GNSS - Earnings call transcript Q1 2024

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Operator

Good day, ladies and gentlemen, and welcome to the Genasys Fiscal First Quarter 2024 Conference Call. [Operator Instructions] At this time, it is my pleasure to turn the floor over to your host, Brian Alger, SVP of Investor Relations and Corporate Development. Welcome, Brian, the floor is yours.

Brian Alger

Thank you, Karen. Good afternoon, everyone. quarter financial first conference Genasys' to fiscal results XXXX call. Welcome Relations Alger, Development SVP Brian and of I'm Investor Corporate for Genasys. Today's our corporate and available up the moment is crossing section, any be it earnings Investors should wires now. website release in the on a filing service, delay the apologize and our call. this in with been we for There's delay wires But for website can the you on the shortly. With our right said, of or here find our looking I Dennis Klahn, the for today's Richard you those the on commentary, for numbers company's looking as now, call CFO. and me Danforth, and it across is CEO;

results call, management the projections differ in today's performance and the future for any and materially these call statements of regarding described this financial otherwise XXXX. as February be to specifically facts, We on the made that management's company's Form information risks on forward-looking Factors those statements Factors and except potential obligation forward-looking differences company's uncertainties company's section disclaim plans, of XX, in that such involves the During fiscal can and than statements, might the today, statements Other explicitly as expectations found may ended based historical intent make only XX, are or of outlook Risk other risks September cause year and will from expectations, update XXXX. certain statements. forward-looking The XX-K the forward-looking uncertainties. stated.

reconciliation the respect financial information adjusted in loss, with the close GAAP to at by metrics, we EBITDA, backlog net today. the bookings, release financial issued investors in will which performance. company the to the please We company's EBITDA adjusted also helpful provide and non-GAAP the see press A evaluating market of operational including table measures of metrics, discuss believe adjusted to

production in coming executed leading measure given revenue the and planning. purchase indicators these months. recognition. metrics moment. of dollar bookings in timing value of is across support As to a should orders the We received measures regardless to use internal metric the scheduled of a an I any next operational XX period consider revenues of future the orders said, that be Bookings it customer of is and related backlog that are ship purchase Backlog total

replay a approximately on available call page the hours the Relations this Finally, company's website. of will in be Investor X through

Now, Danforth. time, Richard this turn call my Richard? to at it's to Genasys' pleasure the over CEO,

Richard Danforth

software $XX million Protect dams XX FEMA vision installed $XX island to use everyone. The $XX the warning in for This Puerto engineer, beating More on categories. approach of by being Thank of integrated is generate you, Genasys is realized. system Rico. funded for for of solicitation had project example XX project million the only selected of dams to than competition million revenue Genasys. of Puerto in a and through of a install and procure Genasys' been Brian, comprehensive and welcome, cloud-based is To recap, differentiated the Genasys competitive most has strategic our hardware announcement to describing Yesterday's communications. emergency recent all the protective Rico expected revenue been fully Genasys the has to of be score line. to planned the expected is and XX-month hardware highest evaluation over

be Importantly, with managed Genasys data and channels all the census will of communication streams the software. Protect

that the maintenance agreement. length a million depending hardware of and also for X-year we million is services provide between license, the $X.X approximately to expected $XX on will maintenance could $X generate that software it million addition In

Our the investments software the project. drove Protect Puerto in selection Genasys developing the Rico for

the been year's than both by will Genasys fiscal states more this protective differentiation also and of in Puerto selection System, recurring for incremental state is the generate software we Emergency example Department delivering to entire be with platform, the Rico for significantly, not in Union, XXXX, result, another full just the including a most a Dam most of project. The Protect of Rico. of County, with Already communication. of a for our revenues, yet project have Puerto for selected revenue As would multiyear engagement of Corrections we more than only Angeles outlined I Warning residents hardware we hardware of the the island approach Los Utah but the and accounting

more of getting became advantages Our our they approach engagements comprehensive as are platform becoming are but larger, more also evident. the

to software balanced is hardware more Our transition a company well underway.

in quarter. lower prior fiscal on quarter in the we Protect. had of which for exit build detail Similarly, will significant second XX% our substantially XX% leverage a nearly sequentially expected fiscal ARR Ladris, low acquisition getting year, solution. year's Evertel December, revenue Our our from hardware and and partnership into backlog. grew scale. ARR. Coming CONNECT early nearly exiting Though first revenues are exceptionally our are traffic to Synergies continues averages our hardware year. be of we AI was we $X software from Recurring Dennis quarter the year, quarterly fiscal Genasys year-over-year. momentum And as in to And results up with expect nearly to first second financial quarter of more towards provide part business million million, heavily the prior historical to this were as beginning were line quarter than realized we and weighed the the hardware realized. as the versus provides half of with revenues be business gain grew $X with bookings ARR momentarily. the we result, XX% Total first software communicated

Internationally, recover, and are more XXXX, look natural a communications disasters, geopolitical and the our deal across expansion to wins continuing messages is complete confidence activity hardware out interest our for need we solutions deserved. see are us seeing pipeline a beginning more various we protective greater in also business new the are we Mass the software as frankly growing notification in events, and and half our sirens to unrest many and we and protect solution adequate, globe. our at outlook. and constituents. require tension, for confident remainder our finally well. Recent double growing over of December, XX-year-old 'XX and for will infrastructure XXXX revenues outlook our fiscal not see expected including in As give fiscal fiscal XXXX enterprises the are fiscal critical communities, XXXX. that we Unchanged over second civil least and Too from of software the

and uncertainty selection in bolster see first exception U.S. recent revenue for the approaching despite XXXX our back-end levels the Puerto our timing year hardware remains of Though the We very federal the the fiscal continue Rico to low performance confidence in there a approval. -- on of improved near-term bookings around a of loaded of business. in hardware adjusted assumptions on fiscal a U.S. year, negative the our quarter. March half EBITDA federal a from that bit full is expect in budget second adjusted continue the our approved time frame, quite to basis Based XXXX. the be profitable EBITDA, to though we we XXXX. On report expect to budget

the will Dennis? to turn in go through greater financials the outlook Now and call to detail. over Dennis I

Dennis Klahn

prior XX% quarter recurring over you, quarter the a each the Thank of $X.X million, to first year-over-year. our In of record revenues growth Revenues revenue. XXXX, grew year's accelerated fiscal decrease software we of fiscal the for year quarter first XX% this first Richard. In XXXX, that successfully were quarter.

decreased year revenue the same that reiterate, period, were offsetting As to our XX% compared nearly XX% software than $X.X revenue million. to recurring More $X.X revenues total hardware growth, sequentially And million. XX% and year-over-year. prior increased software to up XX% to

Richard fiscal hardware As XXXX Genasys mentioned, exceptionally backlog. started low with

in GAAP XX, basis, excludes last used equivalents percentage million, Quarterly decline a government negative the the first reduced XXXX, and unable the quarter, of positive prior absorption. due $X.X of year-over-year. first from including to million. the a decline million the the the $X.X to year capital in entering quarter, $X.X reduction until quarter our Evertel nearly compensation, first the overhead XX nearly backlog loss quarter of U.S. while in The $X.X activities points first and fiscal The orders and expenses, $X.X stock negative noncash $X.X pick million million was million. $X.X up to up $X.X XXXX. EBITDA, in The the was absorption. Cash, XX year's expenses as of low quarter, loss X% attributable percentage profit quarter drop was to margins which of million built with in acquisition. On increase year-over-year more million lower million, booked year-end. primarily adjusted December related totaled in was or year's a we in were of lower the a million in the Cash On the million improved to was overhead December was gross and from also operating revenue gross $XX.X securities quarter. profit first operating revenue of software $XX.X was addition quarter increased quarter the to operating compared note, fiscal this prior hardware the Adjusted the fiscal marketable cash tied working to compared week year as subsequent the points that XX% period. ago hardware margin in compared of In was a $X.X EBITDA million $X.X first had January. Gross fiscal during but revenues was a

XXXX, fiscal expect hardware to software Richard should and to revenues XXXX rebound to As at fiscal revenues continue levels. double in mentioned, close least we

fiscal open Q&A. We I'd loss like continue EBITDA fiscal now improve XXXX in to to the than Operator? expect to XXXX. And call adjusted to

Operator

is now MKM. like from will from question take first from Brian, Thank gentlemen, we we'll you. it for our ROTH so Instructions] And the lost and Searle questions. Brian Scott we And [Operator to Ladies move floor Colley open looks Stephens.

Scott Searle

in the the half the quickly level just year. of ramp for Maybe in this second in, to dive comfort hardware

again, ramp in Just that a levels. about September. implies want back-end really to historic loaded and clarify, you're June It to past recovery talking starting

could is much U.S. you gave the around the to how backlog that, pipeline for think was resolution, approval, little more budgetary bit continuing of caveat which resolution in color and the a the think, now you wondering I budgetary of timing potential that? at actually targeted is if tied March. the I provide of I

Richard Danforth

I date the so with extension. date, March third think, Scott, is the they've far the given

we've in program a new it's we year. out. a be? I put don't But number program is have Not out us. it see. would think have we we'll for thought we Army it that put anything we revenue significant yet. fiscal Army So expectations what about Have for this But that

most ancillary budget that. there will starts grants. a and have software and significant new CR, So we'll through will No we business hardware the That's no other be of on can thing. effect get lots be under see. There an issues where

significant be to a us it if can it pass. So hit doesn't

Scott Searle

follow Got maybe to up Rick [ And ]. just that, you. on

seems like growing. funnel it pipeline, In terms opportunity the had of the overall been

some given funnel, haven't out I'm the indicate the think, call. You've though bottom of coming if the sequentially? you're metrics, you is things been wondering just growing, Have could what past they I on larger? seeing getting that even been

Richard Danforth

It is.

Scott Searle

opening I'd say, and been, And which pipeline bit you a little forward? more in becoming the Is core portion your your talked going a geopolitical business. has of that about tensions, civil of bigger necessarily the unrest not remarks, staple

Richard Danforth

United Civil the has in involves Almost police. unrest LRADs. local some every police agency local States

So...

Dennis Klahn

Navies around world... the

Richard Danforth

Yes. for demand, LRAD It certainly can drive particularly hardware.

like grow. to of we we about terms large Puerto pipeline pipeline, the with And announced continue on include opportunities the question one pipeline, some see it grow. usually we of the When In don't we to continues Rico. talk your the

at look to We our forecast for bookings. continue

had long, half remain optimistic call. slipped prior year to year, second quarter and unchanged of fiscal. an what with we close, of outlook conference the [indiscernible] or Some our started for year last all have from last

Scott Searle

about and little Evertel second I wonder and cross-selling being having that's opportunities how half so received The opportunities, previous And the secondly, pipeline of talk outlook you Puerto for The are Rico. correct? that larger kind talked full year? put could of reflect that a is into you Was not had not if those just amount did that that guys your bit them? the like what this about

Richard Danforth

pipeline. are you opportunities kept our large usually are Yes, separate The correct. from

grown Evertel have We've opportunities Evertel, The I it their XX%. Marin quarter of in Was it terms cross-selling by said, County. was one re-upped, I In ARR, has as Marin? think recently begun.

Dennis Klahn

For what?

Richard Danforth

Evertel. them For sold just...And

Dennis, I'm wrong, re-up, me if the but... So correct

Dennis Klahn

it Marin... we wasn't No, have...

Richard Danforth

for re-upped of $XXX,XXX was on Ladris it of it thing. kind add evac that But top for and then a $XXX,XXX, at

same people, to selling the we're Scott. So

Operator

And Colley from next Stephens. Brian we to go

Brian Colley

we the close a you it off. FY should like So of Puerto I'm to if get the contract should seems off of Rico Rico which in 'XX curious if hardware next year. Puerto decline a your new view can base or rolls hitting see kind revenue you that you grow targets as once

Richard Danforth

even to We'll substantial for sure. the win build have Well, something Puerto that. normal Rico will with XXXX the fiscal LRAD pipeline We'll like stuff. our provide in revenues larger

replace to onetime $XX million tied million So order. to $XX a

the San Diego. projects a puts in marketplace. all dam this in protection South around Puerto us are CIP dam calling However, chasing, projects are There different here will in world. we America There the and the critical position There in are credentials dam vertical. are card projects and to kind of Europe great certainly to further give of not a that it but the Rico, size infrastructure us

Brian Colley

or of should And for more and the it. Puerto should it cadence the split Got mean XX% revenue year, between year? heavily... kind Rico, FY we 'XX be next in think year then terms of XX% of I maybe this this how about

Richard Danforth

It next year. will largely be

a all get X-month occur XXXX. the our dam to vast is That fiscal will in end So the process the of at will of there's the the And the fiscal designs. majority schedule, of XXXX. put on current approval revenue then Brian, us

Brian Colley

it. also, Got That's in award. Okay. if getting you CROWS confidence curious an helpful. update could the your that on And and level I order was provide then

Richard Danforth

as Brian, It's pending a will If that well. budget. the go DoD CROWS goes,

Brian Colley

Got it.

most And maybe CONNECT, relative like trending last and you for that of question of was your is, that's could looks and of between to kind seeing then me kind composition pipeline expectations pipeline, EVAC talk and today? you're software I the where about Okay. the ALERT hoping what how demand the just

Richard Danforth

county. pretty value in our CONNECT just both just The I we're software the as represent piece, dollar sale. are and on, $XXX,XXX I moment ALERT have offerings. of we ago, ARR and those getting a lower started from one dollar revenue The good mentioned, volume the a software biggest mentioned [indiscernible] for a that, uptick EVAC can as

and So the pipeline ALERT is by EVAC. dominated

Dennis Klahn

this a was as prepared more And more Richard's to value the in follow-on becoming of and just entire Maybe real. is that, the Brian. remarks, platform

And cetera. we EVAC, increasing accelerated, sold cetera, platform ALERT, to apparent et et that's already we've oh, Protect the that Genasys whether interest by both acoustics. And other really be a got hardware has hardware software software that CONNECT, software where would So Without as our in RFP an result, us in win. order enormous Protect is differentiation. potential. over Puerto $XX a one are everyone also we the It AI, and seeing that opportunity. the Rico have you're not the that includes Genasys won offerings, from software, way, should Traffic a of It's there. from seeing million

Operator

Mike our And we'll from Northland call from Capital. take next Latimore

Mike Latimore

Great. All right.

hardware to On in the I quarter, you But heard give the a first got more sure did you on first back I hardware said there? that, you think I'm not little bookings number normal. detail in it can a the bookings the give quarter?

Richard Danforth

fiscal bookings hardware booked consistent in first What 'XX quarter in Historically, the we substantially is higher quarter. is Sure. than in first this lowest with QX first we albeit quarters, other what achieved quarter.

win. a small So it's

'XX. In double we what of QX versus 'XX booked almost fact, in it's

Mike Latimore

Okay. Got it.

if through how over of the year passes, approved much deal, versus would that's this business that you CROWS the see years? multiple budget On

Richard Danforth

X, Well, see by would June. gets if you I don't budget we passed be, probably as soon any money would assume a flow know, as end of March

be there'll So which a fiscal point. there of U.S. with that Army is a deal that we many new program, left year to phase the it a means months be at had couple And in haven't our would years. in for only start-up

at it little start So strong a be and a the will slower finish.

Dennis Klahn

to for order year, there's of program our like be new the record. CROWS. previous of is purchase placed true The against record, expected a program remember, Mike, same each

Mike Latimore

Yes.

Okay, sense. makes

of pipeline, a how is one much wanting your SaaS pipeline the versus the software software of terms of part prospect the full or of stack sort stack? SaaS In

Richard Danforth

did It's often a came, the where ALERT, is always EVAC. after booked competitive that. into we negotiation [indiscernible] we in those and significant counties prior introducing mix. for And get those will we And large went I orders. as we RFPs couple And a as Brian mentioned a of answer award mentioned, EVAC subsequently and of with the calls,

and achieved and continued clearly is So there, we've it, the Evertel it's as with the cross-selling well. piece opportunity

Mike Latimore

Puerto then Great. Rico on the And last deal. just

million said hardware. You $XX

be? have you of you So this are overall, do deploy OpEx to to considering And to add what sort thing? gross much margin

Richard Danforth

increase OpEx was have don't What Rico. we Puerto for of Well, the island a question? in expected significant the other

Mike Latimore

The gross margin...

Richard Danforth

gross and contributor margin. Gross factory the margin lower with services be the will a the in our margin actuals be but on Gross company. than still hardware a the out typically significant coming equipment San hardware of and gross to margin, Diego consistent historical will

Operator

And Capital. next, go Ascendiant Woo Ed from we'll to

Edward Woo

Yes.

mentioned. gross the that on margin clarification you a Just

better bigger are bigger. determinant these that much for deals, why big pricing contracts On much contract? a have the Was the considering wouldn't you leverage winning

Richard Danforth

multiple to price approximately, worth hardware. than Yes was But significant $XX Ed, criteria, will million, contribution award margin of this bigger quarter company. give At the mistake XX%. don't years that's most

if you're the business, So the the our normal the normal have gross from you margin of going of to the that balance have and of enjoy significant base improvement on contribution will margins factory activities. balance business, the of absorption plus

Edward Woo

this specifically win going obviously type deals? deals Are and last much year's guys much bigger bigger And Aramco. we of win Great. with anticipate targeting forward? you Should

Richard Danforth

face the the picture. you of case in the and Protect is Puerto larger if they In introducing hardware to us. look platform Well, software, traditional Rico, the weren't Genasys deals at competitors approach we in

the respond gave most in So Genasys to the to a that as reflective us. scores and the was RFP, customer that was qualified company it

the to Protect continue the I around platform yes, we opportunities will to world. capabilities So think, pursue Genasys larger exploit

Operator

And next Oppenheimer. from Yang our question from Martin we'll take

Martin Yang

the lot for anything regarding OpEx but think Rico question of leverage be? from part what if Puerto increase, for it would the Rico. but a And OpEx Puerto Rico assume not know with answered operating should project, project? I you we associated there's a major big changed have the coming I of Puerto first I my,

Richard Danforth

what So the said, benefit talked absorption. I will also avail travel business base about From will second contribution that, up. question the I said, increased margin go That's just first. be Yes, OpEx that of think it significant. And will from I as course. perspective, will that an

see hire I us in We anybody I sales the number. single-digit marketing. see on kind will of island, it's adding the purchasing or don't factory. adding or anybody in but don't people more a us

a So I think it's headcount from nominal perspective.

Martin Yang

Got it.

customers. an sales enterprise the your regarding Can about us market? you customer is seeing question are into and second your you on pipeline engagement give maybe how The enterprise update

Richard Danforth

Yes.

an us, some that, and fell For be it's released don't I think anything been Slide opportunistic. X, those into see we've coming shortly. others. enterprise yet, you'll but to several Aramco win on with a there's

Operator

[Operator turn I'd to back the Okay, to time. over appear there no and questions closing Alger to Instructions] like further be for remarks. Brian this at floor

Brian Alger

everyone, you, Thank today's call. participating Great. for in

commentary. You should in of middle release, it see the cross wire our did the press the

find can website A on our website. our will on of here you the available it So replay shortly. be call

and additional follow same. I'll that's we actively the recommend regarding and do For LinkedIn information post strongly whether serve, our activity X, products, you our of up-to-date that us or a number again, customers customers platforms, social various Genasys, news on and we our and comment

quarter social to all you. great I So again speaking you to have a report Thank quarter encourage fiscal second stay next forward on us XXXX the things, on strongly to networks. top follow look we results. when We night. with of Otherwise, you

Operator

We this participation. does teleconference. gentlemen, and for Ladies today's you you. conclude thank Thank your

great have time, this and You your day. lines may disconnect a at

Genasys (GNSS) 13 Feb 242024 Q1 Earnings call transcript