Genasys Inc. Reports Fiscal Second Quarter 2024 Financial Results
Genasys Inc. (NASDAQ: GNSS), the leader in Protective Communications, announced its fiscal second quarter 2024 results ended March 31, 2024. The company reported revenue of $5.7 million, a significant decrease from $11.2 million in 2Q 2023. GAAP net loss widened to $6.9 million from $3.4 million the previous year. Software revenue grew by 104%, whereas hardware revenue fell by 61%. The Puerto Rico dam project was expanded to $75 million. Genasys also secured a $15 million two-year term loan and is optimistic about future projects, despite lower-than-expected hardware revenues for fiscal 2024.
- Expansion of Puerto Rico dam project to $75 million.
- Software revenue increased by 104% YoY.
- Recurring software revenue grew by 123% YoY.
- Secured a $15 million two-year term loan.
- Positive long-term outlook for the CROWS 16 program.
- Revenue decreased by 48.8% YoY to $5.7 million.
- GAAP net loss widened to $6.9 million from $3.4 million YoY.
- Gross profit margin dropped to 37.9% from 43.9% YoY.
- Hardware revenue fell by 61% YoY.
- Operating expenses increased to $9.2 million from $8.3 million YoY.
- GAAP net loss per share was $0.16, compared to $0.09 in 2Q 2023.
- Cash, cash equivalents, and marketable securities decreased to $6.6 million from $10.1 million.
- Adjusted EBITDA was ($5.7) million, compared to ($2.3) million in prior year.
Insights
Genasys Inc.'s financial results for the fiscal second quarter present a mixed picture. Revenue dropped by nearly 50% compared to the same quarter last year, down from
The company also reported a GAAP net loss of $6.9 million, doubling from last year's loss of $3.4 million. This is attributed to higher operating expenses, which increased by 10% year-over-year. Research and development expenditures are also up, reflecting ongoing investments, likely in response to their acquisition of Evertel and enhancement of software features, which, while beneficial long-term, are currently weighing on profitability.
It's important to consider the expanded scope of the Puerto Rico project and the CROWS 16 program in future projections. Together, these initiatives could significantly boost revenue and profitability, yet the timing remains uncertain, especially for fiscal 2024. They are anticipated to provide
Overall, while the immediate financials are not favorable, ongoing projects and software growth provide a hopeful outlook. Retail investors should weigh the current losses against potential long-term gains.
The expansion of the Puerto Rico Early Warning System project to $75 million and the establishment of the CROWS 16 program within the US DoD budget are significant developments for Genasys. These initiatives could substantially enhance Genasys' market footprint and revenue streams, particularly in the protective communications sector. The Puerto Rico project alone signifies a major contract that could offer steady cash flow over an extended period, improving the company's market position and financial stability.
Genasys is also seeing an increased adoption of its software across 39 states, reflecting a broadening customer base and potentially less dependency on hardware sales. This diversification is important for mitigating risks associated with fluctuations in hardware demand.
The company's recent financing through a
Overall, these developments could position Genasys well for long-term growth, but the immediate financial performance remains weak. Investors should consider the broader market trends and the company's strategic initiatives when evaluating potential investment risks and rewards.
In terms of technology, Genasys' focus on expanding its software solutions and enhancing the features of its offerings is a positive sign. The 104% increase in software revenue and the 123% rise in quarterly recurring revenue highlight the growing demand and potential of their SAAS (Software as a Service) model. This shift towards software, which often comes with higher margins and more predictable revenue streams, is a strategic move that could help stabilize the company's financials in the long term.
The CROWS 16 program, included in the US DoD budget, underscores the strategic importance of Genasys' LRAD (Long Range Acoustic Device) technology. This program could ensure a steady demand for their specialized communication solutions for years to come, reinforcing the company's position in the defense sector.
Furthermore, the ongoing developments and enhancements in their software products, driven by increased R&D investment, indicate a commitment to maintaining technological leadership. This can be a strong competitive advantage, especially in the public safety and defense sectors where Genasys operates.
While the immediate financial results are disappointing, the technological advancements and strategic projects underway could drive future growth. It's important for investors to consider these technological factors in their long-term investment decisions.
Increased Scope in Puerto Rico Expands Opportunity to
CROWS 16 Program Established
SAN DIEGO, May 14, 2024 (GLOBE NEWSWIRE) -- Genasys Inc. (NASDAQ: GNSS), the leader in Protective Communications, today announced financial results for the Company’s fiscal second quarter ended March 31, 2024.
Richard S. Danforth, Chief Executive Officer of Genasys, Inc., commented, “Genasys is finally turning the corner. The previously announced project in Puerto Rico has been expanded to
Mr. Danforth continued, “Bookings activity in our Software business continues to track in line with our aggressive expectations. Not only does our footprint in California continue to expand but we are also seeing broader adoption with Genasys software being utilized in 39 states, The outlook for the hardware business is outstanding, and the recurring revenues of the software business rapidly growing. We are more confident in the long-term health of our business than we have ever been.”
Fiscal 2Q 2024 Financial Summary
- Revenue of
$5.7 million , versus$11.2 million in 2Q 2023 - GAAP operating loss of (
$6.9) million , versus ($3.4) million in 2Q 2023. - GAAP net loss of (
$6.9) million versus ($3.4) million in 2Q 2023. GAAP net loss per share ($0.16) versus ($0.09) in 2Q 2023. - Adjusted EBITDA of (
$5.7) million , versus ($2.3) million in 2Q 2023.
Business Highlights
- Expanded project value of previously announced Early Warning System (EWS) for 37 dams on the island of Puerto Rico to approximately
$75 million . - Fortified balance sheet through
$15 million , two-year term loan agreement. Loan agreement calls for non-amortizing quarterly interest payments, with pre-payment optionality. - Expanded our Board of Directors with two independent directors with extensive understanding of the public sector markets for emergency planning, management and response.
Business Outlook
Over the past several weeks, we have had numerous constructive conversations with our Puerto Rican customer, PREPA. As a result of those conversations, we now expect the project in Puerto Rico to generate approximately
Regardless of precise timing, the project in Puerto Rico is expected to generate substantial EBITDA and cash. Importantly, by breaking down the project into distinct groups, the cash for deposits, installation, and final approvals is expected to flow consistently over the duration of the project. This approach is expected to lead to overall better margins in our hardware business as overhead absorption should be more distributed, especially as the CROWS 16 program ramps up.
Today’s announced financing is expected to provide adequate resources to enable Genasys to continue growing its software business, while ramping production and deliveries to our hardware customers. Profits from the Puerto Rico dam project and future CROWS 16 deliveries are expected to not only enable timely repayment of the debt obligation, but also strengthen the Company’s balance sheet.
Entering fiscal 2024, we expected a very back end loaded year from a revenue standpoint, given the exceptionally low initial backlog. Though the US DoD budget was passed at the end of March, we have yet to see related funding and subsequent purchase orders flow to Genasys. While funding and orders are still considered likely to progress, and we are very confident that CROWS 16 and the Puerto Rico dam project will drive substantial revenues in fiscal 2025 and beyond, we no longer expect fiscal 2024 hardware revenues to meet prior forecasts. Software revenues are still expected to grow sequentially with ARR at least doubling year over year at fiscal year end.
Fiscal 2Q 2024 Financial Review
Fiscal Second 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 second 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/1375/50525.
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 conflicts, 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) | ||||||||
| March 31, | September 30, | |||||||
| 2024 | 2023 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 3,544 | $ | 8,665 | ||||
| Short-term marketable securities | 3,011 | 1,481 | ||||||
| Restricted cash | - | 758 | ||||||
| Accounts receivable, net | 2,820 | 5,952 | ||||||
| Inventories, net | 6,564 | 6,501 | ||||||
| Prepaid expenses and other | 6,324 | 1,851 | ||||||
| Total current assets | 22,263 | 25,208 | ||||||
| Long-term restricted cash | 346 | 96 | ||||||
| Property and equipment, net | 1,483 | 1,551 | ||||||
| Goodwill | 13,251 | 10,282 | ||||||
| Intangible assets, net | 9,743 | 8,427 | ||||||
| Operating lease right of use asset | 3,507 | 3,886 | ||||||
| Prepaid expenses and other - noncurrent | 439 | 455 | ||||||
| Total assets | $ | 51,032 | $ | 49,905 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 2,597 | $ | 2,785 | ||||
| Accrued liabilities | 8,308 | 7,466 | ||||||
| Operating lease liabilities, current portion | 1,027 | 1,008 | ||||||
| Total current liabilities | 11,932 | 11,259 | ||||||
| Other liabilities, noncurrent | 445 | 551 | ||||||
| Operating lease liabilities, noncurrent | 3,773 | 4,283 | ||||||
| Total liabilities | 16,150 | 16,093 | ||||||
| Total stockholders' equity | 34,882 | 33,812 | ||||||
| Total liabilities and stockholders' equity | $ | 51,032 | $ | 49,905 | ||||
| Genasys Inc. | |||||||||||||||
| Condensed Consolidated Statements of Operations | |||||||||||||||
| (Unaudited - in thousands, except per share amounts) | |||||||||||||||
| Three months ended | Six months ended | ||||||||||||||
| March 31, | March 31, | ||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||
| (unaudited) | (unaudited) | (unaudited) | (unaudited) | ||||||||||||
| Revenues | $ | 5,739 | $ | 11,213 | $ | 10,100 | $ | 21,700 | |||||||
| Cost of revenues | 3,562 | 6,288 | 6,444 | 11,943 | |||||||||||
| Gross profit | 2,177 | 4,925 | 3,656 | 9,757 | |||||||||||
| 37.9 | % | 43.9 | % | 36.2 | % | 45.0 | % | ||||||||
| Operating expenses: | |||||||||||||||
| Selling, general and administrative | 6,640 | 6,054 | 13,158 | 12,439 | |||||||||||
| Research and development | 2,531 | 2,281 | 4,722 | 4,216 | |||||||||||
| Total operating expenses | 9,171 | 8,335 | 17,880 | 16,655 | |||||||||||
| Loss from operations | (6,994 | ) | (3,410 | ) | (14,224 | ) | (6,898 | ) | |||||||
| Other income and expense, net | 51 | 15 | 128 | (4 | ) | ||||||||||
| Loss before income taxes | (6,943 | ) | (3,395 | ) | (14,096 | ) | (6,902 | ) | |||||||
| Income tax (benefit) expense | (5 | ) | 8 | (434 | ) | 8 | |||||||||
| Net loss | $ | (6,938 | ) | $ | (3,403 | ) | $ | (13,662 | ) | $ | (6,910 | ) | |||
| Net loss per common share: | |||||||||||||||
| Basic | $ | (0.16 | ) | $ | (0.09 | ) | $ | (0.31 | ) | $ | (0.19 | ) | |||
| Weighted average common shares outstanding: | |||||||||||||||
| Basic | 44,248 | 36,817 | 44,027 | 36,756 | |||||||||||
| Reconciliation of GAAP measures to non-GAAP measures | |||||||||||||||
| Net loss | $ | (6,938 | ) | $ | (3,403 | ) | $ | (13,662 | ) | $ | (6,910 | ) | |||
| Other income and expense, net | (51 | ) | (15 | ) | (128 | ) | 4 | ||||||||
| Income tax (benefit) expense | (5 | ) | 8 | (434 | ) | 8 | |||||||||
| Depreciation and amortization | 731 | 639 | 1,460 | 1,282 | |||||||||||
| Stock based compensation | 524 | 513 | 970 | 933 | |||||||||||
| Adjusted EBITDA | $ | (5,739 | ) | $ | (2,258 | ) | $ | (11,794 | ) | $ | (4,683 | ) | |||
FAQ
What were Genasys Inc.'s revenues for fiscal Q2 2024?
How much did Genasys Inc.'s net loss increase in fiscal Q2 2024?
What was the growth in Genasys Inc.'s software revenue in fiscal Q2 2024?
What is the value of the expanded Puerto Rico dam project for Genasys Inc.?
What financial assistance did Genasys Inc. secure recently?
What were the changes in Genasys Inc.'s gross profit margin in fiscal Q2 2024?
How did Genasys Inc.'s hardware revenue perform in fiscal Q2 2024?
What were Genasys Inc.'s operating expenses in fiscal Q2 2024?
