Genasys Inc. Q1 FY2025 earnings call

• Genasys played a crucial role in Southern California fires in January, with Genasys Protect enabling safe evacuations of hundreds of thousands and showing resilience under peak traffic. - Progress in Puerto Rico: Received second deposit of $2 million, written approval of design on third group of dams, first major milestone of provisioning a 50-kilowatt generator, with first revenues expected in second fiscal quarter. - December quarter results showed year-on-year improvement on hardware backlog and software ARR, with gross margins and operating expenses improving sequentially. - International law enforcement demand for LRAD products rebounding, and work with U.S. DoD robust, including follow-on order for mobile communication trailers and progress on AHD CROWS program.

In the first quarter of fiscal 2025, recurring software revenue increased 69% year-over-year. Total software revenue grew 64% year-over-year, including an additional Genasys ALERT order in Los Angeles County. Hardware revenue grew 57% year-over-year. Gross profit margin was 45.8% in the December quarter, up nearly 12 points versus the year-ago period. Software margins continue to increase as a percentage of sales with recurring software revenue, and hardware this quarter reflects a two-point benefit from a favorable sales channel.

• Puerto Rico project: First revenues to be recorded in second fiscal quarter, more significant revenue recognition in June quarter with first group deployment, and significant revenues expected in second half of fiscal year. - Backlog has grown to $40 million including ARR of $8.8 million, with an expanding pipeline of opportunities indicating financial turnaround is well underway.

• Supply chain issues affecting Puerto Rico project. - Change in administrations potentially impacting Puerto Rico project funding and business securing. - Negative press on alerts in past incidents, though Genasys addressed specific issues with software changes in LA County fires.

Q: Mike Latimer from Northland Capital asked about Puerto Rico deployment timeframes.

A: Richard Danforth said the first group is challenging, but second and third groups will be staggered, with lion's share of revenue in second half.

Q: Ed Woo from Ascendiant Capital asked about competition.

A: Richard Danforth said no immediate signs of increased competition.

Q: Scott Searle from Roth Capital asked about supply chain issues with Puerto Rico and impact of change in administrations.

A: Richard Danforth said supply chain issues are being managed, and change in administrations may affect business but public safety and defense spending are likely to be positive.

Q: Scott Searle also asked about inbound opportunity from California wildfires and past false alert issues.

A: Richard Danforth said there's significant inbound opportunity, and addressed specific false alert issues in LA County with software changes.