VirTra(VTSI) - 2025 Q2 - Quarterly Results

Financial Performance Overview VirTra's Q2 and H1 2025 financial performance saw revenue growth but declines in net income and gross margins Second Quarter and Six Months 2025 Highlights Q2 2025 revenue grew 15% to $7.0 million, and H1 revenue grew 5% to $14.1 million, with an $18.8 million backlog and 95% STEP renewal rates Financial Highlights (in millions, except per share data) | | For the Three Months Ended June 30, | % Δ | For the Six Months Ended June 30, | % Δ | | :--- | :--- | :--- | :--- | :--- | | All figures in millions, except per share data | 2025 | 2024 | | 2025 | 2024* | | | Total Revenue | $7.0 | $6.1 | 15% | $14.1 | $13.4 | 5% | | Gross Profit | $4.8 | $5.5 | -13% | $10.0 | $10.2 | -2% | | Gross Margin | 69% | 91% | N/A | 71% | 76% | N/A | | Net Income | $0.2 | $1.2 | N/A | $1.4 | $1.7 | N/A | | Diluted EPS | $0.02 | $0.11 | N/A | $0.13 | $0.15 | N/A | | Adjusted EBITDA | $0.7 | $1.6 | N/A | $2.4 | $2.9 | N/A | *Six months 2024 reflects restated financials - Second quarter bookings increased to $4.6 million from $3.6 million in Q2 2024, contributing to a total of $32.1 million over the last twelve months[4] - The company's backlog totaled $18.8 million as of June 30, 2025, composed of $7.1 million in Capital, $5.7 million in Service, and $6.0 million in STEP contracts[4] - The STEP® recurring revenue program maintained high renewal rates of approximately 95%, with an increasing number of customers converting to new three-year agreements[4] Management and Financial Commentary Management noted Q2 revenue and bookings growth despite federal funding timing, anticipating improved demand in late 2025 and 2026, while focusing on cost control and international expansion - CEO John Givens noted that while Q2 bookings were sequentially lighter due to the pace of federal funding, activity is expected to improve later in 2025 and into 2026[5] - The company is focused on operational discipline, improving product quality, and controlling costs, which allows it to maintain competitive pricing[6] - CFO Alanna Boudreau emphasized the solid backlog of $18.8 million and noted that international markets remain an attractive avenue for growth[16] Detailed Financial Results This section details VirTra's Q2 and H1 2025 financial results, covering revenue, gross profit, operating expenses, and net income Second Quarter 2025 Financial Results Q2 2025 revenue grew 15% to $7.0 million, but gross profit declined to $4.8 million (69% margin) and net income fell to $0.2 million, despite an 11% reduction in operating expenses Q2 2025 Financial Performance (in millions) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $7.0 million | $6.1 million | +15% | | Gross Profit | $4.8 million | $5.5 million | -13% | | Gross Margin | 69% | 91% | -22 p.p. | | Net Operating Expense | $3.9 million | $4.4 million | -11% | | Operating Income | $0.9 million | $1.1 million | -18% | | Net Income | $0.2 million | $1.2 million | -83% | | Diluted EPS | $0.02 | $0.11 | -82% | - The increase in revenue was primarily driven by higher capital deliveries and stable recurring revenue from STEP and service contracts[11] - The significant decrease in gross margin was because the prior year's quarter benefited from unusually low cost of sales related to capitalized development work[12] Six Months 2025 Financial Results H1 2025 revenue increased 5% to $14.1 million, with gross profit at $10.0 million (71% margin) and net income of $1.4 million, supported by a 9% decrease in operating expenses H1 2025 Financial Performance (in millions) | Metric | H1 2025 | H1 2024 (Restated) | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $14.1 million | $13.4 million | +5% | | Gross Profit | $10.0 million | $10.2 million | -2% | | Gross Margin | 71% | 76% | -5 p.p. | | Net Operating Expense | $7.7 million | $8.5 million | -9% | | Operating Income | $2.3 million | $1.8 million | +28% | | Net Income | $1.4 million | $1.7 million | -18% | | Diluted EPS | $0.13 | $0.15 | -13% | - The change in gross margin reflects a higher mix of capital sales relative to service and STEP revenue compared to the prior year period[8] - Net operating expense decreased by 9% due to disciplined cost management while maintaining investment in core growth initiatives[9] Financial Statements This section presents VirTra's condensed balance sheets, statements of operations, and cash flows for the reported periods Condensed Balance Sheets As of June 30, 2025, VirTra's total assets increased to $67.4 million, with cash at $20.7 million, while total liabilities remained stable and equity grew to $47.3 million Condensed Balance Sheet (in millions) | Balance Sheet Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $20.7 million | $18.0 million | | Total current assets | $44.1 million | $44.5 million | | Total assets | $67.4 million | $65.5 million | | Total current liabilities | $10.0 million | $9.6 million | | Total liabilities | $20.0 million | $19.8 million | | Total stockholders' equity | $47.3 million | $45.7 million | Condensed Statements of Operations For H1 2025, total revenue was $14.1 million, yielding a gross profit of $10.0 million and net income of $1.4 million, or $0.13 per diluted share Condensed Statements of Operations (Six Months Ended June 30) | Income Statement (Six Months Ended June 30) | 2025 | 2024 (Restated) | | :--- | :--- | :--- | | Total revenue | $14,139,185 | $13,421,461 | | Gross profit | $10,009,357 | $10,238,779 | | Income from operations | $2,282,169 | $1,781,782 | | Net income | $1,439,375 | $1,668,923 | | Diluted EPS | $0.13 | $0.15 | Condensed Statements of Cash Flows H1 2025 saw net cash from operations at $6.0 million, leading to a $2.7 million net increase in cash, bringing the balance to $20.7 million Condensed Statements of Cash Flows (Six Months Ended June 30) | Cash Flow (Six Months Ended June 30) | 2025 | 2024 (Restated) | | :--- | :--- | :--- | | Net cash provided by operating activities | $6,047,430 | $1,268,224 | | Net cash used in investing activities | ($3,261,941) | ($1,608,798) | | Net cash used in financing activities | ($128,962) | ($97,634) | | Net increase (decrease) in cash | $2,656,527 | ($438,208) | | Cash at end of period | $20,697,354 | $18,411,634 | Supplemental Information This section provides additional financial details, including Adjusted EBITDA reconciliation, conference call information, and company overview Adjusted EBITDA Reconciliation Adjusted EBITDA for Q2 2025 was $0.7 million and for H1 2025 was $2.4 million, a decrease from prior year periods - Adjusted EBITDA is a non-GAAP financial measure used by management to eliminate the impact of certain items not considered indicative of ongoing operational performance[21] Adjusted EBITDA Reconciliation | Period | Net Income | Adjusted EBITDA | | :--- | :--- | :--- | | Three Months Ended June 30, 2025 | $175,314 | $695,632 | | Three Months Ended June 30, 2024 | $1,200,727 | $1,612,107 | | Six Months Ended June 30, 2025 | $1,439,375 | $2,398,946 | | Six Months Ended June 30, 2024 | $1,668,923 | $2,904,029 | Conference Call Information VirTra will host a conference call on August 11, 2025, at 4:30 p.m. ET to discuss financial results, with replay details provided - A conference call to discuss the results is scheduled for August 11, 2025, at 4:30 p.m. Eastern time[17] - The report provides U.S. and international dial-in numbers, a conference ID (13754706), and details for a broadcast replay available through August 25, 2025[17][18][19] About VirTra, Inc. & Forward-Looking Statements VirTra is a global provider of training simulators for law enforcement and military, with the report including a standard forward-looking statements disclaimer - VirTra provides judgmental use of force and firearms training simulators for law enforcement, military, educational, and commercial markets[20] - The report contains forward-looking statements subject to a "safe harbor" provision, and actual results may differ materially from expectations[22]