PART I. FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) Genasys Inc.'s unaudited financials for March 31, 2025, show decreased assets and equity, alongside a narrowed net loss and improved operating cash flow [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased to **$49.7 million** while liabilities rose to **$41.7 million** as of March 31, 2025, leading to a sharp decline in stockholders' equity Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 (Unaudited) | September 30, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$49,721** | **$53,936** | | Cash and cash equivalents | $5,667 | $4,945 | | Short-term marketable securities | $1,409 | $7,945 | | Total current assets | $23,420 | $26,140 | | Goodwill | $13,257 | $13,329 | | **Total Liabilities** | **$41,665** | **$36,373** | | Accrued liabilities | $17,401 | $9,030 | | Notes payable, at fair value | $12,810 | $12,010 | | Warrant liability | $3,220 | $6,640 | | **Total Stockholders' Equity** | **$8,056** | **$17,563** | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For Q2 2025, total revenues increased to **$6.9 million** with a narrowed net loss of **$6.1 million**, reflecting improved performance over the prior year Statement of Operations Summary (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $6,932 | $5,739 | $13,872 | $10,100 | | Gross Profit | $2,610 | $2,177 | $5,788 | $3,656 | | Loss from Operations | $(6,255) | $(6,994) | $(12,196) | $(14,224) | | Net Loss | $(6,139) | $(6,938) | $(10,217) | $(13,662) | | Net Loss per Share | $(0.14) | $(0.16) | $(0.23) | $(0.31) | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities significantly improved to **$5.4 million** for the six months ended March 31, 2025, with investing activities providing **$6.5 million** Cash Flow Summary (in thousands) | Activity | Six Months Ended March 31, 2025 | Six Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(5,375) | $(12,496) | | Net cash provided by (used in) investing activities | $6,461 | $(3,347) | | Net cash provided by financing activities | $25 | $10,218 | | **Net increase (decrease) in cash** | **$1,057** | **$(5,629)** | - The improvement in operating cash flow was primarily due to a smaller net loss and a significant increase in accrued liabilities, which included a **$9.7 million** customer deposit for the Puerto Rico project[15](index=15&type=chunk)[95](index=95&type=chunk)[98](index=98&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Notes detail the Evertel acquisition, **$14.3 million** in remaining performance obligations, fair value measurements, and segment performance showing software growth - On October 4, 2023, the Company acquired Evertel Technologies LLC for a total consideration of **$4.6 million**, consisting of cash, common stock, and contingent consideration, adding **$2.9 million** to goodwill[33](index=33&type=chunk)[36](index=36&type=chunk)[39](index=39&type=chunk) - As of March 31, 2025, the company had approximately **$14.3 million** in remaining performance obligations, with about **98%** expected to be recognized as revenue over the next 12 months, including **$9.7 million** related to the Puerto Rico contract[60](index=60&type=chunk) - The company has a **$15 million** Term Loan due in May 2026, recorded at a fair value of **$12.8 million** as of March 31, 2025, with associated warrants classified as a liability with a fair value of **$3.2 million**[103](index=103&type=chunk)[104](index=104&type=chunk)[107](index=107&type=chunk) Segment Revenue and Operating Loss (Six Months Ended March 31, in thousands) | Segment | Revenue 2025 | Revenue 2024 | Operating Loss 2025 | Operating Loss 2024 | | :--- | :--- | :--- | :--- | :--- | | Hardware | $9,310 | $6,945 | $(6,363) | $(5,886) | | Software | $4,562 | $3,155 | $(5,833) | $(8,338) | | **Total** | **$13,872** | **$10,100** | **$(12,196)** | **$(14,224)** | - On May 9, 2025, the company amended its Term Loan agreement to receive an additional **$4 million** loan, with a potential for another **$4 million**, maturing on December 31, 2025[157](index=157&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=37&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses a **21%** Q2 2025 revenue increase, narrowed net loss, and strategic growth initiatives, with Adjusted EBITDA loss improving to **$10.0 million** [Overview and Business Outlook](index=37&type=section&id=Overview%20and%20Business%20Outlook) Genasys provides Protective Communications solutions, anticipating future growth from key contracts like the **$75 million** Puerto Rico Early Warning System and a new U.S. Army program - The company offers a unified, end-to-end Protective Communications platform combining software (ALERT, EVAC, CONNECT) and hardware (ACOUSTICS, LRAD)[163](index=163&type=chunk)[165](index=165&type=chunk) - Future growth is expected from a fully funded contract of up to **$75 million** for Puerto Rico's Early Warning System and a new U.S. Department of Defense CROWS program[186](index=186&type=chunk) - Key business developments include a contract with Maui for EVAC services, a mass notification software contract with Los Angeles County, and a **$3.35 million** follow-on maintenance agreement with the Indian Navy[189](index=189&type=chunk) [Results of Operations](index=45&type=section&id=Results%20of%20Operations) Q2 2025 revenues increased **21%** to **$6.9 million**, with gross profit up **20%**, driven by higher sales and a favorable product mix, while operating expenses remained flat Comparison of Three Months Ended March 31 (in thousands) | Metric | 2025 | 2024 | Change | Change % | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $6,932 | $5,739 | $1,193 | 20.8% | | Gross Profit | $2,610 | $2,177 | $433 | 19.9% | | Loss from Operations | $(6,255) | $(6,994) | $739 | (10.6)% | Comparison of Six Months Ended March 31 (in thousands) | Metric | 2025 | 2024 | Change | Change % | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $13,872 | $10,100 | $3,772 | 37.3% | | Gross Profit | $5,788 | $3,656 | $2,132 | 58.3% | | Loss from Operations | $(12,196) | $(14,224) | $2,028 | (14.3)% | - The increase in hardware revenue for Q2 2025 was largely due to higher backlog, including **$1.23 million** from initial deliveries for the Puerto Rico contract[204](index=204&type=chunk) - Software revenue growth was driven by a **28%** increase in recurring revenue for the quarter and a **46%** increase for the six-month period[204](index=204&type=chunk)[217](index=217&type=chunk) [Segment Results and Adjusted EBITDA](index=52&type=section&id=Segment%20Results%20and%20Adjusted%20EBITDA) The Software segment's operating loss narrowed by **28%** in Q2 2025, contributing to an improved total Adjusted EBITDA loss of **$10.0 million** for the six-month period Adjusted EBITDA Reconciliation (in thousands) | | Three Months Ended March 31, | Six Months Ended March 31, | | :--- | :--- | :--- | | | **2025** | **2024** | **2025** | **2024** | | Net loss | $(6,139) | $(6,938) | $(10,217) | $(13,662) | | **Adjusted EBITDA** | **$(5,149)** | **$(5,739)** | **$(9,963)** | **$(11,794)** | - The Software segment's Adjusted EBITDA loss improved by **31.8%** in Q2 2025 and **35.3%** in the six-month period, reflecting revenue growth and cost management[232](index=232&type=chunk)[236](index=236&type=chunk) - The Hardware segment's Adjusted EBITDA loss increased by **21.7%** in Q2 2025 and **11.5%** in the six-month period, primarily due to higher operating expenses related to the Puerto Rico project[232](index=232&type=chunk)[236](index=236&type=chunk) [Liquidity and Capital Resources](index=53&type=section&id=Liquidity%20and%20Capital%20Resources) As of March 31, 2025, the company held **$5.7 million** in cash, with management believing current capital is sufficient for the next twelve months, despite potential needs for additional funds Cash and Liquidity (in thousands) | Account | March 31, 2025 | September 30, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $5,667 | $4,945 | | Short-term marketable securities | $1,409 | $7,945 | - Cash used in operating activities for the six months ended March 31, 2025, was **$5.4 million**, an improvement from **$12.5 million** used in the prior-year period[245](index=245&type=chunk)[246](index=246&type=chunk) - Management believes current capital is sufficient for the next twelve months but notes that additional capital may be needed and may not be available on satisfactory terms[241](index=241&type=chunk)[244](index=244&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=55&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company considers its direct exposure to foreign exchange rate fluctuations minimal due to transactions primarily in U.S. dollars or naturally hedged local currencies - The company's direct exposure to foreign currency risk is considered minimal as most transactions are denominated in U.S. dollars or local currencies of its foreign subsidiaries, which acts as a natural hedge[250](index=250&type=chunk) [Item 4. Controls and Procedures](index=55&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes in internal control over financial reporting during the quarter - Management, including the principal executive and financial officers, concluded that disclosure controls and procedures were effective at a reasonable assurance level as of March 31, 2025[253](index=253&type=chunk) - No changes in internal control over financial reporting occurred during the fiscal quarter ended March 31, 2025, that materially affected, or are reasonably likely to materially affect, internal controls[254](index=254&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=58&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently a party to any pending material legal proceedings - As of the report date, there are no pending material legal proceedings to which the Company is a party or to which any of its property is subject[258](index=258&type=chunk) [Item 1A. Risk Factors](index=58&type=section&id=Item%201A.%20Risk%20Factors) New risks include adverse effects from international trade policies and specific challenges related to the Puerto Rico Early Warning System project, which could delay or disrupt benefits - International trade policies, including tariffs and sanctions, could raise costs, reduce margins, and negatively impact customer demand[260](index=260&type=chunk) - The ability to realize the full benefits of the Puerto Rico Early Warning System project is at risk due to Puerto Rico's fiscal challenges, political instability, and high susceptibility to natural disasters like hurricanes[263](index=263&type=chunk)[264](index=264&type=chunk) [Item 5. Other Information](index=60&type=section&id=Item%205.%20Other%20Information) On May 9, 2025, the company amended its Term Loan agreement to secure an additional **$4 million** loan, with a potential for another **$4 million**, maturing December 31, 2025 - On May 9, 2025, the Company amended its term loan agreement to secure an additional **$4 million** loan, with an option for another **$4 million** at the lenders' discretion[270](index=270&type=chunk) - The new term loan matures on December 31, 2025, and includes a provision requiring a total return to lenders equal to **30%** of the principal amount being repaid[270](index=270&type=chunk)

[Management Commentary & Business Highlights](index=1&type=section&id=Management%20Commentary%20%26%20Business%20Highlights) Genasys anticipates significant operational acceleration in H2 FY2025, driven by the Puerto Rico project, with Q2 revenue up **21%** to **$6.9 million** and reduced net loss Fiscal Q2 2025 Financial Summary vs. Q2 2024 | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Revenue | $6.9 million | $5.7 million | | GAAP Operating Loss | ($6.3) million | ($6.9) million | | GAAP Net Loss | ($6.1) million | ($7.0) million | | GAAP Net Loss per Share | ($0.14) | ($0.16) | | Adjusted EBITDA | ($5.1) million | ($5.7) million | - The CEO anticipates significant operational acceleration in the second half of fiscal 2025, with strong revenue growth expected, particularly in the fourth quarter[2](index=2&type=chunk) - The company secured **$4 million** in bridge financing from its existing lender to maintain backlog momentum, with access to an additional **$4 million**[2](index=2&type=chunk)[4](index=4&type=chunk) - Key business highlights include generating first revenues from the Puerto Rico dams project, securing **$2.5 million** in LRAD bookings with the US Military, and **$1.0 million** in LRAD orders for Critical Infrastructure Protection, alongside the CFO's announced retirement[4](index=4&type=chunk) [Business Outlook](index=2&type=section&id=Business%20Outlook) Genasys expects **$15-20 million** in Puerto Rico project revenue in FY2025, with strong hardware bookings up **48%** and a **$12 million** backlog, despite slower software bookings - The company expects to realize between **$15 million** and **$20 million** in Puerto Rico-related revenue in fiscal 2025[7](index=7&type=chunk) - Revenue for the Puerto Rico project will be recognized on a Percent Of Completion (POC) basis for labor, initially suppressing gross profit margins[6](index=6&type=chunk) - Hardware bookings through March are up **48%** year-over-year, with a current hardware backlog exceeding **$12 million** (excluding Puerto Rico)[7](index=7&type=chunk) - Software bookings slowed in the March quarter due to federal funding uncertainties affecting state and local procurements, despite the pipeline being up over **100%**[8](index=8&type=chunk) - The company expects to receive the first production purchase order under the AHD-CROWS program in the second half of fiscal 2025[7](index=7&type=chunk) [Fiscal Q2 2025 Financial Review](index=3&type=section&id=Fiscal%202Q%202025%20Financial%20Review) Q2 2025 revenue increased **21%** to **$6.9 million**, with ARR at **$8.6 million**, a **37.7%** gross margin, and a reduced GAAP net loss of **($6.1) million** Q2 2025 Revenue Growth vs. Q2 2024 | Revenue Stream | Growth YoY | | :--- | :--- | | Total Revenue | 21% | | Software Revenue | 29% | | Hardware Revenue | 17% | | Recurring Revenue | 28% | - Annual Recurring Revenue (ARR) finished the quarter at **$8.6 million**[10](index=10&type=chunk) - Gross profit margin was **37.7%**, compared to **37.9%** in Q2 2024, depressed by hardware underutilization and increased software system costs[11](index=11&type=chunk) - Operating expenses decreased to **$8.9 million** from **$9.2 million** in Q2 2024, with R&D expenses down **12%** to **$2.2 million**[12](index=12&type=chunk) - Cash, cash equivalents, and marketable securities totaled **$7.2 million** as of March 31, 2025, a decrease from **$13.1 million** as of September 30, 2024[13](index=13&type=chunk) [Financial Statements](index=5&type=section&id=Financial%20Statements) This section provides unaudited consolidated financial statements, including Balance Sheets and Statements of Operations for specified periods [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) As of March 31, 2025, total assets were **$49.7 million**, total liabilities **$41.7 million**, and stockholders' equity **$8.1 million** Selected Balance Sheet Items (in thousands) | Account | March 31, 2025 | September 30, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $5,667 | $4,945 | | Total current assets | $23,420 | $26,140 | | Total assets | $49,721 | $53,936 | | Total current liabilities | $22,621 | $14,085 | | Total liabilities | $41,665 | $36,373 | | Total stockholders' equity | $8,056 | $17,563 | [Consolidated Statements of Operations](index=6&type=section&id=Consolidated%20Statements%20of%20Operations) For Q2 2025, revenues were **$6.9 million**, gross profit **$2.6 million** (**37.7%** margin), and net loss **($6.1) million**, with Adjusted EBITDA at **($5.1) million** Consolidated Statements of Operations (Three Months Ended March 31, in thousands) | Metric | 2025 (unaudited) | 2024 (unaudited) | | :--- | :--- | :--- | | Revenues | $6,932 | $5,739 | | Gross Profit | $2,610 | $2,177 | | Gross Profit % | 37.7% | 37.9% | | Loss from operations | ($6,255) | ($6,994) | | Net loss | ($6,139) | ($6,938) | | Net loss per share | ($0.14) | ($0.16) | Reconciliation to Adjusted EBITDA (Three Months Ended March 31, in thousands) | Metric | 2025 (unaudited) | 2024 (unaudited) | | :--- | :--- | :--- | | Net loss | ($6,139) | ($6,938) | | Adjustments | $990 | $1,199 | | Adjusted EBITDA | ($5,149) | ($5,739) | [Webcast and Conference Call Details](index=3&type=section&id=Webcast%20and%20Conference%20Call%20Details) Management hosted a conference call and webcast on May 13, 2025, to discuss Q2 2025 financial results, with a replay available online - Management hosted a conference call to discuss the financial results on May 13, 2025, at 4:30 p.m. Eastern Time / 1:30 p.m. Pacific Time[15](index=15&type=chunk) - A webcast of the call was made available, with a replay accessible on the investors page of the company's website approximately four hours after the presentation[16](index=16&type=chunk) [About Genasys Inc. & Forward-Looking Statements](index=4&type=section&id=About%20Genasys%20Inc.%20%26%20Forward-Looking%20Statements) Genasys Inc. is a global leader in Protective Communications, with this report containing forward-looking statements subject to inherent risks and uncertainties - Genasys is the global leader in Protective Communications, with its platform and devices protecting over **155 million** people in all 50 US states and over **100** countries[17](index=17&type=chunk) - The report contains forward-looking statements subject to risks and uncertainties as outlined in the "Risk Factors" section of the Company's Form 10-K, with Genasys disclaiming any obligation to update these statements[18](index=18&type=chunk)

Group 1 - Genasys (GNSS) has experienced a significant decline of 28.2% over the past four weeks, but it is now in oversold territory, indicating a potential trend reversal [1] - The Relative Strength Index (RSI) for GNSS is currently at 27.66, suggesting that the heavy selling pressure may be exhausting itself [5] - There is a strong consensus among Wall Street analysts that GNSS will report better earnings than previously predicted, with a 17.1% increase in the consensus EPS estimate over the last 30 days [6] Group 2 - GNSS holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimate revisions and EPS surprises, indicating a potential turnaround [7]

Core Insights - Swift Navigation and STMicroelectronics have collaborated to create an end-to-end GNSS solution aimed at enhancing automotive safety and autonomy, combining Swift's Skylark® Precise Positioning Service with ST's Teseo VI GNSS chipset [1][2][5] Group 1: Joint Solution Features - The joint solution addresses challenges faced by autonomous systems, such as reliance on perception sensors that can fail in adverse weather and the high costs associated with integrating various components [2] - It provides automotive OEMs and Tier 1 suppliers with a streamlined GNSS platform that reduces system costs and accelerates deployment timelines [2][5] Group 2: Skylark® Precise Positioning Service - Skylark is designed for mass market adoption of high-precision GNSS, enabling applications in autonomous driving, robotics, precision logistics, and V2X communication [3] - It is the first real-time, cloud-based service certified to meet ISO 26262:2018 functional safety standards, offering high-integrity positioning at a lower cost compared to traditional solutions [3] Group 3: Teseo VI GNSS Chipset - The Teseo VI chipset features a quad-frequency, multi-constellation receiver and is built on a dual-core Arm® Cortex® M7 processor, enhancing tracking capabilities and resistance to jamming and spoofing [4] - It is optimized to work with Swift's Starling® Positioning Engine, integrating wheel odometry and IMU sensor data with Skylark's GNSS corrections for improved performance in real-world conditions [5] Group 4: Industry Impact and Future Prospects - The collaboration aims to accelerate innovation in autonomous vehicles by providing a solution that meets current safety standards while being adaptable to future regulatory changes [5][6] - Swift Navigation's technology is already powering over 10 million ADAS-enabled and autonomous vehicles globally, indicating strong market trust and adoption [7]

Financial Data and Key Metrics Changes - In Q1 fiscal 2025, Genasys reported significant revenue growth, with recurring software revenue increasing by 69% year-over-year and total software revenue growing by 64% year-over-year [26] - Hardware revenue also saw a substantial increase of 57% year-over-year [27] - Gross profit margin improved to 45.8%, up nearly 12 percentage points compared to the same period last year [27] - The operating loss for the quarter was $5.9 million, an improvement from the $7.2 million loss in the prior year [29] - GAAP net loss was $4.1 million, compared to a net loss of $6.7 million in the first quarter of fiscal 2024 [30] - Cash, cash equivalents, and marketable securities totaled $13.9 million as of December 31, 2024, up from $13.1 million at the end of the previous fiscal year [30] Business Line Data and Key Metrics Changes - The Genasys Protect platform was highlighted for its effectiveness during the January wildfires in Southern California, facilitating timely evacuations and communication [14][16] - The Puerto Rico project is progressing, with the first deposit of approximately $8 million received, followed by a second deposit of $2 million [19][31] - The company expects to record initial revenues from the Puerto Rico project in the second fiscal quarter [20] Market Data and Key Metrics Changes - International law enforcement demand for traditional LRAD products is rebounding towards pre-COVID levels, expanding the opportunity pipeline [22] - The company received a follow-on order for mobile communication trailers for the U.S. Army, indicating robust demand from the Department of Defense [23] Company Strategy and Development Direction - Genasys aims to leverage its technological advancements in public safety and emergency management, as demonstrated during the recent wildfires [12][18] - The company is focused on expanding its software offerings and improving visibility and predictability in its revenue streams [24] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the fiscal year 2025, anticipating continued improvement in both hardware and software business segments [21] - The company is preparing for potential challenges in the supply chain but remains confident in its ability to manage through them [55] - The outlook for the Puerto Rico project is positive, with expectations for steady revenue contributions as the project progresses [35] Other Important Information - Genasys is actively participating in upcoming investor conferences, including the A.G.P. Virtual Tech Conference and the annual ROTH Conference [74] Q&A Session Summary Question: Clarification on deployment timeframes in Puerto Rico - Management indicated that the first group of dams will be the most challenging, with subsequent groups beginning in parallel [39] Question: Cash receipts for the fourth group of dams - Management stated it is unlikely to see cash receipts for the fourth group by fiscal year-end [41] Question: Opportunities in the acoustic market post-wildfires - Management noted a significant increase in inbound inquiries and opportunities for LRAD and software solutions following the fires [43] Question: Backlog after the first quarter - The backlog was reported at $40 million in hardware [47] Question: Competition in the market - Management has not observed an increase in competition despite the heightened visibility of the market [49] Question: Supply chain issues and impact of administration changes - Management acknowledged ongoing supply chain issues but is managing through them, and anticipates a positive impact from increased defense spending under the new administration [55] Question: Inbound opportunities from the Genasys Protect system - Management indicated that quantifying the opportunity will be clearer in the next quarter as they assess the demand from various counties [66] Question: Timeline for the CROWS program - Management expects more clarity on the timeline for the CROWS program in the coming months [69]

Company Performance - Genasys reported a quarterly loss of $0.09 per share, better than the Zacks Consensus Estimate of a loss of $0.16, and an improvement from a loss of $0.15 per share a year ago [1] - The quarterly report represents an earnings surprise of 43.75%, contrasting with a previous quarter where the company reported a larger loss than expected [2] - Revenues for the quarter ended December 2024 were $6.94 million, exceeding the Zacks Consensus Estimate by 5.26% and up from $4.36 million year-over-year [3] Stock Performance - Genasys shares have increased by approximately 12.3% since the beginning of the year, outperforming the S&P 500's gain of 3.1% [4] - The current consensus EPS estimate for the upcoming quarter is -$0.11 on revenues of $9.71 million, and for the current fiscal year, it is -$0.27 on revenues of $55.65 million [8] Industry Outlook - Genasys operates within the Consumer Services - Miscellaneous industry, which is currently ranked in the bottom 10% of over 250 Zacks industries [9] - The performance of Genasys may be influenced by the overall outlook of the industry, as research indicates that the top 50% of Zacks-ranked industries outperform the bottom 50% by more than 2 to 1 [9]

Financial Performance - Revenues for the first quarter of fiscal 2025 were $6,940, an increase from $4,361 in the first quarter of fiscal 2024, with software revenue of $2,313 increasing by $898 and hardware revenue of $4,627 increasing by $1,681 over the prior year quarter[178]. - The company reported a net loss of $4,078 for the first quarter of fiscal 2025, or $(0.09) per share, compared to a net loss of $6,724, or $(0.15) per share, for the same quarter in the prior year[178]. - Total revenues increased by $2,579, or 59%, to $6,940,000 for the three months ended December 31, 2024, compared to $4,361,000 for the same period in 2023[194]. - Gross profit rose by $1,699, or 115%, to $3,178,000, with gross profit as a percentage of sales increasing due to a favorable mix of higher hardware and software revenue[197][198]. - Adjusted EBITDA for Q4 2024 was $(4,813) thousand, an improvement from $(6,055) thousand in Q4 2023, reflecting a reduction in net loss and improved operational performance[207]. Revenue Breakdown - Product sales accounted for $4,144,000, representing 59.7% of total revenue, while contract and other revenues were $2,796,000, or 40.3% of total revenue[194]. - Software segment revenue increased by $898 thousand, or 63.5%, compared to the prior year, driven by a 69% increase in recurring revenue[210]. - Hardware segment revenue rose by $1,681 thousand, or 57.1%, attributed to a higher backlog at the start of the fiscal year[211]. - International revenue surged by 209.2% to $2,279,000, while U.S. revenue increased by 28.6% to $4,661,000[194]. Expenses and Cash Flow - Operating expenses in the quarter ended December 31, 2024, increased by 4.7% to $9,119 compared to $8,709 in the same period in the prior year[178]. - Research and development expenses increased by $94, or 4%, totaling $2,285,000, reflecting an increase in engineering resources[202]. - The company used $19,454 of cash in fiscal 2024 due to delays in hardware orders and continued investment in software[179]. - Cash and cash equivalents as of December 31, 2024, were $8,469 thousand, up from $4,945 thousand as of September 30, 2024[212]. - Net cash provided by operating activities was $947 thousand for the three months ended December 31, 2024, a significant recovery from $(5,729) thousand in the same period last year[215]. - Net cash provided by investing activities was $2,633 thousand, primarily due to maturities of investments in marketable securities[218]. Contracts and Agreements - The company secured a three-year, $3.35 million follow-on maintenance agreement for LRAD systems deployed by the Indian Navy[177]. - A new, larger multiyear program for Long Range Acoustic Devices was approved by Congress in late March 2024, with revenues anticipated to begin after the current fiscal year[179]. - The company anticipates a majority of revenue from a contract of up to $75,000 to engineer, procure, and build an Early Warning System for Puerto Rico will be realized in fiscal years 2025 and 2026[179]. Strategic Investments and Market Position - The company continues to invest in the Genasys Protect software platform, with significant wins in multiple counties including Los Angeles County[179]. - The company plans to continue pursuing domestic and international business opportunities, particularly in government and law enforcement sectors[186]. - The company is investing in enhancing its Genasys Protect platform to meet the needs of target markets and is pursuing certifications for government contracts[187][188]. - The company has a history of delivering innovative products and solutions for mission-critical situations, pioneering the acoustic hailing device market since 2002[158]. Challenges and Risks - The company is facing inflationary pressures, including increased costs from suppliers and logistics, which may impact future gross margins if not offset by price adjustments[190]. - The company anticipates additional expenditures for tooling and equipment during the remainder of fiscal year 2025[218]. Deferred Revenue and Accounts Receivable - The company had aggregate deferred revenue of $3,192,000 for extended warranty obligations and software support agreements as of December 31, 2024[196]. - The company had accounts receivable of $3,017 thousand as of December 31, 2024, which can vary significantly based on sales volume and timing of shipments[217]. Operating Losses - Operating loss in the software segment decreased by $1,325 thousand, or 32.2%, due to increased revenue and lower operating expenses[210]. - Operating loss in the hardware segment increased by $36 thousand, or 1.2%, despite higher revenue due to increased professional services expenses[211].

Financial Performance - Revenue for fiscal Q1 2025 was $6.9 million, a 59.1% increase from $4.4 million in Q1 2024[5] - GAAP net loss for the quarter was ($4.1) million, or ($0.09) per share, compared to a net loss of ($6.7) million, or ($0.15) per share in Q1 2024[10] - Adjusted EBITDA for Q1 2025 was ($4.8) million, an improvement from ($6.1) million in Q1 2024[11] - Gross profit margin improved to 45.8%, up from 33.9% in Q1 2024[8] - Operating expenses for Q1 2025 were $9.1 million, slightly up from $8.7 million in Q1 2024[9] Revenue Breakdown - Software revenue increased by 63.5% year-over-year, while hardware revenue increased by 57.1%[7] - Quarterly recurring revenue within software increased by 68.7% year-over-year[7] Cash and Assets - Cash, cash equivalents, and marketable securities totaled $13.9 million as of December 31, 2024, compared to $13.1 million as of September 30, 2024[12] Project and Backlog - The company received over $10 million in cash deposits for the first two approved groups of Puerto Rico dams[5] - The backlog entering fiscal 2025 is approximately $40 million, primarily tied to the Puerto Rico project[6]

Financial Performance - Revenues decreased by $22,655, or 48.6%, in fiscal year 2024, with hardware revenue down $26,196 and software revenue up $3,541 compared to fiscal year 2023[111]. - Gross profit for fiscal year 2024 was $10,189, a decrease of $11,573 from the prior year, resulting in a gross margin of 42.4%, down from 46.6%[113]. - The net loss for fiscal year 2024 was $31,730, an increase of $13,334 compared to the net loss of $18,396 in fiscal year 2023[114]. - Adjusted EBITDA for fiscal year 2024 was $(22,135), compared to $(6,786) in fiscal year 2023, indicating a significant decline in core operating performance[114]. - Operating loss was $11,818 in fiscal year 2024, compared to operating income of $3,240 in fiscal year 2023, attributed to decreased revenue and increased expenses[117]. Revenue Recognition and Accounting Policies - Revenue recognition is based on ASC 606, which outlines a five-step model for recognizing revenue from contracts with customers[106]. - Product revenue is recognized when products are tendered to a carrier for delivery, marking the point when the customer obtains control[107]. - Warranty and maintenance revenues are recognized on a straight-line basis over the warranty period, with other services recognized upon completion[108]. - The company has identified critical accounting policies that significantly impact its financial results, including revenue recognition and inventory valuation[106]. Expenses and Costs - Selling, general and administrative expenses increased by $2,640, or 10.7%, primarily due to higher legal expenses and costs associated with the acquisition of Evertel[113]. - Research and development expenses rose by $1,517, or 18.7%, attributed to an increase in engineering staff and Evertel software development activities[113]. - Other expense, net, increased by $5,409, primarily due to professional service expenses related to a secured term loan agreement[113]. Cash Flow and Financing Activities - Net cash used in operating activities was $19,454 for the year ended September 30, 2024, primarily due to a net loss of $31,730[120]. - Net cash used in investing activities was $8,666, mainly due to $16,206 in purchases of marketable securities and $908 for the Evertel acquisition[120]. - Net cash provided by financing activities was $23,873, driven by $13,698 in net proceeds from a Term Loan and $10,449 from a stock offering[121]. - The company completed a public offering of 5,750,000 shares at $2.00 per share, generating gross proceeds of approximately $11,500[117]. - The company has a share buyback program authorized for up to $5,000, extended through December 31, 2024[118]. Assets and Liabilities - As of September 30, 2024, the company established a full valuation allowance for deferred tax assets, indicating it is not likely to be realized[109]. - The fair value of the term loan and warrant liabilities is measured at each reporting date, with changes recognized in other income (expense)[109]. - The company accounts for business combinations using the acquisition method, recording assets and liabilities at fair value as of the acquisition date[109]. - As of September 30, 2024, the company had aggregate deferred revenue and prepayments from customers of $5,618, reflecting uneven order receipts due to government budget cycles[112]. - Cash and cash equivalents as of September 30, 2024, were $4,945, down from $8,665 as of September 30, 2023[117]. - As of September 30, 2024, the company had $7,945 in short-term marketable securities, up from $1,481 in the previous year[117]. - The principal of the Term Loan is $15,000, payable upon maturity on May 13, 2026, with compliance to all financial covenants as of September 30, 2024[118]. Market and Operational Challenges - The company has been impacted by price increases from suppliers and logistics, as well as inflationary factors such as increased salary, labor, and overhead costs[106]. - The company regularly reviews and adjusts sales prices to offset inflationary impacts, which may affect future gross margins and operating expenses[106]. - Hardware segment revenue decreased by $26,196, or 61.1%, compared to the prior fiscal year, primarily due to the completion of a U.S. Army program[117]. - Hardware segment revenue for fiscal year 2024 was $16,668, a decrease of $26,196, or 61.1%, from $42,864 in fiscal year 2023[116]. - Software segment revenue increased by $3,541, or 93.2%, driven by a 114.4% rise in recurring revenue, despite a 20.4% decrease in professional services revenue[116].

Financial Performance - Revenue for fiscal Q4 2024 was $6.7 million, a decrease of 37.0% from $10.7 million in the same quarter of fiscal 2023[4] - Total revenue for fiscal 2024 was $24.0 million, down from $46.7 million in fiscal 2023, with hardware revenue decreasing by 61.1%[5][14] - Revenues for the three months ended September 30, 2024, were $6,741 million, a decrease from $10,700 million for the same period in 2023, representing a decline of 37.3%[29] - Net loss for the three months ended September 30, 2024, was $11,386 million, compared to a net loss of $10,062 million for the same period in 2023, indicating an increase in losses of 13.1%[29] - GAAP net loss for fiscal Q4 2024 was ($11.4) million, or ($0.26) per share, compared to a net loss of ($10.1) million, or ($0.27) per share in the prior year[12] - Net loss per common share for the three months ended September 30, 2024, was $(0.26), slightly improved from $(0.27) for the same period in 2023[29] Operating Expenses - Operating expenses for fiscal 2024 were $36.9 million, an increase of $4.2 million from $32.7 million in fiscal 2023[16] - Total operating expenses increased to $9,881 million for the three months ended September 30, 2024, from $7,948 million in the same period of 2023, reflecting a rise of 24.3%[29] - Research and development expenses rose to $2,427 million for the three months ended September 30, 2024, compared to $1,770 million for the same period in 2023, an increase of 37.0%[29] - Selling, general and administrative expenses increased to $7,454 million for the three months ended September 30, 2024, from $6,178 million in the same period of 2023, a rise of 20.6%[29] Profitability Metrics - The gross profit margin for fiscal Q4 2024 was 40.8%, down from 49.6% in the same quarter of fiscal 2023[10] - Gross profit margin decreased to 40.8% for the three months ended September 30, 2024, compared to 49.6% for the same period in 2023[29] - Adjusted EBITDA for the three months ended September 30, 2024, was $(6,013) million, worsening from $(1,686) million in the same period of 2023[29] - Loss from operations for the three months ended September 30, 2024, was $(7,132) million, compared to $(2,639) million for the same period in 2023, reflecting a significant increase in operational losses[29] Bookings and Contracts - Fiscal 2024 bookings reached a record $111 million, with a starting backlog of $40 million for fiscal 2025[2] - Genasys has secured a $75 million contract for an Early Warning System for 37 dams in Puerto Rico, with initial cash deposits already received[3][7] - The company expects substantial growth in fiscal 2025 hardware revenues driven by the substantial award from Puerto Rico[8] Cash and Securities - Cash, cash equivalents, and marketable securities totaled $13.1 million as of September 30, 2024, compared to $10.1 million a year earlier[18] Share Information - Weighted average common shares outstanding increased to 44,598 million for the three months ended September 30, 2024, from 37,190 million in the same period of 2023[29]