Genasys Inc. Reports Fiscal First Quarter 2024 Financial Results
- Revenue of $4.4 million in fiscal first quarter 2024, down from $10.5 million in the same period in 2023.
- Selected for contracts with Los Angeles County, Utah Department of Corrections, and Puerto Rico for Protective Communications solutions.
- Software revenue increased 56.6%, while hardware revenue decreased 69.3% compared to the previous year.
- Adjusted EBITDA of ($6.1) million in the first quarter of fiscal 2024.
- Expectation of back-end loaded fiscal year with confidence in future growth.
- GAAP operating loss of ($7.2) million in 1Q 2024, compared to ($3.5) million in 1Q 2023.
- GAAP net loss of ($6.7) million in 1Q 2024, versus ($3.5) million in 1Q 2023.
- Gross profit margin decreased to 33.9% from 46.1% in 1Q 2023.
- Operating expenses increased to $8.7 million from $8.3 million in 1Q 2023.
- GAAP net loss per share was ($0.15) in 1Q 2024, compared to ($0.10) in 1Q 2023.
Insights
Revenue Decline and Gross Profit Margin: Genasys Inc.'s revenue decline of 58.4% is significant, particularly as it reflects a drop in hardware revenue by 69.3%. This is a substantial deviation from the industry norm where companies strive for year-over-year growth. The decrease in gross profit margin from 46.1% to 33.9% highlights inefficiencies or a shift in the sales mix towards lower-margin products. Investors should consider the impact of reduced overhead absorption and whether this is indicative of a broader trend or a temporary fluctuation.
Operating Expenses and Net Loss: The increase in operating expenses, despite the revenue shortfall, suggests an aggressive investment in research and development, which increased by 13.2%. While this could position the company for future growth, the current impact is a widened GAAP net loss, now at ($6.7) million compared to ($3.5) million in the previous year. This could affect investor sentiment and stock performance in the short term, as the market typically reacts unfavorably to widening losses.
Market Position and Growth Prospects: The announcement of Genasys Inc. being named a 'Strong Performer' in The Forrester Wave report is a positive indicator of the company's market position. However, the true test will be in the conversion of these accolades into tangible financial performance. The company's focus on expanding its Annual Recurring Revenue (ARR) through contracts with Los Angeles County and the State of Utah is promising and aligns with the industry shift towards predictable revenue streams. However, the reliance on the second half of the fiscal year for the majority of hardware revenue introduces risk and uncertainty for investors.
Macro-Economic Factors and Outlook: Genasys Inc.'s mention of the US Federal budget and other budget cycles as factors contributing to uncertainty suggests that macroeconomic conditions are affecting their business outlook. The company's performance must be contextualized within the broader economic environment, including government spending patterns and fiscal policies. The back-end loaded nature of the expected revenue could be a reflection of procurement cycles and budgetary constraints faced by their government clients. Investors should monitor these external factors as they can significantly influence the company's performance.
SAN DIEGO, Feb. 13, 2024 (GLOBE NEWSWIRE) -- Genasys Inc. (NASDAQ: GNSS), the leader in Protective Communications, today announced financial results for the Company’s fiscal first quarter ended December 31, 2023.
Richard S. Danforth, Chief Executive Officer of Genasys, Inc., commented, “The vision of Genasys Protect is beginning to be realized. Yesterday’s announcement describing the integrated use of Genasys’ cloud-based software and hardware for 37 dams in Puerto Rico is only the most recent example of our differentiated approach to Protective Communications.”
Mr. Danforth continued, “Thus far in fiscal 2024, we have been selected for multi-year engagements with Los Angeles County, the State of Utah, and most recently, the island of Puerto Rico. Coming into this year, we had exceptionally low backlog and as we communicated in early December, we expect financial results to be heavily weighted towards the end of the fiscal year. Recent wins and the continuing deal activity and pipeline expansion give us greater confidence in our second half 2024 and fiscal 2025 outlook. Genasys’ differentiated Protective Communications offering continues to displace incumbents and win the business that is already generating a rapidly growing Annual Recurring Revenue (ARR).”
Fiscal 1Q 2024 Financial Summary
- Revenue of
$4.4 million , versus$10.5 million in 1Q 2023 - GAAP operating loss of (
$7.2) million , versus ($3.5) million in 1Q 2023. - GAAP net loss of (
$6.7) million versus ($3.5) million in 1Q 2023. GAAP net loss per share ($0.15) versus ($0.10) in 1Q 2023. - Adjusted EBITDA of (
$6.1) million , versus ($2.4) million in 1Q 2023.
Business Highlights
- Selected to provide comprehensive Early Warning System (EWS) for 37 dams on the island of Puerto Rico. The
$60 million to$70 million solution includes both Genasys Protect software and ACOUSTICS, integrated with sensors and communication equipment. - Chosen for multi-year statewide CONNECT contract with the Utah Department of Corrections
- Won 5-year Genasys Protect EVAC contract with Los Angeles County, the nation’s most populous county spanning more than 4,000 square miles.
- Expanded contracts with Marin and San Mateo counties in California to include Traffic AI, powered by Ladris.
- Genasys named a Strong Performer in The Forrester Wave™: Critical Event Management Platforms, Q4 2023 report.
Business Outlook
Given the low backlog entering fiscal 2024 and the continuing uncertainty surrounding the US Federal budget and other budget cycles, we continue to expect a very back-end loaded fiscal year with the significant majority of our hardware revenues coming in the second half of fiscal 2024. Sequentially, we expect continued growth in our software revenues, and on the full year, we continue to believe that hardware revenues will approach fiscal 2022 levels.
Fiscal 1Q 2024 Financial Review
Fiscal first quarter revenue was
Gross profit margin was
Operating expenses of
GAAP net loss in the quarter was (
Excluding other income and expense, net income tax expense (benefit), depreciation, stock-based compensation and amortization of intangibles, Adjusted EBITDA was (
Cash, cash equivalents and marketable securities totaled
We include in this press release the non-GAAP operational metrics of adjusted EBITDA, which we believe provide helpful information to investors with respect to evaluating the Company’s performance. Adjusted EBITDA represents our net loss before other income and expense, net, income tax expense (benefit), depreciation and amortization expense and stock-based compensation. We do not consider these items to be indicative of our core operating performance. The items that are non-cash include depreciation and amortization expense and stock-based compensation. Adjusted EBITDA is a measure used by management to understand and evaluate our core operating performance and trends and to generate future operating plans, make strategic decisions regarding allocation of capital and invest in initiatives that are focused on cultivating new markets for our solutions. In particular, the exclusion of certain expenses in calculating Adjusted EBITDA facilitates comparisons of our operating performance on a period-to-period basis.
Webcast and Conference Call Details
Management will host a conference call to discuss the financial results for the first quarter of fiscal year 2024 this afternoon at 4:30 p.m. Eastern Time / 1:30 p.m. Pacific Time. To access the conference call, dial toll-free (888) 390-3967, or international at (862) 298-0702. A webcast will also be available at the following link: https://www.webcaster4.com/Webcast/Page/1375/49779
Questions to management may be submitted before the call by emailing them to: ir@genasys.com. A replay of the webcast will be available approximately four hours after the presentation on the page of the Company’s website.
About Genasys Inc.
Genasys Inc. (NASDAQ: GNSS) is the global leader in Protective Communications Solutions and Systems, designed around one premise: ensuring organizations and public safety agencies are “Ready when it matters™”. The Company provides the Genasys Protect platform, the most comprehensive portfolio of preparedness, response, and analytics software and systems, as well as Genasys Long Range Acoustic Devices® (LRAD®) that deliver directed, audible voice messages with exceptional vocal clarity from close range to 5,500 meters. Genasys serves state and local governmental agencies, and education (SLED); enterprise organizations in critical sectors such as oil and gas, utilities, manufacturing, and automotive; and federal governments and the military. Genasys Protective Communications Solutions have diverse applications, including emergency warning and mass notification for public safety, critical event management for enterprise companies, de-escalation for defense and law enforcement, and automated detection of real-time threats like active shooters and severe weather. Today, Genasys protects over 70 million people globally and is used in more than 100 countries, including more than 500 cities, counties, and states in the U.S. For more information, visit genasys.com.
Forward-Looking Statements
Except for historical information contained herein, the matters discussed are forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. You should not place undue reliance on these statements. We base these statements on particular assumptions that we have made in light of our industry experience, the stage of product and market development as well as our perception of historical trends, current market conditions, current economic data, expected future developments and other factors that we believe are appropriate under the circumstances. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those suggested in any forward-looking statement. The risks and uncertainties in these forward-looking statements include without limitation the business impact of geopolitical conflict, epidemics or pandemics, and other causes that may affect our supply chain, and other risks and uncertainties, many of which involve factors or circumstances that are beyond the Company's control. Risks and uncertainties are identified and discussed in our filings with the Securities and Exchange Commission. These forward-looking statements are based on information and management's expectations as of the date hereof. Future results may differ materially from our current expectations. For more information regarding other potential risks and uncertainties, see the "Risk Factors" section of the Company's Form 10-K for the fiscal year ended September 30, 2023. Genasys Inc. disclaims any intent or obligation to publicly update or revise forward-looking statements, except as otherwise specifically stated.
Investor Relations Contacts
Brian Alger, CFA
SVP, IR and Corporate Development
ir@genasys.com
(858) 676-0582
| Genasys Inc. | ||||||||
| Condensed Consolidated Balance Sheets | ||||||||
| (Unaudited - in thousands) | ||||||||
| December 31, | September 30, | |||||||
| 2023 | 2023 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 4,780 | $ | 8,665 | ||||
| Short-term marketable securities | 8,777 | 1,481 | ||||||
| Restricted cash | - | 758 | ||||||
| Accounts receivable, net | 4,435 | 5,952 | ||||||
| Inventories, net | 6,890 | 6,501 | ||||||
| Prepaid expenses and other | 2,100 | 1,851 | ||||||
| Total current assets | 26,982 | 25,208 | ||||||
| Long-term restricted cash | 346 | 96 | ||||||
| Property and equipment, net | 1,587 | 1,551 | ||||||
| Goodwill | 13,151 | 10,282 | ||||||
| Intangible assets, net | 10,366 | 8,427 | ||||||
| Operating lease right of use asset | 3,712 | 3,886 | ||||||
| Prepaid expenses and other - noncurrent | 494 | 455 | ||||||
| Total assets | $ | 56,638 | $ | 49,905 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 1,897 | $ | 2,785 | ||||
| Accrued liabilities | 8,618 | 7,466 | ||||||
| Operating lease liabilities, current portion | 1,031 | 1,008 | ||||||
| Total current liabilities | 11,546 | 11,259 | ||||||
| Other liabilities, noncurrent | 509 | 551 | ||||||
| Operating lease liabilities, noncurrent | 4,030 | 4,283 | ||||||
| Total liabilities | 16,085 | 16,093 | ||||||
| Total stockholders' equity | 40,553 | 33,812 | ||||||
| Total liabilities and stockholders' equity | $ | 56,638 | $ | 49,905 | ||||
| Genasys Inc. | |||||||
| Condensed Consolidated Statements of Operations | |||||||
| (Unaudited - in thousands, except per share amounts) | |||||||
| Three months ended | |||||||
| December 31, | |||||||
| 2023 | 2022 | ||||||
| (unaudited) | (unaudited) | ||||||
| Revenues | $ | 4,361 | $ | 10,487 | |||
| Cost of revenues | 2,882 | 5,655 | |||||
| Gross profit | 1,479 | 4,832 | |||||
| 33.9 | % | 46.1 | % | ||||
| Operating expenses: | |||||||
| Selling, general and administrative | 6,518 | 6,384 | |||||
| Research and development | 2,191 | 1,935 | |||||
| Total operating expenses | 8,709 | 8,319 | |||||
| Loss from operations | (7,230 | ) | (3,487 | ) | |||
| Other income and expense, net | 77 | (20 | ) | ||||
| Loss before income taxes | (7,153 | ) | (3,507 | ) | |||
| Income tax benefit | (429 | ) | - | ||||
| Net loss | $ | (6,724 | ) | $ | (3,507 | ) | |
| Net loss per common share: | |||||||
| Basic | $ | (0.15 | ) | $ | (0.10 | ) | |
| Weighted average common shares outstanding: | |||||||
| Basic | 43,729 | 36,696 | |||||
| Reconciliation of GAAP measures to non-GAAP measures | |||||||
| Net loss | $ | (6,724 | ) | $ | (3,507 | ) | |
| Other income and expense, net | (77 | ) | 20 | ||||
| Income tax benefit | (429 | ) | - | ||||
| Depreciation and amortization | 729 | 643 | |||||
| Stock based compensation | 446 | 420 | |||||
| Adjusted EBITDA | $ | (6,055 | ) | $ | (2,424 | ) | |
FAQ
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