VirTra, Inc Q1 FY2025 earnings call

• Operational execution: Began the year with focus on operational execution, achieved GAAP profitability, strong gross margins, and progress in sales efficiencies and operational scalability.
• Sales initiatives: Restructured sales organization, transitioned to regional sales model, optimized sales efficiency, entered GSA procurement channel, introduced standardized product bundles, and overhauled digital marketing strategy.
• V-XR progress: V-XR extended reality platform has two units sold, with first customer deliveries expected in Q2, and several in quote discussions. Working to expand headset compatibility and streamline deployment.
• Content library: Expanded certified training content to over 120 hours, using AI tools to accelerate content development, and scenarios informed by real-world challenges and customer feedback.
• Facility reconfiguration: Reconfiguring facility to support scalability, adding space for reliability testing and integrating lean manufacturing processes.
• IVAS partnership: Completed advanced recoil kit validation and reliability testing protocols, positioned well to support expanded work under IVAS or similar initiatives.

Total revenue for the first quarter ended March 31, 2025 was $7.2 million, a 3% decrease from the prior year period. Government revenue was $5.2 million compared to $6.7 million in the prior year, and international revenue was $1.9 million compared to $550,000 in the prior year. Gross profit improved to $5.2 million, or 73% of total revenue, up from 64% in the prior year period. Net income for the quarter was $1.3 million or $0.11 per diluted share, a 170% increase from the prior year period. Bookings for the quarter totaled $6.4 million, more than double the prior year's $2.9 million. Backlog at March 31, 2025 stood at $21.2 million, including $9.9 million in capital, $5.8 million in service, and $5.5 million in STEP contracts.

• Disciplined cost management, enhanced contract structures, and ongoing demand recovery are expected to support continued progress.
• Recent updates to STEP program with full three-year commitments transform into high confidence recurring revenue, with renewal trends strong at around 95%.

• Macro headwinds: Many government agencies face uncertainty around appropriations and budget cuts, leading to longer sales cycles and funding holdbacks.
• Delayed deliveries: Portion of new capital bookings, particularly from international customers, requested deferred delivery into 2026, dependent on customer-driven installation timelines outside control.

Q: Do you think that contributed to any orders being pulled into Q1?

A: Not really sure if the macros did that. I think there were monies in budgets trying to be spent before sweeping or shutdown, and some grant monies awarded despite holdbacks. Each agency is different.

Q: Are you seeing demand from other end market verticals for V-XR and is some demand driven by grant activity?

A: Grant activity under de-escalation and training curriculum is driving V-XR, and there's interest in private security and other markets. Some markets ask for things technology doesn't do yet, but leads are noted for development.

Q: On the staff program and three-year agreements, are you forcing all customers over to these three-year agreements or is it an option?

A: Forcing into three-year to move sales cycle forward due to technology advances and performance issues with older equipment. It's more of a sales tactic with option for year four/five if needed