Genasys (US:GNSS)2020-02-11 01:44Financial Data and Key Metrics Changes - Revenues for Q1 2020 were $8.8 million, down from $10.2 million in Q1 2019, indicating a decrease of approximately 13.7% [9] - Gross profit was $4.6 million, representing a gross margin of 52.4%, an improvement from 50% in the prior year [9] - Operating expenses increased by 3% to $3.9 million, primarily due to higher investment in software development [10] - Net income was $620,000 or $0.02 per diluted share, down from $1 million or $0.03 per diluted share in the same quarter last year [11] - Cash and cash equivalents decreased to $17.1 million from $18.8 million at the end of the previous fiscal year [12] - Working capital increased by $1 million to $25.8 million [13] Business Line Data and Key Metrics Changes - Bookings for the quarter were $4.3 million, while backlog stood at $23.3 million, indicating a healthy sales pipeline [15] - The company expects revenue growth in fiscal year 2020, particularly in the second half [15] Market Data and Key Metrics Changes - The company is well-positioned to fulfill the European Union's public warning system directive, which mandates implementation by June 2022 [17] - Genasys has been involved in delivering over 150 million SMS emergency notifications in Australia, showcasing its experience in the market [22] Company Strategy and Development Direction - Genasys aims to leverage its National Emergency Warning System (NEWS) to meet EU requirements and expand its market presence [16][22] - The company is focusing on both hardware and software solutions, with a significant emphasis on software development to enhance its offerings [44] - There is an ongoing effort to secure domestic and international defense and homeland security orders, with expectations for strong growth in fiscal 2020 [30] Management's Comments on Operating Environment and Future Outlook - Management anticipates stronger revenues in the second half of fiscal year 2020 based on current bookings and backlog [15] - The company is not expecting substantial EU revenue in fiscal year 2020 due to the timing of proposals and evaluations [51] - Management noted that the coronavirus has not had any material impact on operations as of now [102] Other Important Information - The company has a $5 million stock repurchase program, with $4.5 million still available [13] - Genasys is expanding its software development team, particularly in Spain, to support international initiatives [44] Q&A Session Summary Question: Expectations for Acoustic Hailing Device orders from the Army for 2020 - Management expects orders for 2020 to be slightly smaller than 2019 due to pent-up demand in the previous year [34] Question: Timing for orders from Laguna Beach and Newport Beach - Revenue conversion from these orders is expected to take one to two quarters [35] Question: Drivers of gross margin improvement - The improvement is primarily attributed to a more profitable product mix [36] Question: R&D spending for 2020 - The company expects growth in R&D spending compared to 2019, focusing on software initiatives [38] Question: Timing for EU request for proposals - Management expects a handful of proposals from the EU in the fiscal year, but evaluation may take longer than anticipated [44] Question: Revenue recognition split for the year - A 40-60 split in revenue recognition is expected, with shifts in backlog numbers anticipated in the second half of fiscal 2020 [55] Question: Impact of 5G networks on products - Upgrading to 5G will likely require updates to the NEWS software module, presenting opportunities for the company [104] Question: Developments on the Southern border - There has been slow progress due to discord between Congress and DHS, affecting budgeting [93] Question: CROWS initiative status - CROWS is still active, with initial funding for concept development expected this fiscal year [95]