Q3 2026 Genasys Inc Earnings Call

August 13, 2026

Speaker #1: Ladies and gentlemen, thank you for standing by. My name is Krista, and I will be your conference operator today. At this time, I would like to welcome everyone to Genesis third quarter 2026 conference call.

Operator: Ladies and gentlemen, thank you for standing by. My name is Krista, and I will be your conference operator today. At this time, I would like to welcome everyone to Genasys Q3 2026 conference call. 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 at that time, simply press star then the number 1 on your telephone keypad. If you would like to withdraw your question, again, press star 1. Thank you. I would now like to turn the conference over to Clay Liolios, Investor Relations. Please go ahead.

Operator: Ladies and gentlemen, thank you for standing by. My name is Krista, and I will be your conference operator today. At this time, I would like to welcome everyone to Genasys Q3 2026 Conference call. 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 at that time, simply press star then the number one on your telephone keypad. If you would like to withdraw your question, again, press star one. Thank you. I would now like to turn the conference over to Clay Liolios, Investor Relations. Please go ahead.

Speaker #1: 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 at that time, simply press star, then the number 1 on your telephone keypad.

Speaker #1: And if you would like to withdraw your question, again, press star 1. Thank you. I would now like to turn the conference over to Clay Lealos, investor relations, please go ahead.

Speaker #2: Good afternoon, everyone. Thank you for participating in today's conference call to discuss Genasys Inc.'s fiscal third quarter 2026 results, and as of June 30, 2026.

Clay Liolios: Good afternoon, everyone. Thank you for participating in today's conference call to discuss Genasys Inc.'s fiscal Q3 2026 results ended 30 June 2026. Joining us on today's call are the company's Chief Executive Officer, Richard Danforth, and Chief Financial Officer, Cassandra Hernandez-Monteon. Before we begin, let me remind everyone of the company's Safe Harbor disclaimer. Certain portions of our comments today will concern future expectations, plans, and prospects of the company that constitute forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. Forward-looking statements include all statements containing verbs such as aims, anticipates, estimates, expects, believes, intends, plans, predicts, will, may, continue, projects, or targets, and negatives of these words and similar words or expressions. Forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those indicated by the forward-looking statements.

Speaker #2: Joining us on today's call are the company's Chief Executive Officer, Richard Danforth, and Chief Financial Officer, Cassandra Montiel. Before we begin, let me remind everyone of the company's Safe Harbor disclaimer.

Speaker #2: Certain portions of our comments today will concern future expectations, plans, and prospects of the company that constitute forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995.

Speaker #2: Forward-looking statements include all statements containing verbs such as "aims," "anticipates," "estimates," "expects," "believes," "intends," "plans," "predicts," "will," "may," "continue," "projects," or "targets," and negatives of these words, as well as similar words or expressions.

Speaker #2: Forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those indicated by the forward-looking statements. Factors that could affect our actual results include, among others, those that are discussed under the heading "Risk Factors" in our most recently filed reports with the SEC.

Clay Liolios: Factors that could affect our actual results include, among others, those that are discussed under the heading Risk Factors in our most recently filed reports with the SEC, including our annual report on Form 10-K, our quarterly reports on Form 10-Q, and our current reports on Form 8-K. In addition, this call includes discussions of certain non-GAAP financial measures, including adjusted EBITDA. The most directly comparable GAAP measure and reconciliations from non-GAAP measures are available in the earnings release and other documents posted on the company's website under Investor Relations. A replay of the webcast will be made available approximately 4 hours after the presentation through the conference call link on the Events and Presentations page of the company's website. With that, I would like to turn the call over to Genasys CEO, Richard Danforth.

Clay Liolios: Factors that could affect our actual results include, among others, those that are discussed under the heading Risk Factors in our most recently filed reports with the SEC, including our annual report on Form 10-K, our quarterly reports on Form 10-Q, and our current reports on Form 8-K. In addition, this call includes discussions of certain non-GAAP financial measures, including adjusted EBITDA. The most directly comparable GAAP measure and reconciliations from non-GAAP measures are available in the earnings release and other documents posted on the company's website under Investor Relations. A replay of the webcast will be made available approximately four hours after the presentation through the conference call link on the Events and Presentations page of the company's website. With that, I would like to turn the call over to Genasys CEO, Richard Danforth.

Speaker #2: Including our annual report on Form 10-K, our quarterly reports on Form 10-Q, and our current reports on Form 8-K. In addition, this call includes discussions of certain non-GAAP financial measures, including adjusted EBITDA. The most directly comparable GAAP measure and reconciliations for non-GAAP measures are available in the earnings release and other documents posted on the company's website under Investor Relations.

Speaker #2: A replay of the webcast will be made available approximately four hours after the presentation, through the conference call link on the Events and Presentations page of the company's website.

Speaker #2: With that, I would like to turn the call over to Genasys CEO, Richard Danforth.

Speaker #3: Thank you, Clay. And welcome, everyone. Revenue for the fiscal third quarter was $7.3 million, compared to $9.9 million in the prior year period. The decrease was driven by two timing-related factors.

Richard Danforth: Thank you, Clay, and welcome everyone. Revenue for the fiscal Q3 was $7.3 million compared to $9.9 million in the prior year period. The decrease was driven by two timing-related factors. The first was a supply chain constraint associated with the CROWS program. The constraint has now been resolved. Production on this initial $9 million order is underway, and we expect to complete delivery within the fiscal year. Importantly, this was a timing issue rather than a demand issue. The second factor was a deliberate pause in our work in Puerto Rico. We elected to suspend work until customer payments resumed. Following quarter end, collections began flowing again, and we have since remobilized project activities on the island. Even with the temporary pause, we expect the work scheduled for the fiscal year to remain unchanged.

Speaker #3: The first was a supply chain constraint associated with the CROWS program. The constraint has now been resolved, production on this initial $9 million order is underway, and we expect to complete delivery within the fiscal year.

Speaker #3: Importantly, this was a timing issue rather than a demand issue. The second factor was a deliberate pause in our work in Puerto Rico. We elected to suspend work until customer payments resumed.

Speaker #3: Following quarter end, collections began flowing again. And we have since remobilized project activities on the island. Even with the temporary pause, we expect the work scheduled for the fiscal year to remain unchanged.

Richard Danforth: With both of these timing factors now moving in the right direction, and with gross margins remaining above 50%, we continue to expect fiscal 2026 to be a record year for both revenue and profitability. Staying on the top line, we are seeing meaningful progress in growing demand for our software offerings. Recent wins include a large multi-year Genasys Protect contract with Ada County, Idaho, home to more than 550,000 residents and over 3 million annual visitors. Ada County is the second Idaho county to replace its incumbent emergency alert provider with our platform. That displacement trend is encouraging. Agencies are moving away from legacy providers because Genasys delivers better outcomes when it really matters. We also continued to expand our platform. In June, we announced a partnership with Intterra and CAL FIRE to connect the CAL FIRE AwareCA platform and Genasys Protect.

Speaker #3: These timing factors are now moving in the right direction, and with gross margins remaining above 50%, we continue to expect fiscal 2026 to be a record year for both revenue and profitability.

Speaker #3: Staying on the top line, we have seen meaningful progress in growing demand for our software offerings. Recent wins include a large, multi-year Genesis Protect contract with Ada County, Idaho.

Speaker #3: Home to more than 550,000 residents, and over 3 million annual With both of visitors. Ada County is the second Idaho County to replace its incumbent emergency alert provider with our platform.

Speaker #3: That displacement trend is encouraging. Agencies are moving away from legacy providers because Genesis delivers better outcomes when it really matters. We also continue to expand our platform.

Speaker #3: In June, we announced a partnership with Intera and Cal Fire to connect the Cal Fire Aware platform and Genesis Protect. This connection gives the public another trusted source for real-time emergency updates.

Richard Danforth: This connection gives the public another trusted source for real-time emergency updates. Now, any alert issued through Genasys Protect instantly spreads across the state. Separately, we integrated Genasys Evertel with the public safety data and analytics platform called Peregrine. They are a leading crime data and intelligence software used by real-time crime centers and fusion centers today. This was tested and verified by the Vacaville Police Department, pushing real-time crime center intelligence directly to officers in the field rather than through manual distribution. It is worth noting that there are approximately 80 fusion centers and 800 real-time crime centers across the USA. Integrations like these accomplish two important objectives. They extend the reach of our software into the platform agencies already rely on every day, and they make Genasys Protect increasingly difficult to displace once it becomes embedded in mission-critical workflows.

Speaker #3: Now, any alert issued through Genesis Protect instantly spreads across the state. Separately, we integrated Genesis EverTel with the public safety data and analytics platform called Peregrine.

Speaker #3: They are a leading crime data and intelligence software provider used by real-time crime centers and fusion centers today. This was tested and verified by the Vacaville, California Police Department, pushing real-time crime center intelligence directly to officers in the field rather than through manual distribution.

Speaker #3: It is worth noting that there are approximately 80 fusion centers and 800 real-time crime centers across the USA. Integrations like these accomplish two important objectives.

Speaker #3: They extend the reach of our software into the platform agencies already rely on every day. And they make Genesis Protect increasingly difficult to displace once it becomes embedded in mission-critical workflows.

Speaker #3: We have seen steadily increasing interest from strategic partners looking to build similar connections. And we expect that to be a durable contributor to our software growth.

Richard Danforth: We are seeing steadily increasing interest from strategic partners looking to build similar connections, and we expect that to be a durable contributor to our software growth. Earlier this week, we announced a software milestone we are especially proud of. Genasys Protect now covers approximately 15% of the US population and 20% of the country's land area, making it the nation's leading platform for zone-based emergency alerting, evacuation management, and secure real-time communication. That level of adoption is a testament to our technology and its ability to help keep people safe and save lives. While we are proud of this milestone, we believe there remains substantial opportunity to expand our footprint across the rest of the country. On the hardware side, momentum continues to build, particularly in critical infrastructure.

Speaker #3: Earlier this week, we announced a software milestone. We are especially proud of. Genesis Protect now covers approximately 15% of the US population, and 20% of the country's land area, making it the nation's leading platform for zone-based emergency alerting, evacuation management, and secure real-time communication.

Speaker #3: That level of adoption is a testament to our technology and its ability to help keep people safe and save lives. While we are proud of this milestone, we believe there remains substantial opportunity to expand our footprint across the rest of the country.

Speaker #3: On the hardware side, momentum continues to build, particularly in critical infrastructure. Over the past several months, we have seen a steady expanding pipeline for our LRAD 950 NXT systems, as a security layer for unmanned sites such as electrical substations, dams, ports, and data centers.

Richard Danforth: Over the past several months, we have seen a steady expanding pipeline for our LRAD 950NXT systems as a security layer for unmanned sites such as electrical substations, dams, ports, and data centers. Last week, we announced a $2.4 million critical infrastructure protection order from one of the largest utilities in the United States. The order expands a deployment that began with a single substation installation and was followed by a $2 million order. This is a customer that continues to expand its deployment as it sees the system perform. The 950NXTs are integrated with the substation's physical security infrastructure and multi-sensor perimeter intrusion detection systems. They address a full range of physical security requirements to detect, assess, communicate, respond, delay, and deter threats. In short, they transform passive monitoring into immediate intervention. Critical infrastructure remains one of our strongest growth opportunities.

Speaker #3: Last week, we announced a $2.4 million critical infrastructure protection order from one of the largest utilities in the United States. The order expands a deployment that began with a single substation installation and was followed by a $2 million order.

Speaker #3: This is a customer that continues to expand its deployment as it sees the systems perform. The 950 NXTs are integrated with the substation's physical security infrastructure and multi-sensor perimeter intrusion detection systems.

Speaker #3: They address a full range of physical security requirements to detect, assess, communicate, respond, delay, and deter threats. In short, they transform passive monitoring into immediate intervention.

Speaker #3: Critical infrastructure remains one of our strongest growth opportunities. The pipeline continues to build, and we expect the market to be a meaningful driver of our hardware growth going forward.

Richard Danforth: The pipeline continues to build, and we expect the market to be a meaningful driver of our hardware growth going forward. At the same time, our longstanding defense and security customers remain active. The United States Army continues to be an important partner, and demand from international navies and defense agencies continue to strengthen as government increase spending on force protection, maritime security, and critical infrastructure resilience. Overall, our pipeline continues to grow across both hardware and software, and our focus remains on converting those opportunities into signed contracts and recognized revenue. Turning to the balance sheet. In July, we extended the maturity of our term loan, providing additional working capital flexibility and reducing our dependence on the timing of payments from any single customer.

Speaker #3: At the same time, our long-standing defense and security customers remain active. The U.S. Army continues to be an important partner, and demand from international navies and defense agencies continues to strengthen as governments increase spending on force protection, maritime security, and critical infrastructure resilience.

Speaker #3: Overall, our pipeline continues to grow across both hardware and software, and our focus remains on converting those opportunities into signed contracts and recognized revenue.

Speaker #3: Turning to the balance sheet, in July, we extended the maturity of our term loan providing additional working capital flexibility and reducing our dependence on the timing of payments from any single customer.

Speaker #3: We view our lender's willingness to extend the facility as further validation of the strength of our backlog, the opportunities within our pipeline, and our long-term outlook.

Richard Danforth: We view our lender's willingness to extend the facility as further validation of the strength of our backlog, the opportunities within our pipeline, and our long-term outlook. Overall, the fiscal Q3 was affected by timing, not by any change in underlying demand. Our backlog remains strong, our pipeline continues to grow, and the factors that delayed revenue recognition during the quarter are now being resolved. We enter the Q4 with improved operating leverage, greater financial flexibility, and a strong visibility into the work ahead. As a result, we remain confident in delivering a record year of revenue and profitability. With that, I will turn the call over to Cassandra.

Speaker #3: Overall, the fiscal third quarter was affected by timing, not by any change in underlying demand. Our backlog remains strong, our pipeline continues to grow, and the fact is that delayed revenue recognition during the quarter is now being resolved.

Speaker #3: We enter the fourth quarter with improved operating leverage, greater financial flexibility, and strong visibility into the work ahead. As a result, we remain confident in delivering a robust year of revenue and profitability.

Speaker #3: With that, I'll turn the call over to Cassandra.

Speaker #2: Thank you, Richard. And thank you, everyone, for joining for the third quarter results. In the third quarter of fiscal 2026, Genasys generated $7.3 million in revenue.

Cassandra Hernandez-Monteon: Thank you, Richard. Thank you everyone for joining. For Q3 results. In the Q3 of fiscal 2026, Genasys generated $7.3 million in revenue. This included only $1.3 million in contribution from the Puerto Rico project due to our deliberate decision to halt work on the island until customer payment resumes. As Richard mentioned, collections restarted after quarter end, and we have begun remobilizing activities. We expect Puerto Rico to be a meaningful contributor to the Q4 revenue as project activities continue to ramp through the remainder of our fiscal year. Total software revenue for fiscal Q3 was $2.7 million, representing a 21% increase year-over-year and a 12% increase sequentially. During the quarter, we generated approximately $2.5 million in software bookings, including both new customer wins and contract renewals.

Speaker #2: This included only $1.3 million in contribution from the Puerto Rico project due to our deliberate decision to halt work on the island until customer payment resumed.

Speaker #2: As Richard mentioned, collections restarted after quarter-end, and we have begun remobilizing activities. We expect Puerto Rico to be a meaningful contributor to the fourth quarter revenue as project activities continue, to ramp through the remainder of our fiscal year.

Speaker #2: Total software revenue for fiscal third quarter was $2.7 million representing a 21% increase year-over-year and a 12% increase sequentially. During the quarter, we generated approximately $2.5 million in software bookings, including both new customer wins and contract renewals.

Speaker #2: We exited the quarter with 12-month backlog of approximately $69 million. Compared to $58.2 million, at the end of the second quarter. While the increase reflects both continued order activity and the timing of certain programs, the backlog provides meaningful revenue visibility and supports our view that the third quarter revenue shortfall was primarily a timing issue rather than a reduction in customer demand.

Cassandra Hernandez-Monteon: We exited the quarter with 12-month backlog of approximately $69 million compared to $58.2 million at the end of the second quarter. While the increase reflects both continued order activity and the timing of certain programs, the backlog provides meaningful revenue visibility and supports our view that the Q3 revenue shortfall was primarily a timing issue rather than a reduction in customer demand. Gross profit margin in the quarter was 57.1% compared to 26.3% in the fiscal Q3 of 2025. This improvement was driven primarily by the revenue mix. The prior year period included a large contribution from the Puerto Rico project, which carried lower margins under the percentage of completion revenue recognition methodology. While the current quarter benefited from higher portions of software revenue, operating expenses decreased 3.8% to $8.2 million from $8.5 million in the prior year period.

Speaker #2: Gross profit margin in the quarter was 57.1%, compared to 26.3% in the fiscal third quarter of 2025. This improvement was driven primarily by the revenue mix.

Speaker #2: The prior year period included a large contribution from the Puerto Rico project, which carried lower margins under the percentage of completion revenue recognition methodology, while the current quarter benefited from higher portions of software revenue.

Speaker #2: Operating expenses decreased 3.8% to 8.2 million from 8.5 million in the prior year period. Selling, general, and administrative expenses decreased 4.6% to 6.1 million while research and development expenses decreased 1.2% year-over-year to 2.1 million.

Cassandra Hernandez-Monteon: Selling, general, and administrative expenses decreased 4.6% to $6.1 million, while research and development expenses decreased 1.2% year over year to $2.1 million. These reductions reflect action taken during the quarter to better align spending with the company's cash flow profile and near-term operating priorities. GAAP net loss for the quarter was $4.7 million, or a loss of $0.10 per share, basic and diluted, compared with a GAAP net loss of $6.5 million, or a negative $0.14 per share in the Q3 of fiscal 2025. Adjusted EBITDA improved to a loss of $3.1 million from a loss of $4.8 million in the prior year period, primarily reflecting improvement, gross margins, and disciplined expense management. Now on to the balance sheet. Cash, cash equivalents, and marketable securities totaled $3.1 million as of 30 June 2026, compared to $8 million at 30 September 2025.

Speaker #2: These reductions reflect action taken during the quarter to better align spending with the company's cash flow profile and near-term operating priorities. Gap net loss for the quarter was 4.7 million or a loss of 10 cents per share, basic and diluted, compared with a gap net loss of 6.5 million or a negative 14 cents per share in the third quarter of fiscal 2025.

Speaker #2: Adjusted EBITDA improved to a loss of $3.1 million from a loss of $4.8 million in the prior year period, primarily reflecting improved gross margins and disciplined expense management.

Speaker #2: Now, onto the balance sheet. Cash, cash equivalents, and marketable securities totaled $3.1 million as of June 30, 2026, compared to $8 million at September 30, 2025.

Speaker #2: As Richard mentioned earlier, in July, we completed the third amendment to our term loan and security agreement, extending the maturity date to July 2027 and providing additional financial flexibility as we execute against our backlog and pipeline.

Cassandra Hernandez-Monteon: As Richard mentioned earlier, in July, we completed the third amendment to our term loan and security agreement, extending the maturity date to July 2027 and providing additional financial flexibility as we execute against our backlog and pipeline. We believe the revised structure is better aligned with the operating cash flow profile of the business and supports execution of our growth strategy. In summary, while a meaningful portion of revenue shifted beyond the Q3, the underlying business fundamentals remain solid. Gross margins exceeded 57%, 12-month backlog increased to approximately $69 million, and collections in Puerto Rico resumed following the quarter end. We also took action during the quarter to better align spending with our cash flow profile while improving financial flexibility through the extension of our term loan. We remain focused on executing against our backlog, generating cash flow, and improving flexibility. With that, Richard, back to you.

Speaker #2: We believe the revised structure is better aligned with the operating cash flow profile of the business and supports execution of our growth strategy.

Speaker #2: In summary, while a meaningful portion of revenue shifted beyond the third quarter, the underlying business fundamentals remain solid. Gross margins exceeded 57%, 12-month backlog increased to approximately $69 million, and collections in Puerto Rico resumed following the quarter end.

Speaker #2: We also took action during the quarter to better align spending with our cash flow profile while improving financial flexibility through the extension of our term loan.

Speaker #2: We remained focused on executing against our backlog, generating cash flow, and improving flexibility. With that, Richard, back to you.

Speaker #3: Thank you, Cassandra. We sit in a strong position. Our software products are beginning to get the recognition they deserve, and our hardware business is bringing in a steady flow of new orders.

Richard Danforth: Thank you, Cassandra. We sit in a strong position. Our software products are beginning to get the recognition they deserve, and our hardware business is bringing in a steady flow of new orders. The demand environment across both sides of our business are as robust as they have ever been, and the work we have done this year has put us in a position to meet it. With the progress we have made on the balance sheet and the cost structure, we enter the Q4 with real momentum. The term loan extension gives us working capital flexibility and reduces our dependencies on the timing of customer payments. We remain on pace for a record year in both revenue and profitability, backed by our $69 million backlog and pipeline that continues to grow.

Speaker #3: The demand environment across both sides of our business are as robust as they have ever been. And the work we have done this year has put us in a position to meet it.

Speaker #3: With the progress we have made on the balance sheet and the cost structure, we enter the fourth quarter with real momentum. The term loan extension gives us working capital flexibility and reduces our dependencies on the timing of customer payments.

Speaker #3: We remain on pace for a rugged year in both revenue and profitability, backed by our 69 million backlog and pipeline that continues to grow.

Speaker #3: I want to thank our employees for their work this quarter, and our shareholders for their continued support. With that, we'd like to open it up for Q&A.

Richard Danforth: I want to thank our employees for their work this quarter and our shareholders for their continued support. With that, we would like to open it up for Q&A. Operator?

Speaker #3: Operator?

Speaker #4: Thank you. We will now begin the question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue.

Operator: Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, again, press star 1. We will pause for a moment to compile the Q&A roster. Your first question comes from the line of Ed Wu with Ascendant Capital. Please go ahead.

Operator: Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, again, press star one. We will pause for a moment to compile the Q&A roster. Your first question comes from the line of Ed Wu with Ascendant Capital. Please go ahead.

Speaker #4: And if you would like to withdraw your question, again, press star one. We'll pause for a moment to compile the Q&A roster. Your first question comes from the line of Ed Wu with Ascendant Capital.

Speaker #4: Please go ahead.

Speaker #5: Yeah. Congratulations on the progress. In the despite the Q3, but glad that there's momentum. Heading into Q4, my question is on the Idaho win.

Ed Wu: Yeah. Congratulations on the progress despite the Q3, but glad that there is momentum heading into Q4. My question is on the Idaho win. You say you displaced legacy systems. Have you seen any big changes with competition out there, or do you feel that it is easier that you guys are gaining momentum to be able to displace with more of your other systems and competitors out there?

Ed Woo: Yeah. Congratulations on the progress despite the Q3, but glad that there is momentum heading into Q4. My question is on the Idaho win. You say you displaced legacy systems. Have you seen any big changes with competition out there, or do you feel that it is easier that you guys are gaining momentum to be able to displace with more of your other systems and competitors out there?

Speaker #5: You said you displaced legacy systems. Have you seen any big changes out in well, competition out there? Or do you feel that it's easier that you guys are gaining momentum to be able to displace with more of your other systems and competitors out there?

Speaker #3: Ed, I think Ada County is an evacuation customer, and they love it. They like the simplicity and the intuitiveness of it. And our communication software, or alert software, is equally the same.

Richard Danforth: Ed, I think Ada County is an evacuation customer, and they love it, and they like the simplicity and the intuitiveness of it. Our communication software, our alert software is equally the same. So they like the easier use of the platform. I think when the contract runs out with their existing supplier, not only in Ada, but in counties all across the country, they will switch to Genasys.

Speaker #3: So they like the easier use of the platform. And I think when the contract runs out with their existing supplier, not only in Ada, but in counties all across the country, they will switch to Genesys.

Speaker #5: And you mentioned, I think you said that that was the second county in Idaho to do that. Is it much easier now for you to spread to the rest of the state?

Ed Wu: You mentioned, I think you said that was the second county in Idaho to do that. Is it much easier now for you to spread to the rest of the state?

Ed Woo: You mentioned, I think you said that was the second county in Idaho to do that. Is it much easier now for you to spread to the rest of the state?

Speaker #5: And obviously, to other countries or other states?

Ed Wu: Yes

Richard Danforth: Yes

Ed Wu: to other countries?

Ed Woo: to other countries?

Ed Wu: That is exactly the point.

Richard Danforth: That is exactly the point.

Ed Wu: or other states as well?

Ed Woo: or other states as well?

Speaker #3: Yeah. Ada is the largest county. In the state, with over half a million people. But yes. So we already cover more people most of the people in the state and our intention is to land the whole state.

Ed Wu: Yeah.

Richard Danforth: Yeah.

Ed Wu: Okay.

Ed Woo: Okay.

Richard Danforth: Ada is the largest county in the state with over half a million people. Yes, we already cover most of the people in the state, and our intention is to land the whole state.

Speaker #5: Great. Then my last question is back on the Puerto Rico contract, you mentioned that you had a pause for a little bit and then you were restarting now as collection is going.

Ed Wu: Great. My last question is back on the Puerto Rico contract. You mentioned that you had to pause for a little bit, then you were restarting now as collection is going. Does that impact the overall timing of when you are going to complete the project? Also, does that affect your overall profitability as well?

Ed Woo: Great. My last question is back on the Puerto Rico contract. You mentioned that you had to pause for a little bit, then you were restarting now as collection is going. Does that impact the overall timing of when you are going to complete the project? Also, does that affect your overall profitability as well?

Speaker #5: Does that impact the overall timing of when you're going to complete the project? And also, does that affect your overall profitability as well?

Speaker #3: The second one first. No, it doesn't have anything to do with our profitability in Puerto Rico. It remains to be—remains to be very good.

Richard Danforth: Second one first. No, it does not have anything to do with our profitability, and Puerto Rico remains to be very good. I think you know this, Ed, but we had not scheduled any work on the island for our fiscal Q4 when we came into this fiscal year, principally to stay away from hurricane season. So we have now going to be doing work in the Q4 in Puerto Rico. There will be some challenges based on weather, I am sure. But right now, we have begun and, yeah, we are going to get as much done on the island as possible in this Q4.

Speaker #3: And I think you know this, Ed, but we had not scheduled any work on the island for our fiscal fourth quarter when we came into this fiscal year.

Speaker #3: Principally to stay away from hurricane season. So we have now going to be doing work in the fourth quarter in Puerto Rico. There will be some challenges, based on weather, I'm sure.

Speaker #3: But right now, we've begun and yeah, we're going to get as much done on the island as possible in this fourth quarter.

Speaker #5: Great. Well, thanks for answering my questions, and I wish you guys good luck. Thank you.

Ed Wu: Great. Well, thanks for answering my questions, and I wish you guys good luck. Thank you.

Ed Woo: Great. Well, thanks for answering my questions, and I wish you guys good luck. Thank you.

Speaker #3: You too. Thank you.

Richard Danforth: You too. Thank you.

Speaker #2: Thank you.

Speaker #4: Your next question comes from the line of Luke Fingerson with Lake Street Capital Markets. Please go ahead.

Cassandra Hernandez-Monteon: Thank you.

Operator: Your next question comes from the line of Luke Fingerson with Lake Street Capital Markets. Please go ahead.

Speaker #6: Hey, guys. Luke Fingerson on for Jason Schmidt here. Congrats on the good quarter. Obviously, some big contracts coming in. I'm just going to start on the collection of payments from Puerto Rico.

Luke Fingerson: Hey, guys. Luke Fingerson on for Jaeson Schmidt here. Congrats on the good quarter. Obviously, some big contracts coming in. Just going to start on the collection of payments from Puerto Rico. Just curious how that's progressing and how we should think about the timing of collections.

Speaker #6: Just curious kind of how that's progressing and how we should think about the timing of collections.

Speaker #3: In the last four weeks, Luke, we've collected 2.9 million dollars every other Friday. And they're paying against specific invoices. So it could be higher or it could be slightly lower, but the important thing is that the cash is finally flowing.

Richard Danforth: In the last 4 weeks, Luke, we have collected $2.9 million, like every other Friday.

Luke Fingerson: Okay.

Luke Fingerson: And they are

Richard Danforth: And they are

Luke Fingerson: Gotcha

Richard Danforth: paying against specific invoices, so it could be higher or it could be slightly lower, but the important thing is that the cash is finally flowing.

Speaker #6: Gotcha. Is that kind of in line with how you expected, or is it going to accelerate here?

Luke Fingerson: Gotcha. Is that in line with how you expected, or is it going to accelerate here? I guess it is kind of how

Speaker #3: There's a backlog from not being paid for so long, so they're working through that backlog, and then as we continue to finish things in Puerto Rico, we will invoice them for that work.

Richard Danforth: There is a backlog for not being paid for so long.

Luke Fingerson: Yep.

Luke Fingerson: They are working through that backlog, and then as we continue to finish things in Puerto Rico, we will invoice them for that work.

Richard Danforth: They are working through that backlog, and then as we continue to finish things in Puerto Rico, we will invoice them for that work.

Speaker #6: Gotcha. No, that makes sense. And then kind of with the US Army you got the utility order. And then the Ada County order. I mean, obviously, these opportunities are just kind of flowing in here.

Luke Fingerson: Gotcha. No, that makes sense. With the United States Army, you got the utility order and then the Ada County order. Obviously, these opportunities are just kind of flowing in here, a lot of them follow-ons. As these opportunities continue to develop, many of them being follow-on orders, kind of curious where you see the addressable and serviceable markets of these opportunities in the next few years.

Speaker #6: A lot of them are follow-ons. So as these opportunities continue to develop, many of them being follow-on orders, I'm kind of curious where you see the addressable and serviceable markets for these opportunities in the next few years.

Speaker #3: Oh, I don't think I've ever put a number out on that, Luke, but it is large. Our bookings in the hardware side of the business, non-military, will be higher this year than I think it's ever been.

Richard Danforth: I do not think I have ever put a number out on that, Luke, but it is large. Our bookings in the hardware side of business, non-military, will be higher this year than I think it has ever been. We will generate about $9 million in revenue off the CROWS program this fiscal year. I mentioned a bit in my remarks regarding CIP market and vertical. That one utility company I referenced bought $4.4 million worth of LRAD 950NXTs this fiscal year. In last fiscal year, it was about $1 million. So it is over $5 million for one utility here in California. The pipeline on that unit is very robust and growing. In my remarks, I told you that not only is it the power stations, but it is dams, it is data centers. It is all over the map.

Speaker #3: And we'll generate about $9 million in revenue off the crows program this fiscal year. I mentioned a bit in my remarks regarding CIP market and vertical.

Speaker #3: That one utility company I referenced bought 4.4 million dollars worth of NXTs this fiscal year. In last fiscal year, it was about a million.

Speaker #3: So it's over $5 million for one utility here in California. And the pipeline on that unit is very robust and growing. In my remarks, I told you, not only is it the power stations, but it's dams.

Speaker #3: It's data centers. It's all over the map.

Speaker #6: Yeah, no, I mean, good to hear. Obviously, the market's broad and booming. So thanks for taking my questions, Luke.

Luke Fingerson: Yeah. Good to hear. Obviously, the market's broad and booming, so thanks for taking my question. I appreciate it.

Richard Danforth: I think I've mentioned this in the past, Luke, but we've sold those units to the French Navy, Spanish Navy, Royal Canadian Navy, United States Navy, some mega yachts, and in the process of bidding other countries' navies.

Speaker #3: I think I mentioned this in the past, Luke, but we've sold those units to the French Navy, Spanish Navy, Canadian Navy, United States Navy, and some mega yachts.

Speaker #3: And in the process of bidding to other countries' navies.

Speaker #6: Yeah, no, really appreciate the clarity on that. And thanks for taking my questions.

Luke Fingerson: Yeah. Really appreciate the clarity on that, and thanks for taking my questions.

Speaker #3: Okay. Thank you.

Richard Danforth: Okay. Thank you.

Speaker #4: And that does conclude our question and answer session. And ladies and gentlemen, that does conclude today's conference call. Thank you for your participation. And you may now disconnect.

Operator: That does conclude our question and answer session. Ladies and gentlemen, that does conclude today's conference call. Thank you for your participation, and you may now disconnect.