Genasys (US:GNSS)2022-12-16 21:58Business Segments and Revenue Recognition - The company operates in two segments: Hardware and Software, with principal markets in North and South America, Europe, Middle East, and Asia [232]. - Revenue is recognized when products are delivered to a carrier, representing the point when customers obtain control [213]. - The company uses ASC 606 for revenue recognition, which requires a five-step analysis to determine when and how revenue is recognized [211]. - The company disaggregates revenue by reporting segment and geography to align with business operations [221]. - Product revenue includes sales from direct sales force and authorized resellers, with minimal returns historically due to defect policies [212]. Financial Performance - Total revenues for the fiscal year ended September 30, 2022, increased by $7.0 million, or 15%, to $54.0 million compared to $47.0 million in the prior year [236]. - Product sales accounted for $48.6 million, representing 90.0% of total revenues, with a 16.9% increase from $41.6 million in the previous year [235]. - Gross profit rose by $2.9 million, or 12.4%, to $26.3 million, with a gross margin of 48.7%, down from 49.8% in the prior year [237]. - Selling, general and administrative expenses increased by $4.3 million, or 24.5%, primarily due to higher employee-related costs and increased marketing expenses [240]. - The net loss for fiscal 2022 was $16.2 million, a decrease of $16.9 million compared to a net income of $704,000 in fiscal 2021 [245]. Segment Performance - The Software segment revenue increased by 11.8%, driven by a 427.3% rise in recurring revenue, despite a decline in professional services revenue [251]. - Hardware segment revenue increased by $6.7 million, or 15.2%, attributed to a higher backlog at the start of the fiscal year [253]. - A non-cash goodwill impairment charge of $13.2 million was recognized in the Software segment, significantly impacting net loss [242]. Cash Flow and Capital Expenditures - Cash provided by operating activities was $468,000 for the fiscal year ended September 30, 2022, compared to $6.15 million in 2021 [255]. - Cash and cash equivalents as of September 30, 2022, were $12.7 million, a slight decrease from $13.2 million in the prior year [253]. - Cash used for capital expenditures was $0.4 million in the fiscal year ended September 30, 2022, compared to $0.2 million in 2021 [262]. - The company anticipates additional capital expenditures in fiscal year 2023 as it continues to invest in new products and technologies [262]. Accounts and Working Capital - The company had accounts receivable of $6.7 million as of September 30, 2022, down from $7.7 million in 2021 [258]. - Working capital increased to $20.2 million as of September 30, 2022, from $18.0 million in 2021, primarily due to a decrease in customer deposits [259]. Share Repurchase and Securities - The company repurchased 259,310 shares for $1.0 million during the year ended September 30, 2022, with $3.0 million remaining available for share repurchase [265]. - The company used $6.8 million of cash to purchase marketable securities in the fiscal year ended September 30, 2022, compared to $5.1 million in 2021 [260]. Impairment and Allowances - The company evaluates goodwill for impairment annually, assessing qualitative factors to determine fair value [226]. - The allowance for doubtful accounts is estimated on a case-by-case basis, influenced by customer creditworthiness and economic trends [223]. - Inventory valuation involves periodic reviews and impairment recognition when future benefits are less than carrying value [224]. - Deferred tax assets are evaluated quarterly for realizability, with valuation allowances recorded as necessary [230]. Employee Compensation - Share-based compensation is measured based on estimated fair values and amortized over the requisite service periods [222]. - The company recorded $1.7 million in bonus expense for the fiscal year ended September 30, 2022, down from $2.6 million in 2021 [267]. Market Environment - The company operates in a rapidly evolving business environment, which may affect future cash receipts and expenditures [254]. - Research and development expenses increased by $2.1 million, or 42.8%, due to a rise in staffing from 79 to 96 employees [243].