $3.9 million, exceeding last year by $3.6 million. For the full fiscal year, the $8.1 million in incremental revenue resulted in incremental gross profit of $5.1 million. Thus, for the reasons outlined earlier, our total expenses rose by $11.8 million and our operating profit of $5.5 million. I'm sorry, our operating loss for the year was $1.2 million compared to an operating profit of $5.5 million, which is a swing of $6.7 million. But as most of you know, we really focus on adjusted EBITDA as it gives us a clearer view of our performance by stripping out the non-cash, the non-recurring items like depreciation, amortization, share-based payments, and the cost of legal settlements. For Q4, our adjusted EBITDA was $7.1 million compared to only $2.9 million last year.
Speaker #1: And for the full fiscal year, $8.1 million in incremental revenue resulted in incremental gross profit of $5.1 million.
Speaker #2: And .
Speaker #1: Thus , for the reasons outlined earlier , our total expenses rose by 11.1 11.8 million , and our operating profit of 5.5 million , sorry , our operating loss for the year was 1.2 million , compared to an operating profit of 5.5 million , which is a swing of 6.7 million .
Speaker #1: But as most of you know , we really focus on adjusted EBITDA as it gives us a clearer view of our performance by stripping out the non-cash , the non-recurring items like depreciation , amortization , share based payments and the cost of legal settlements .
Speaker #1: for So Q4 , our EBITDA adjusted was 7.1 million , compared to only 2.9 million last year . That's an increase of 4.1 million , or an impressive 140% .
Operator: That's an increase of $4.1 million or an impressive 140%. The adjusted EBITDA margin was 17.6%. Let me emphasize this point. Our adjusted EBITDA margin of 17.6% is very close to our long-term expectation of 20%. For the full fiscal year, adjusted EBITDA was $12.8 million compared to $17.3 million last year. We did make incremental investments, as we've disclosed in previous phone calls, to exploit the opportunities and to prepare the business for growth in 2026 and beyond. We ended Q4 with $17.2 million in cash. That's an increase of $6.3 million from the end of last quarter. In addition, the amount outstanding on the line of credit declined by $5.2 million. Thus, the net increase in cash in the quarter was an impressive $11.6 million. The financial statements as presented don't show much of the increase in cash because we also purchased $4.9 million in shares for cancellation.
That's an increase of $4.1 million or an impressive 140%. The adjusted EBITDA margin was 17.6%. Let me emphasize this point. Our adjusted EBITDA margin of 17.6% is very close to our long-term expectation of 20%. For the full fiscal year, adjusted EBITDA was $12.8 million compared to $17.3 million last year. We did make incremental investments, as we've disclosed in previous phone calls, to exploit the opportunities and to prepare the business for growth in 2026 and beyond. We ended Q4 with $17.2 million in cash. That's an increase of $6.3 million from the end of last quarter. In addition, the amount outstanding on the line of credit declined by $5.2 million. Thus, the net increase in cash in the quarter was an impressive $11.6 million. The financial statements as presented don't show much of the increase in cash because we also purchased $4.9 million in shares for cancellation.
Speaker #1: The adjusted EBITDA margin was 17.6%. Let me emphasize this point. Our adjusted EBITDA margin of 17.6% is very close to our long-term expectation of 20%.
Speaker #1: For the full fiscal year . Adjusted EBITDA was 12.8 million , compared to 17.3 million last year . We did make incremental investments , as we've disclosed in previous phone calls , to exploit the opportunities and to prepare the business for growth in 2026 and beyond .
Speaker #1: We ended Q4 with $17.2 million in cash. That's an increase of $6.3 million from the end of last quarter. In addition, the amount outstanding on the line of credit declined by $5.2 million.
Speaker #1: Thus, the net increase in cash in the quarter was an impressive $11.6 million. The financial statements as presented don't show much of the increase in cash because we also purchased $4.9 million in shares for cancellation.
Operator: We have been paying cash-based taxes of $1.5 million, and we have repaid loans for another $300,000. On that matter, I just want to remind everyone, in fiscal 2025, we actually purchased about a million shares for cancellation for an investment of $4.4 million. Over the last two NCIB programs, we purchased about 1.8 million shares for cancellation at a total investment of $8.1 million. Our credit facility remains strong at $35 million, with only $2.7 million outstanding at year-end, with room to expand if strategic opportunities arise. Total assets at year-end were $145 million. That's an increase of $3.7 million from the end of fiscal year 2024. The increase in assets is largely related to the $5.6 million increase in receivables, which is based on revenues, and a $3.1 million increase in deferred income taxes.
We have been paying cash-based taxes of $1.5 million, and we have repaid loans for another $300,000. On that matter, I just want to remind everyone, in fiscal 2025, we actually purchased about a million shares for cancellation for an investment of $4.4 million. Over the last two NCIB programs, we purchased about 1.8 million shares for cancellation at a total investment of $8.1 million. Our credit facility remains strong at $35 million, with only $2.7 million outstanding at year-end, with room to expand if strategic opportunities arise. Total assets at year-end were $145 million. That's an increase of $3.7 million from the end of fiscal year 2024. The increase in assets is largely related to the $5.6 million increase in receivables, which is based on revenues, and a $3.1 million increase in deferred income taxes.
Speaker #1: We have been paying cash based taxes of 1.5 million , and we have repaid loans for another 300,000 . On that matter , I just want to remind everyone in fiscal 2025 , we actually purchased about a million shares for cancellation for an investment of 4.4 million over the last two NCIB programs .
Speaker #1: We purchased about 1.8 million shares for cancellation at a total investment of 8.1 million . Our credit facility remains strong at $35 million , with only 2.7 million outstanding at year room end , with to expand if strategic opportunities arise .
Speaker #1: Total assets at year-end were $145 million. That's an increase of $3.7 million from the end of fiscal year 2024. The increase in assets is largely related to the $5.6 million increase in receivables, which is based on revenues, and a $3.1 million increase in deferred income taxes.
Operator: Now, these were offset by the decrease in the value of goodwill and intangibles, largely the result of ongoing amortization, and a decrease in the value of inventories. Now, just a note about inventories for a second. Yes, inventories decreased CAD 1.6 million this year, but I'm also happy to say that inventories declined by CAD 8.1 million since peaking in Q2 2023. Total liabilities at quarter-end were CAD 47.5 million. That's an increase of CAD 2.9 million. Now, that increase is largely the result of an increase in payables by CAD 3.2 million. Now, to avoid the typical questions that we usually receive regarding tariffs, I want to remind everyone. Our proprietary products are covered by the USMCA trade agreement. There are no tariffs on products manufactured in Canada when sold into the US.
Now, these were offset by the decrease in the value of goodwill and intangibles, largely the result of ongoing amortization, and a decrease in the value of inventories. Now, just a note about inventories for a second. Yes, inventories decreased CAD 1.6 million this year, but I'm also happy to say that inventories declined by CAD 8.1 million since peaking in Q2 2023. Total liabilities at quarter-end were CAD 47.5 million. That's an increase of CAD 2.9 million. Now, that increase is largely the result of an increase in payables by CAD 3.2 million. Now, to avoid the typical questions that we usually receive regarding tariffs, I want to remind everyone. Our proprietary products are covered by the USMCA trade agreement. There are no tariffs on products manufactured in Canada when sold into the US.
Speaker #1: Now, these were offset by the decrease in the value of goodwill and intangibles, largely the result of ongoing amortization and a decrease in the value of inventories.
Speaker #1: Now , just a note about inventories for a second . Yes , inventories decreased 1.6 million this year , but I'm also happy to say that inventories declined by 8.1 million since peaking in the second quarter of 2023 .
Speaker #1: Total liabilities at quarter end were $47.5 million. That's an increase of $2.9 million. Now, that increase is largely the result of an increase in payables by $3.2 million.
Speaker #1: Now , to avoid the typical questions that we really we usually receive regarding tariffs , I want to remind everyone our products proprietary are covered by the Usmca trade agreement .
Operator: Our next generation transmitter products will be manufactured in North America, mitigating the impact of those 15% tariffs. We believe that we are well-positioned and may actually have a competitive advantage compared to all our competitors, many of our competitors who manufacture their products overseas. Now, in terms of projections, as Mirko kind of alluded to, we are still buoyant about fiscal 2026, and we anticipate overall revenues to be higher than CAD 150 million for the fiscal year. This is consistent with our double-digit revenue growth trajectory. More impactful is that we are going to leverage relatively flat operating expenses, and we anticipate our adjusted EBITDA to grow by at least 50%, a much faster rate than top-line growth, illustrating our ability to leverage our OpEx. So if I could summarize our overall performance, in Q3, we delivered solid double-digit revenue growth of over 14%.
Our next generation transmitter products will be manufactured in North America, mitigating the impact of those 15% tariffs. We believe that we are well-positioned and may actually have a competitive advantage compared to all our competitors, many of our competitors who manufacture their products overseas. Now, in terms of projections, as Mirko kind of alluded to, we are still buoyant about fiscal 2026, and we anticipate overall revenues to be higher than CAD 150 million for the fiscal year. This is consistent with our double-digit revenue growth trajectory. More impactful is that we are going to leverage relatively flat operating expenses, and we anticipate our adjusted EBITDA to grow by at least 50%, a much faster rate than top-line growth, illustrating our ability to leverage our OpEx. So if I could summarize our overall performance, in Q3, we delivered solid double-digit revenue growth of over 14%.
Speaker #1: There are no tariffs on products manufactured in Canada when sold into the US. Our next-generation transmitter products will be manufactured in North America, mitigating the impact of those 15% tariffs.
Speaker #1: I believe that we are well positioned and may actually have a competitive advantage compared to all our competitors. Many of our competitors manufacture their products overseas.
Speaker #1: Now, in terms of projections, as Mirko alluded to, we are still buoyant about fiscal 2026, and we anticipate overall revenues to be higher than $150 million for the fiscal year.
Speaker #1: This is consistent with our double-digit revenue growth trajectory. More impactful is that we are going to leverage relatively flat operating expenses, and we anticipate our adjusted EBITDA to grow by at least 50%.
Speaker #1: A much faster rate than top line growth , illustrating our ability to leverage OpEx our . So if I could summarize our overall performance in Q3 , we delivered solid double digit revenue growth of over 14% in Q4 .
Operator: In Q4, we delivered solid double-digit revenue growth of 33%. Gross margins are stable. We achieved our long-term expectation of 72.5%. Our OpEx has largely stabilized at these levels, though we will see quarterly variations based on the timing of marketing spend. Our adjusted EBITDA margin in our fourth quarter was 17.6%, a bit shy of our long-term objective of 20%, but clearly demonstrates the earning potential of the business. We purchased 1.1 million shares for a total investment of CAD 4.9 million in the year, a pretty successful accomplishment for the year. With that, I'll turn it back to Mirko for Q&A, and thank you again for joining us on today's call. Thanks, Dan. I guess we'll open up for questions. Operator Tiffany, you can start with the questions, please.
In Q4, we delivered solid double-digit revenue growth of 33%. Gross margins are stable. We achieved our long-term expectation of 72.5%. Our OpEx has largely stabilized at these levels, though we will see quarterly variations based on the timing of marketing spend. Our adjusted EBITDA margin in our fourth quarter was 17.6%, a bit shy of our long-term objective of 20%, but clearly demonstrates the earning potential of the business. We purchased 1.1 million shares for a total investment of CAD 4.9 million in the year, a pretty successful accomplishment for the year. With that, I'll turn it back to Mirko for Q&A, and thank you again for joining us on today's call.
Speaker #1: We delivered solid double digit revenue growth of 33% . Gross margins are stable . We achieved our long term expectation of 72.5% . Our OpEx has largely stabilized at these levels , though we will see quarterly variations based on the timing of marketing spend .
Speaker #1: Adjusted our EBITDA margin in our fourth quarter was 17.6%, a bit shy of our long-term objective of 20%. But it clearly demonstrates the earning potential of the business.
Speaker #1: And we purchased 1.1 million shares for a total investment of $4.9 million in the year, a pretty successful accomplishment for the year.
Mirko Wicha: Thanks, Dan. I guess we'll open up for questions. Operator Tiffany, you can start with the questions, please.
Speaker #1: With that, I'll turn the Q&A back to Mirko. And thank you again for joining us on today's call.
Speaker #3: Thanks , Dan . I guess we'll up for we'll open questions and operator . Tiffany , you can start with the questions , please
Speaker #3: Thanks , Dan . I guess we'll up for we'll open questions and operator . Tiffany , you can start with the questions , please .
Operator: At this time, if you'd like to ask a question, press Star, then the number one on your telephone keypad. To withdraw your question, simply press Star one again. We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Robert Young with Canaccord Genuity. Please go ahead. Hi, good evening. First question, just on the guidance. I think, Mirko, at the beginning, you said that you could hit or you would need $150 to $160 million in top line to break through 20% EBITDA margins. And then, Dan, I think you said the 50% growth in EBITDA. My math is right. I put it around 13%. And so I'm just curious about the path from 2026 to 20% EBITDA margins, given if you're already over $150. Just help me understand what needs to happen to bridge that. Okay.
Operator: At this time, if you'd like to ask a question, press Star, then the number one on your telephone keypad. To withdraw your question, simply press Star one again. We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Robert Young with Canaccord Genuity. Please go ahead.
Speaker #4: this time , if you would like to ask a At question , press star . Then the number one on your telephone keypad to withdraw your question , simply press star one again .
Speaker #4: We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Robert Young with Canaccord Genuity.
Robert Young: Hi, good evening. First question, just on the guidance. I think, Mirko, at the beginning, you said that you could hit or you would need $150 to $160 million in top line to break through 20% EBITDA margins. And then, Dan, I think you said the 50% growth in EBITDA. My math is right. I put it around 13%. And so I'm just curious about the path from 2026 to 20% EBITDA margins, given if you're already over $150. Just help me understand what needs to happen to bridge that. Okay.
Speaker #4: Please go ahead .
Speaker #5: Hi . Good evening . First question just on the the guidance , I think , Mirko , at the beginning you said that you could hit or you would need 150 to 160 million in top line to break through 20% EBITDA margins .
Speaker #5: And then , Dan , I think you said the 50% growth in EBITDA . If my math is right , that would put it just curious around 13% .
Speaker #5: And so I'm about the path from 2026 to 20% EBITDA margins given if you're already over 150 , just help me understand . You know what needs to happen to to to to bridge that .
Operator: Go ahead, Mirko. Go ahead. No, go ahead. If you want to take that one, I can add to it. Well, so we've always sort of suggested that we think we could be at scale at $150 to 160 million. I think when we threw out the $150 million, that was almost a half a decade ago or even more than that. Cost structures have changed a little bit, and I think it might be closer to $160 million given all of the new things that we have to put in place. We just accomplished $40 million in revenue, and we just had 17.6%. Now, I don't think anyone believes we're going to be able to do $40 million each quarter next year. Our first quarter is going to be less than $40 million. Typically, our fourth quarter is our most robust quarter.
Dan Rabinowitz: Go ahead, Mirko.
Mirko Wicha: Go ahead. No, go ahead. If you want to take that one, I can add to it.
Dan Rabinowitz: Well, so we've always sort of suggested that we think we could be at scale at $150 to 160 million. I think when we threw out the $150 million, that was almost a half a decade ago or even more than that. Cost structures have changed a little bit, and I think it might be closer to $160 million given all of the new things that we have to put in place. We just accomplished $40 million in revenue, and we just had 17.6%. Now, I don't think anyone believes we're going to be able to do $40 million each quarter next year. Our first quarter is going to be less than $40 million. Typically, our fourth quarter is our most robust quarter.
Speaker #1: Okay. Go ahead. Go ahead.
Speaker #3: No , no . Go ahead . If you want to take that one , I can add to it . Well .
Speaker #1: I So we've always sort of suggested that we , we think we could be at scale at think 150 to 160 million . I when we threw out the 150 million , that was almost a half a decade ago , or even more than that have changed a little bit .
Speaker #1: And I think it might be closer to the $160 million, given all of the new things that we have to put in place. We just accomplished $40 million in revenue, and we just had 17.6%.
Speaker #1: Now, I don't think anyone believes we're going to be able to do $40 million each quarter next year. First, our first quarter is going to be less than $40 million.
Operator: Typically, part of it is because it's commensurate with the US government year-end. So we have to sort of average what we can expect to do in Q1, Q2, Q3, and Q4 to get to the $150 million mark. And we will have some quarters that will not be at $40 million, and we won't be able to get to that 20% number. So we're being cautiously optimistic. We do believe that a 50% increase in EBITDA is very, very doable. And you're right, the mathematics kind of puts it down a little bit below the 15% level for the full fiscal year. But we're knocking on that door. Yeah. And I would say, Robert, to Dan's point, I think really on a full-year basis, we'll be looking at 2027 as our target. Okay. No, that's all really helpful. Thanks for that.
Typically, part of it is because it's commensurate with the US government year-end. So we have to sort of average what we can expect to do in Q1, Q2, Q3, and Q4 to get to the $150 million mark. And we will have some quarters that will not be at $40 million, and we won't be able to get to that 20% number. So we're being cautiously optimistic. We do believe that a 50% increase in EBITDA is very, very doable. And you're right, the mathematics kind of puts it down a little bit below the 15% level for the full fiscal year. But we're knocking on that door.
Speaker #1: Typically , our fourth quarter is our most robust quarter , and typically the and part of it is because it's commensurate with the US government year end .
Speaker #1: So, we have to sort of average what we can expect to do in the first, second, third, and fourth quarter to get to the $150 million mark.
Speaker #1: And we will have some quarters that will not be at $40 million, and we won't be able to get to that 20% number.
Speaker #1: So we're being cautiously optimistic . We do believe that a 50% increase in EBITDA is very , very doable . And you're right , the mathematics kind of puts it down a little bit below the 15% level for the full fiscal year .
Mirko Wicha: Yeah. And I would say, Robert, to Dan's point, I think really on a full-year basis, we'll be looking at 2027 as our target.
Speaker #1: But we're knocking on that door.
Speaker #3: Yeah . And I would say , Robert , you know , to Dan's point , I think really the on a full year basis will be would be looking at 2027 as our target
Robert Young: Okay. No, that's all really helpful. Thanks for that.
Operator: And then you said that the mission-related component of your business is roughly two-thirds. I know you said that previously. But I was wondering if it might be helpful to provide a little more information around what percentage of the business is related to defense. Is that something you'd be willing to share? I've asked this in the past. We don't really break it down. Dan, I mean, do you have a rough, I mean, we could do a rough number, but we don't actually break it down specifically defense. But out of the two-thirds, I mean, yeah. We certainly don't have it from a revenue standpoint. I mean, we sort of track on the sales side of the equation. But it's a little bit of a complicated exercise because you've got where does the client reside, and then what's the technology that's being sold into it.
And then you said that the mission-related component of your business is roughly two-thirds. I know you said that previously. But I was wondering if it might be helpful to provide a little more information around what percentage of the business is related to defense. Is that something you'd be willing to share? I've asked this in the past.
Speaker #3: .
Speaker #5: Okay . That's all really helpful . Thanks for that . And then you said that the the mission related component of your business is roughly two thirds .
Speaker #5: I know you said that previously, but I was wondering if it might be helpful to provide a little more information around what percentage of the business is related to defense.
Mirko Wicha: We don't really break it down. Dan, I mean, do you have a rough, I mean, we could do a rough number, but we don't actually break it down specifically defense. But out of the two-thirds, I mean, yeah.
Speaker #5: Is that something you'd be willing to share? I've asked this in the past.
Speaker #3: really break it We don't down . I mean , do you have a rough I mean , we could do a rough number , but we don't actually break it down .
Dan Rabinowitz: We certainly don't have it from a revenue standpoint. I mean, we sort of track on the sales side of the equation. But it's a little bit of a complicated exercise because you've got where does the client reside, and then what's the technology that's being sold into it.
Speaker #3: Specifically defense, but other than two-thirds.
Speaker #1: Of it .
Speaker #3: Yeah .
Speaker #1: We certainly don't have it from a revenue standpoint . I mean , we we sort of track on the sales side of the equation , but it's a it's a little bit of a complicated exercise because you've got where did the client reside .
Operator: So you have all sorts of anomalies that we have to curate before we can come up with a number that would be meaningful to the group. It's not something that we focus much of our attention on. Okay. Yeah. I mean, Robert, to give you an example, I mean, I guess you could consider The Pentagon as defense, right? Ironically, we classify our project at The Pentagon as government because it's the video deployment throughout the entire Pentagon, right? So it could be defense, but we kind of classify it as government, right? Like NASA, right? Is enterprise, but yet is government. So it gets complicated. Okay. Okay. I mean, that's helpful. I mean, if I think of the business in the past, you said that media broadcast is 1/3, and defense and government are 1/3, and enterprise are 1/3.
So you have all sorts of anomalies that we have to curate before we can come up with a number that would be meaningful to the group. It's not something that we focus much of our attention on.
Speaker #1: And then what's the technology that's being sold into it . And so , you know , you sorts of that we have have anomalies all to curate before we can come up with a number that would would be meaningful to the group .
Robert Young: Okay.
Mirko Wicha: Yeah. I mean, Robert, to give you an example, I mean, I guess you could consider The Pentagon as defense, right? Ironically, we classify our project at The Pentagon as government because it's the video deployment throughout the entire Pentagon, right? So it could be defense, but we kind of classify it as government, right? Like NASA, right? Is enterprise, but yet is government. So it gets complicated.
Speaker #1: It's not something that we focus much of our attention on. Okay.
Speaker #3: Yeah . I mean , Robert , to give you to give you an example , I mean , you know , I guess you could you could consider the Pentagon as defense , right ?
Speaker #3: Ironically, we classify our project at the Pentagon as government because it's the video deployment throughout the entire Pentagon, right. So it could be defense.
Speaker #3: But we kind of classify it as government . You know , like NASA , right ? You know , is enterprise . But yet is government , you know , so it gets complicated .
Robert Young: Okay. Okay. I mean, that's helpful. I mean, if I think of the business in the past, you said that media broadcast is 1/3, and defense and government are 1/3, and enterprise are 1/3.
Speaker #5: Okay . Okay . I mean , that's helpful . I mean , the if I think of the the business in the past , you've said know that , you , media broadcast is the third .
Operator: Is that still roughly the same? And then is that enterprise piece, what does that comprise? Maybe give us a little sense of how far that leans toward defense, or toward security, or situational awareness. That'd be helpful. Well, good question. I mean, I think if you use 1/3, 1/3, 1/3, we're probably depending on what quarter, we're ± a couple of points. So it's probably a good generic comment to say pure defense, probably, which includes ISR, but ISR could also be public safety, right? But if you look real defense-oriented applications, maybe 1/3 enterprise, which is government, which would be like The Pentagon, would be like, for example, NASA, but also is Citibank, JPMorgan, and banking sectors, which would include control room, right? For that environment, that's about 1/3. And then 1/3 for the broadcast.
Is that still roughly the same? And then is that enterprise piece, what does that comprise? Maybe give us a little sense of how far that leans toward defense, or toward security, or situational awareness. That'd be helpful.
Speaker #5: Defense and government are a third, and enterprise is another third. Is that still roughly the same? And then, is that the enterprise piece?
Speaker #5: What is that comprise ? sense Maybe little of give us a , you know , how far that leans toward defense or towards security or situational awareness ?
Mirko Wicha: Well, good question. I mean, I think if you use 1/3, 1/3, 1/3, we're probably depending on what quarter, we're ± a couple of points. So it's probably a good generic comment to say pure defense, probably, which includes ISR, but ISR could also be public safety, right? But if you look real defense-oriented applications, maybe 1/3 enterprise, which is government, which would be like The Pentagon, would be like, for example, NASA, but also is Citibank, JPMorgan, and banking sectors, which would include control room, right? For that environment, that's about 1/3. And then 1/3 for the broadcast.
Speaker #5: That'd be helpful .
Speaker #3: Well good question . I mean , I think , I think if you use a third , a third , a third , you know , we're probably depending on what quarter we're plus or minus a couple points .
Speaker #3: So it's probably a good generic . You know , comment to say like pure defense probably like , you know , which includes like ISR but ISR could also be public safety .
Speaker #3: Right . but if So you look real defense oriented applications , maybe a third enterprise , which is government , which could be which would be like a Pentagon would be like , like for example , NASA , but also is , you know , Citibank , JP Morgan , banking sectors , which would include control room .
Operator: So if you look at the enterprise for us, it's government, enterprise, control room market, and I guess for the sake of argument, say non-defense related, right? That's how you want to break it down. Public safety. Yeah. Public safety, right? Like police stations. When a police department puts out their control room system, it involves a lot of our ISR assets as well, but it's video coming into for emergency response, collaboration, and that's our C360 environment. That's public safety, right? Okay. That's really helpful. Any way you want to look at it, I guess a lot coming from defense spend. I think you've said in the past, you've said that, and I think you updated this quarter. I think you said you have large pipeline opportunities in both enterprise and defense. Would that split of the pipeline be similar to the revenue split?
So if you look at the enterprise for us, it's government, enterprise, control room market, and I guess for the sake of argument, say non-defense related, right? That's how you want to break it down. Public safety. Yeah. Public safety, right? Like police stations. When a police department puts out their control room system, it involves a lot of our ISR assets as well, but it's video coming into for emergency response, collaboration, and that's our C360 environment. That's public safety, right?
Speaker #3: Right . For that . Environment . That's about a third and then a third for the , for the , for the broadcast .
Speaker #3: So if you look at enterprise for us, it's government enterprise control room market. And I guess for the sake of related non-defense argument, say.
Speaker #3: That's how you write. Want to break it down.
Speaker #1: And public safety.
Speaker #3: Yeah . And public safety . Right . Like , you know , police stations like police department puts out there control room system .
Speaker #3: It involves a lot of our ISR assets as well. But it's video coming in for emergency response collaboration. And that's our C3 60 environment.
Robert Young: Okay. That's really helpful. Any way you want to look at it, I guess a lot coming from defense spend. I think you've said in the past, you've said that, and I think you updated this quarter. I think you said you have large pipeline opportunities in both enterprise and defense. Would that split of the pipeline be similar to the revenue split?
Speaker #3: That's public safety. Right?
Speaker #5: Okay, that's really helpful. Any way you want to look at it, I guess a lot is coming from defense spend.
Speaker #3: And .
Speaker #5: I think you've .
Speaker #1: Said submission permission .
Speaker #5: In in the past , you've said that . And I think you updated it this quarter . I think you said you have large pipeline opportunities in both enterprise and defense .
Operator: Is it 1/3, 1/3, 1/3? Or would you say that more of the pipeline opportunity is driven by government and defense? I imagine those are longer duration contracts. Maybe if you give me a little color around that, that would be helpful. Yeah. No, you're right. I mean, they are different, and they're also different timing and the length of them. But I would say at the moment, I mean, just looking at today and looking at the long-term pipeline, there's a tremendous pipeline in, amazingly enough, in our banking sector, where there's a lot of emphasis right now on cybersecurity and people putting in control room environments, which tend to be quite large and also multinational. You have a lot of customers that are deploying; they're first to deploy the central system, and then they're deploying it all across the world.
Is it 1/3, 1/3, 1/3? Or would you say that more of the pipeline opportunity is driven by government and defense? I imagine those are longer duration contracts. Maybe if you give me a little color around that, that would be helpful.
Speaker #5: And like , would that split of the pipeline be similar to the revenue split ? Is is it a third , a third , a third , or would you say opportunity the that more of pipeline is driven , you know by , government and defense ?
Mirko Wicha: Yeah. No, you're right. I mean, they are different, and they're also different timing and the length of them. But I would say at the moment, I mean, just looking at today and looking at the long-term pipeline, there's a tremendous pipeline in, amazingly enough, in our banking sector, where there's a lot of emphasis right now on cybersecurity and people putting in control room environments, which tend to be quite large and also multinational. You have a lot of customers that are deploying; they're first to deploy the central system, and then they're deploying it all across the world.
Speaker #5: I imagine those are longer-duration contracts, and maybe if you could give me a little color around that, that would be helpful.
Speaker #3: No , you're Yeah . right . I mean , they are different . And they're also different timing and the length of them .
Speaker #3: But I would say at the moment , I mean , just looking at today and looking at the long term pipeline , you know , there's a tremendous pipeline in , amazingly enough , in our banking sector a lot of where there's emphasis right now on cybersecurity and people putting in control room environments , which tend to be quite large and also multinational .
Operator: So those tend to be pretty large, but they tend to be multi-year and pretty long. So it's hard to put a finger on it, which kind of mimics some of the defense contracts, right? I mean, these things are also long. Look at the Navy program. We did the CANES program. We did the Predator program. We did the State Department program. These things are five to 15 years. So they tend to look kind of similar based on a programmatic type of business. So I haven't really looked at the actual split, but I don't see any weird anomalies that would lead me to think that 1/3, 1/3, 1/3 is still not a good number. Okay. And then you said that you see good momentum in those markets over the next three to five years.
So those tend to be pretty large, but they tend to be multi-year and pretty long. So it's hard to put a finger on it, which kind of mimics some of the defense contracts, right? I mean, these things are also long. Look at the Navy program. We did the CANES program. We did the Predator program. We did the State Department program. These things are five to 15 years. So they tend to look kind of similar based on a programmatic type of business. So I haven't really looked at the actual split, but I don't see any weird anomalies that would lead me to think that 1/3, 1/3, 1/3 is still not a good number.
Speaker #3: You have a lot of, a lot of customers that are deploying, you know, their first deploy, the central system, and then deploying it all across the world.
Speaker #3: So those tend to be pretty large, but they tend to be multi-year and pretty long. So it's hard to put a finger on it, which kind of mimics some of the defense contracts.
Speaker #3: Right ? I mean , these things are also long . Look at the Navy program . We did Canes the predator program . We got the State program .
Speaker #3: Department We program . And these things are , you know , 5 to 15 years . So they tend to look kind of similar based on a programmatic type of business .
Speaker #3: So I you know , I really looked at haven't the actual split , but I don't see any weird anomalies that would lead me to think that the third , a third , a third is still not a good , good number .
Robert Young: Okay. And then you said that you see good momentum in those markets over the next three to five years.
Operator: I'm not trying to put words in your mouth, but I think it was isolated around government and defense, if that's the case. Could you confirm? Does that mean that you have very high confidence and visibility on the size of these contracts, or are you just looking at the level of demand when you make that outlook? It's pretty much a combination of both. There's a tremendous amount of interest, activity, POCs, people getting very, very hot and interested, and plus also some pretty significantly large contracts. It's a combination of both. I mean, I've never seen such a level of activity in the market ever. I think it's purely because of the chaos going around the world, instability in the world, geopolitical tensions.
I'm not trying to put words in your mouth, but I think it was isolated around government and defense, if that's the case. Could you confirm? Does that mean that you have very high confidence and visibility on the size of these contracts, or are you just looking at the level of demand when you make that outlook?
Speaker #5: Okay. And you said then that you see good momentum in those markets over the next 3 to 5 years. I'm not trying to put words in your mouth, but I think it was isolated from what you said, around government and defense.
Speaker #5: If that's the case, you confirm. But does that mean that you have very high confidence and visibility on the size of these contracts?
Mirko Wicha: It's pretty much a combination of both. There's a tremendous amount of interest, activity, POCs, people getting very, very hot and interested, and plus also some pretty significantly large contracts. It's a combination of both. I mean, I've never seen such a level of activity in the market ever. I think it's purely because of the chaos going around the world, instability in the world, geopolitical tensions.
Speaker #5: Are you just looking at the level of demand when you make that, you know, that outlook?
Speaker #5: ?
Speaker #3: It's it's pretty much a combination of of both . There's a tremendous amount of interest activity , you know , POCs , people getting very , hot and very interested and , and plus also some pretty significantly large contracts .
Speaker #3: So it's a combination of both. I mean, I've never seen such a level of activity in the market, and I think it's purely because of the chaos going on around the world and the instability in the world.
Operator: I mean, everything from border security, to police enforcement, to government security, to defense, to NATO being forced to increase their budget significantly. We're just seeing it everywhere. I don't see it stopping. I mean, I think this is just the beginning. I don't see an end to it. So I think, I know 10 years is a long ways, but I think three to five years is easy to say there's no stopping this. Okay. A couple more questions. Can I keep going? Yeah, sure. Okay. You said that you had seen a higher level of demand from the 5G contribution, the Aviwest business. I could take that in one of a couple of ways. Either maybe you were conservative on your build or conservative on your expectation of demand, or demand truly is just way beyond what you were expecting.
I mean, everything from border security, to police enforcement, to government security, to defense, to NATO being forced to increase their budget significantly. We're just seeing it everywhere. I don't see it stopping. I mean, I think this is just the beginning. I don't see an end to it. So I think, I know 10 years is a long ways, but I think three to five years is easy to say there's no stopping this.
Speaker #3: Geopolitical tensions . I mean , , you know , from border everything that security to police enforcement to government security to defense to , you know , NATO being forced to increase their budgets significantly .
Speaker #3: just seeing it We're everywhere . So it's and I don't see it stopping . I mean , I think this is this is just the beginning .
Speaker #3: It's I don't see an end to it . So I think , you know , I know ten years is a long ways , but I think 3 to 5 years is , is easy to this There's no stopping say .
Robert Young: Okay. A couple more questions. Can I keep going?
Yeah, sure. Okay.
Robert Young: You said that you had seen a higher level of demand from the 5G contribution, the Aviwest business. I could take that in one of a couple of ways. Either maybe you were conservative on your build or conservative on your expectation of demand, or demand truly is just way beyond what you were expecting.
Speaker #3: .
Speaker #5: Okay. Couple more questions. Can I keep going?
Speaker #3: Yeah , sure .
Speaker #5: Okay. You said that you had seen a higher level of demand from the 5G contribution. The AV business. I guess I can take that in one of a couple ways.
Speaker #5: Either maybe you were conservative on your build or conservative on your expectation of demand, or demand truly is just way beyond what you were expecting.
Operator: Maybe if you could dig deeper into that on what the drivers are there, what's causing that, why is it that your product is seeing such good uptake, etc.? Great question. I mean, we do build usually pretty accurate forecasting. We've done a lot of product introductions over our lifetime. We did build, which we thought was a pretty robust forecast for the launch. We were obviously pleasantly surprised that the product has received much more rigorous attention due to what I believe is really the bubble that's coming up, which is a private 5G networking. And I think as we demonstrated back in the Paris Olympics, we've been doing a lot of tests, and we've been testing this technology with some other advanced pieces with our Pro 420 and Pro Series before the launch of Falcon.
Maybe if you could dig deeper into that on what the drivers are there, what's causing that, why is it that your product is seeing such good uptake, etc.?
Speaker #5: Maybe if you could just dig deeper into that on , you know , what the there , drivers are what's causing that ? What why is it that your product is , you know , seeing such good uptake , etc.
Mirko Wicha: Great question. I mean, we do build usually pretty accurate forecasting. We've done a lot of product introductions over our lifetime. We did build, which we thought was a pretty robust forecast for the launch. We were obviously pleasantly surprised that the product has received much more rigorous attention due to what I believe is really the bubble that's coming up, which is a private 5G networking. And I think as we demonstrated back in the Paris Olympics, we've been doing a lot of tests, and we've been testing this technology with some other advanced pieces with our Pro 420 and Pro Series before the launch of Falcon.
Speaker #5: ?
Speaker #3: Great question . You know , I mean , we do build pretty easily , pretty accurate forecasting . We've done a lot of product introductions over a lifetime .
Speaker #3: know , it You was we did build a which we thought was a pretty robust for the forecast launch . We were obviously pleasantly surprised that the product has received much more rigorous attention due to what I believe is really the bubble that's coming up , which is a private 5G networking .
Speaker #3: And I think as we demonstrated back in , you know , the Paris Olympics , we've been doing a lot of tests and we've been we've been testing this technology with some other advanced pieces with our Pro for 20 and Pro Series .
Operator: So we made sure that we actually checked out the latest antenna technology. I mean, we are at the forefront of the private 5G networking. So we made sure that we built everything into the Falcon at the beginning. Usually, when you have products, you know what? You add functionality, you test the market, you add more. We came out very strong with absolutely slapping this market sideways. And with the MIMO antenna and technology, with all of those features and functionalities that private 5G people are requiring and need, it just hit their sweet spot. And I tell you, it's been an amazing, pleasant surprise. We have no problem scaling, by the way. So it's like we can scale this thing to ever. But I think people appreciate the compactness, the robustness, the size, the powerful capability in the private 5G MIMO technology.
So we made sure that we actually checked out the latest antenna technology. I mean, we are at the forefront of the private 5G networking. So we made sure that we built everything into the Falcon at the beginning. Usually, when you have products, you know what? You add functionality, you test the market, you add more. We came out very strong with absolutely slapping this market sideways. And with the MIMO antenna and technology, with all of those features and functionalities that private 5G people are requiring and need, it just hit their sweet spot. And I tell you, it's been an amazing, pleasant surprise. We have no problem scaling, by the way. So it's like we can scale this thing to ever. But I think people appreciate the compactness, the robustness, the size, the powerful capability in the private 5G MIMO technology.
Speaker #3: Before the launch of Falcon . So we made sure that we actually checked out the latest , you know , antenna technology . I mean , we are at the forefront of the private 5G networking .
Speaker #3: So we made sure that we built everything into the Falcon at the beginning. Usually, when you have products, you know, you add functionality.
Speaker #3: You test the market , you add more . We came out very strong with absolutely slapping this market sideways . And , you know , with the with the Mimo antenna and technology with with all of features and those functionalities that private 5G people are requiring and need , it just hit the sweet spot .
Speaker #3: And I tell you , it's been an amazing , pleasant surprise . We have no problem scaling , by the way . So it's like we can scale this thing to to ever .
Speaker #3: But I think people appreciate the compactness , the robustness , the the size , the the powerful capability in the private 5G Mimo technology .
Operator: And by the way, this is the beginning. This is the beginning of the family, which we're about to launch the next member of that family later this year, and it's going to continue into the next 18 months. So we are replacing the entire fleet. So I think people are buying into the vision, the strategy, the product family, the software with the Hub 360. That is the control system. Our ecosystem is really taking off. People love that. And by the way, it fully connects seamlessly within the SRT, SST, and Makito world. So when you look at the whole fixed contribution, wireless contribution, and 5G networking, we're the only vendor right now. We're the only vendor that can do both at the bleeding edge. So I think it's a perfect storm, right? We're very excited about the Falcon. Okay. Last question.
And by the way, this is the beginning. This is the beginning of the family, which we're about to launch the next member of that family later this year, and it's going to continue into the next 18 months. So we are replacing the entire fleet. So I think people are buying into the vision, the strategy, the product family, the software with the Hub 360. That is the control system. Our ecosystem is really taking off. People love that. And by the way, it fully connects seamlessly within the SRT, SST, and Makito world. So when you look at the whole fixed contribution, wireless contribution, and 5G networking, we're the only vendor right now. We're the only vendor that can do both at the bleeding edge. So I think it's a perfect storm, right? We're very excited about the Falcon.
Speaker #3: And by the way , this is the beginning and this is the beginning of the family , which we're about to launch the next of the member family later this year .
Speaker #3: And it's going to continue into the next 18 months . So we are replacing the entire fleet . So I think people are buying into the vision , the strategy , the product family , the software with the hub 360 .
Speaker #3: That is the control system . Our ecosystem is really taking off . People love that . And by the way , it's fully connects seamlessly within the SRT Makita you look , SST and world .
Speaker #3: So when at the whole fixed contribution wireless contribution , 5G networking , we're the only right now . vendor the only vendor that can do both at the bleeding edge .
Robert Young: Okay. Last question.
Speaker #3: So I think it's it's it's a perfect storm , right . Very excited about the Falcon .
Operator: Just try to gauge your exposure to the space secular trend. I know you've noted NASA and SpaceX as customers. I think most of it was tracking from the ground with cameras at launch. And just curious, if you just give us a sense if there's a broader opportunity in space, and then I'll get off the line. Okay. No, absolutely. I mean, we've been very, very focused on space. It's a huge opportunity for us. I mean, you know that we have all of the top players. I mean, SpaceX is a major client. Blue Origin is a major client. NASA is one of our biggest clients. And all of the security agencies. So we are a very, very large player in the space community. And by the way, there's a lot of money being flowed into space in the future. So yeah, we're focused on it.
Just try to gauge your exposure to the space secular trend. I know you've noted NASA and SpaceX as customers. I think most of it was tracking from the ground with cameras at launch. And just curious, if you just give us a sense if there's a broader opportunity in space, and then I'll get off the line.
Speaker #5: Okay. Last question. Just trying to gauge your exposure to the space secular trend. I know you've noted NASA and SpaceX as customers.
Speaker #5: I think most of it was tracking the from ground with with with cameras . And , you know , at launch . And just curious if he give us a sense if there's a broader in opportunity space and then I'll get off the line .
Mirko Wicha: Okay. No, absolutely. I mean, we've been very, very focused on space. It's a huge opportunity for us. I mean, you know that we have all of the top players. I mean, SpaceX is a major client. Blue Origin is a major client. NASA is one of our biggest clients. And all of the security agencies. So we are a very, very large player in the space community. And by the way, there's a lot of money being flowed into space in the future. So yeah, we're focused on it.
Speaker #3: Okay . Oh , absolutely . I mean , we've been very , very focused on space . It's a huge opportunity for us .
Speaker #3: I mean , you know , that we have , you know , the all of top players . I mean , SpaceX is a major client .
Speaker #3: origin is Blue a major client . The biggest our biggest clients and and security agencies . all of the So we are very , very large player in the space community .
Operator: We're very excited about it. In fact, we're even developing new technologies that we'll be announcing later this year, which will be the video distribution next-generation technology for people like NASA and others. So yeah, very excited about space. Thanks, gentlemen. Congrats on the top line. Thank you. Top line. Thanks, Robert. Before we go on to the next question, I just want to sort of answer a couple of questions a little bit more specifically. Obviously, I've been tracking revenue sources forever from the origin of the company here. And I can tell you in the last 10 years, last decade, this 1/3, 1/3, 1/3, give or take two or three points has been consistent for a very, very long period of time, which is I was actually surprised when I went back to look at the numbers.
We're very excited about it. In fact, we're even developing new technologies that we'll be announcing later this year, which will be the video distribution next-generation technology for people like NASA and others. So yeah, very excited about space.
Speaker #3: by the way , there's a lot of money being And flowed into space in the future . So yeah , we're focused on it .
Speaker #3: We're very excited about it . In fact , we're even developing new technologies that will be announcing later this year , which will be the video distribution , next generation technology for people like NASA and others .
Thanks, gentlemen. Congrats on the top line. Thank you.
Mirko Wicha: Top line. Thanks, Robert.
Dan Rabinowitz: Before we go on to the next question, I just want to sort of answer a couple of questions a little bit more specifically. Obviously, I've been tracking revenue sources forever from the origin of the company here. And I can tell you in the last 10 years, last decade, this 1/3, 1/3, 1/3, give or take two or three points has been consistent for a very, very long period of time, which is I was actually surprised when I went back to look at the numbers.
Speaker #3: So yeah, very excited about space.
Speaker #5: Thanks, gentlemen. Congrats on the top-line growth.
Speaker #1: Thanks . Before we before we go on to the next question , I just want to sort of answer a couple of questions a little bit more specifically .
Speaker #1: Obviously , I've been tracking revenue sources forever from the origin of the company here . And I can tell you in the last ten the last decade , years , this third , third , third , give or take 2 or 3 points has been been consistent for a very , very long period of time , which is I was surprised when I saw that when actually I went back to look at the numbers .
Operator: It's been consistent for quite a bit of time. I want to talk a little bit about our forecasting methodology because we talk about pipelines, and we talk about visibility and what have you. We talk a little bit about having a sophisticated forecasting methodology. It is true. We don't have forecasts that say things like, "We think that this customer is going to buy $100,000 worth of product." What we have is a pipeline where this customer is going to be buying $94,532 of product. What that means is not only have we spec'd out the components that they're going to be buying, but we've already had discussions about price, which means our pipelines are a lot more robust than what you would think in a typical forecast. We rely on those forecasts for our production schedules.
It's been consistent for quite a bit of time. I want to talk a little bit about our forecasting methodology because we talk about pipelines, and we talk about visibility and what have you. We talk a little bit about having a sophisticated forecasting methodology. It is true. We don't have forecasts that say things like, "We think that this customer is going to buy $100,000 worth of product." What we have is a pipeline where this customer is going to be buying $94,532 of product. What that means is not only have we spec'd out the components that they're going to be buying, but we've already had discussions about price, which means our pipelines are a lot more robust than what you would think in a typical forecast. We rely on those forecasts for our production schedules.
Speaker #1: It's been consistent for quite a time, and I a bit want to talk our a little methodology, because we talk about pipelines.
Speaker #1: we talk When about are visibility and what have you , and we talk a little bit about having a sophisticated forecasting methodology . It is true .
Speaker #1: We . Don't have forecasts that say things like , we think that this customer is going to buy $100,000 worth of product . What we have is a pipeline where this person , this this customer is going to be buying $94,532 of product .
Speaker #1: And what that means is not only have we expected out the components that to be buying, but they're going—we've already had discussions about price, means our pipelines are a lot more, which robust than what you would think in a typical forecast.
Operator: We rely on those things for our revenue recognition, and everyone is trained to treat those things well. There is no betting on the come, and there's no pipeline opportunity that exists that hasn't had some discussion with a customer around it. Okay. Next question. Your next question comes from the line of Ruken Dugal with Chardan. Please go ahead. Hi. Thank you for taking my question. Dan Rabinowitz, when I look at your valuation relative to peers in the sector, there appears to be a meaningful discount despite the company's growth trajectory, leading gross margins, and improving operating performance. Your commentary also suggests that cash generation this coming year will increase.
We rely on those things for our revenue recognition, and everyone is trained to treat those things well. There is no betting on the come, and there's no pipeline opportunity that exists that hasn't had some discussion with a customer around it.
Speaker #1: We rely on those forecasts for our schedules, production. We rely on those things for our revenue recognition, and everyone is trained to treat those things as well.
Speaker #1: No, they're betting on the come, and there's no pipeline that exists that opportunity hasn't had some discussion with the customer around it.
Mirko Wicha: Okay. Next question.
Operator: Your next question comes from the line of Ruken Dugal with Chardan. Please go ahead.
Speaker #1: Okay . Next question .
Ruken Dugal: Hi. Thank you for taking my question. Dan Rabinowitz, when I look at your valuation relative to peers in the sector, there appears to be a meaningful discount despite the company's growth trajectory, leading gross margins, and improving operating performance. Your commentary also suggests that cash generation this coming year will increase.
Speaker #4: Your next question comes from the line of Ruken Dugal with Chandon LP. Please go ahead.
Speaker #6: Hi . Thank you for taking my question . Dan Merkel . When look at I your valuation relative to peers in the sector , there appears to be a meaningful discount despite the company's growth trajectory , leading gross and improving operating performance .
Operator: With our NCIB, we've certainly been buying back shares, but has the company and the company's board considered significantly more aggressive share repurchases as a capital allocation priority given what appears to be an attractive entry point at current levels? And how aggressive can we be? Well, the answer to the question is that we do raise the issue with our board periodically, as recently as today, as a matter of fact. They've asked us to put together a more specific program about it and discuss it at the next meeting. I think they are receptive to the idea of us being a little bit more aggressive. We do intend to renew our NCIB for 2026 and beyond. We're hopeful that we can continue buying back shares as aggressively as possible. I think that there is more receptivity to it, but we're still a relatively small company.
With our NCIB, we've certainly been buying back shares, but has the company and the company's board considered significantly more aggressive share repurchases as a capital allocation priority given what appears to be an attractive entry point at current levels? And how aggressive can we be?
Speaker #6: Your commentary also suggests that cash generation this coming year will increase with our NCIB . We've certainly been buying back shares , but has the company and the company's board considered significantly more aggressive share repurchases as a capital allocation priority , given what appears to be an attractive entry point in current levels and and how aggressive can we be ?
Dan Rabinowitz: Well, the answer to the question is that we do raise the issue with our board periodically, as recently as today, as a matter of fact. They've asked us to put together a more specific program about it and discuss it at the next meeting. I think they are receptive to the idea of us being a little bit more aggressive. We do intend to renew our NCIB for 2026 and beyond. We're hopeful that we can continue buying back shares as aggressively as possible. I think that there is more receptivity to it, but we're still a relatively small company.
Speaker #1: Well , the answer to the question , the answer to the is that we do raise the question issue with with our board periodically as as recently as today , as a matter of and fact they've asked to put us together a more specific program about it .
Speaker #1: And discuss it at the next meeting. I think they are receptive to the idea of us being a little bit more aggressive.
Speaker #1: We do intend to renew our NCIB for 2026 and beyond, and we're hopeful that we can continue buying back shares as aggressively as possible.
Operator: Even though we have CAD 17 million in the bank and we have access to a line of credit, there is a bit of a conservative bent to our board at this point. Got it. Thank you. Your next question comes from the line of Don Angelo Volpe with Beacon Securities. Please go ahead. Hey, good afternoon, guys. Thanks for taking my question, and congratulations on the strong quarter. Just in your prepared remarks, you discussed the Falcon X2. It's now shipping in volume and demand starting to outstrip production. Just wondering if you guys can discuss how quickly you expect to ramp up to meet this high demand. Is that achievable in Q1, or would this be a long-standing approach through 2026? Well, Q1 is got two weeks left. So we're pretty much committed to what we're going to ship by the end of January.
Even though we have CAD 17 million in the bank and we have access to a line of credit, there is a bit of a conservative bent to our board at this point.
Speaker #1: I think that there is more receptivity to it, but we're still a relatively small company. And even though we have $17 million in the bank and we have access to a line of credit, it is a bit conservative. There's a bit of a conservative bent to our board at this point.
Ruken Dugal: Got it. Thank you.
Operator: Your next question comes from the line of Don Angelo Volpe with Beacon Securities. Please go ahead.
Speaker #6: Got it. Thank you.
Donangelo Volpe: Hey, good afternoon, guys. Thanks for taking my question, and congratulations on the strong quarter. Just in your prepared remarks, you discussed the Falcon X2. It's now shipping in volume and demand starting to outstrip production. Just wondering if you guys can discuss how quickly you expect to ramp up to meet this high demand. Is that achievable in Q1, or would this be a long-standing approach through 2026?
Speaker #4: Next question. Your call comes from the line of Don Angelo with Beacon Securities Limited. Please go ahead.
Speaker #7: Hey . Good afternoon guys . Thanks for taking my question . And congratulations on the strong quarter . Just in your prepared remarks , you discussed the valve connects to its now shipping in volume and demand starting to outstrip production .
Speaker #7: Just wondering if you guys can discuss how quickly you expect to ramp up to meet this high demand. Is that achievable in Q1 or would this be a long-standing approach through 2026?
Mirko Wicha: Well, Q1 is got two weeks left. So we're pretty much committed to what we're going to ship by the end of January.
Speaker #3: Well , Q1 is got two weeks left , so so we're pretty we're we're we're pretty . We're pretty much , you know , committed to what we're going to ship by the end of January .
Operator: But yeah, no, we're ramping up. We have no concerns for Q2, Q3, Q4. So production is already prepped. We're going to high volumes. We should be able to cover any excess starting as early as February. So not a concern. Okay. Great. And then, just looking at for Q4, the 33% year-over-year revenue growth, just wondering if you can break down some of the dynamics you were seeing across both the broadcast versus the mission segment. And I'm just curious if there was any pull-forward demand before the end of the year or if we can kind of continue to anticipate momentum to continue. When you say pull forward, sorry. What do you mean by pull forward from Q4 to Q1, or are you saying? They were still from Q1. They made Q4 numbers. Okay. Sorry. No, definitely not. No, but okay, go ahead.
But yeah, no, we're ramping up. We have no concerns for Q2, Q3, Q4. So production is already prepped. We're going to high volumes. We should be able to cover any excess starting as early as February. So not a concern.
Speaker #3: But yeah . No we're ramping up . We have no concerns for Q2 , Q3 , Q4 . So production is is already prepped volumes .
Speaker #3: going to . We're We should to cover any any excess starting as early February . as So not not a concern .
Donangelo Volpe: Okay. Great. And then, just looking at for Q4, the 33% year-over-year revenue growth, just wondering if you can break down some of the dynamics you were seeing across both the broadcast versus the mission segment. And I'm just curious if there was any pull-forward demand before the end of the year or if we can kind of continue to anticipate momentum to continue. When you say pull forward, sorry. What do you mean by pull forward from Q4 to Q1, or are you saying?
Speaker #7: Okay . Great . And then just looking at for Q4 , the 33% year over year revenue growth , just wondering if you can break down some of the dynamics you were seeing across both the broadcast versus or the broadcast versus the mission segment ?
Speaker #7: And I'm just curious if there was any pull-forward demand before the end of the year, or if we can kind of continue to anticipate momentum to continue.
Mirko Wicha: They were still from Q1. They made Q4 numbers.
Speaker #3: Can you say 'pull forward'? Sorry, what is my pull forward for from Q4 to Q1, or...
Donangelo Volpe: Okay. Sorry. No, definitely not. No, but okay, go ahead.
Operator: Dan, you want to handle that? Well, I think that was one of the reasons why Mirko and I both felt fairly compelled to suggest that CAD 150 million plus for 2026 is still in the offering. I didn't want anyone to get the impression that we've moved revenue from the first quarter into the fourth quarter. That didn't happen. In fact, we left the quarter with backlog, which is a great place for us to be. Okay. Great. I'll hop back in the queue. That concludes our question and answer session. I will now turn the call back over to Mirko Wicha for closing remarks. Thank you, Tiffany. Thanks, everybody. In closing, I just want to say we're committed, as always, to maximizing long-term value for all our shareholders.
Mirko Wicha: Dan, you want to handle that?
Dan Rabinowitz: Well, I think that was one of the reasons why Mirko and I both felt fairly compelled to suggest that CAD 150 million plus for 2026 is still in the offering. I didn't want anyone to get the impression that we've moved revenue from the first quarter into the fourth quarter. That didn't happen. In fact, we left the quarter with backlog, which is a great place for us to be.
Speaker #1: Did we steal from Q1 to make Q4 numbers?
Speaker #3: Are okay ? Sorry , no , definitely not . No . But okay , go ahead . Dan , you want to handle that ?
Speaker #1: Well, that was—I think that was one of the reasons why Mirko and I both felt fairly compelled to suggest that $150 million-plus for 2026 is still in the offering.
Speaker #1: I don't want anyone to get the impression that we've we've moved revenue from the first quarter into the into the fourth quarter . didn't That happen .
Donangelo Volpe: Okay. Great. I'll hop back in the queue.
Speaker #1: In fact, we left the quarter with backlog, which is a great, great place for us to be.
Operator: That concludes our question and answer session. I will now turn the call back over to Mirko Wicha for closing remarks.
Speaker #8: What do you do? It...?
Speaker #7: Okay, great. I'll hop back in the queue.
Mirko Wicha: Thank you, Tiffany. Thanks, everybody. In closing, I just want to say we're committed, as always, to maximizing long-term value for all our shareholders.
Speaker #4: And that concludes our question-and-answer session. I will now turn the call back over to Mirko for closing remarks.
Speaker #3: Thank you . Tiffany . Thanks , everybody . In closing , I just want to say we're committed , as always , to maximizing long term value for all our shareholders .
Operator: We are confident in our ability to execute on our strategic revenue growth plan and deliver solid growth for the future as promised. I just want to thank all our shareholders and analysts on the line today for their continued support of Haivision. I look forward to speaking with you in mid-March when we will discuss our first quarter performance results, which will close in two weeks from now. Thank you. Ladies and gentlemen, this concludes today's call. Thank you all for joining. You may now disconnect. Please wait. The conference will begin shortly.
We are confident in our ability to execute on our strategic revenue growth plan and deliver solid growth for the future as promised. I just want to thank all our shareholders and analysts on the line today for their continued support of Haivision. I look forward to speaking with you in mid-March when we will discuss our first quarter performance results, which will close in two weeks from now. Thank you.
Speaker #3: We're confident ability to in our execute on our strategic revenue growth plan and deliver solid growth for the future . As promised . I just want to thank all our shareholders , analysts online today for their support of continued high Vision , and I look forward to speaking with you in mid-March , when we will discuss our first quarter performance results , which will close in two weeks from now .
Operator: Ladies and gentlemen, this concludes today's call. Thank you all for joining. You may now disconnect. Please wait. The conference will begin shortly.
Speaker #3: Thank . you
Speaker #4: gentlemen , this concludes and today's call . Thank you all for joining . You may now disconnect .
