Genasys Inc. Reports Fiscal First Quarter 2024 Financial Results
Genasys Inc. announces financial results for the fiscal first quarter of 2024, showcasing revenue of $4.4 million, a decrease from the previous year. The company highlights contracts with Los Angeles County, Utah Department of Corrections, and Puerto Rico for its Protective Communications solutions. Despite a decrease in hardware revenue, software revenue saw growth, leading to an Adjusted EBITDA of ($6.1) million. The company emphasizes a back-end loaded fiscal year with confidence in future growth.
Positive
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.
Negative
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.
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.
02/13/2024 - 04:45 PM
SAN DIEGO, Feb. 13, 2024 (GLOBE NEWSWIRE) -- Genasys Inc. ( NA S D AQ: 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 $4.4 million , a decrease of 58.4% from $10.5 million in the prior year's quarter. Software revenue increased 56.6% while hardware revenue decreased 69.3% , compared with the fiscal 2023 first quarter. Within software, quarterly recurring revenue increased 84.9% year over year.
Gross profit margin was 33.9% , compared with 46.1% in the first quarter of fiscal 2023. The drop in gross profit is attributable to lower hardware revenue in this year’s quarter and the related reduction in overhead absorption. Software gross margins improved nearly 15 percentage points year over year.
Operating expenses of $8.7 million increased from $8.3 million in fiscal 1Q 2023. Selling, general and administrative expenses increased 2.1% from $6.4 million in the prior year to $6.5 million in the quarter ended December 31, 2023. Research and development expenses increased 13.2% year over year primarily related to efforts to increase the features and functionality of our software offerings.
GAAP net loss in the quarter was ($6.7) million , or ($0.15) per share, compared with a GAAP net loss of ($3.5) million , or ($0.10) per share, in the first quarter of fiscal 2023.
Excluding other income and expense, net income tax expense (benefit), depreciation, stock-based compensation and amortization of intangibles, Adjusted EBITDA was ($6.1) million for the first quarter of fiscal 2024, compared with ($2.4) million for the prior fiscal year period.
Cash, cash equivalents and marketable securities totaled $13.6 million as of December 31, 2023, compared with $10.1 million as of September 30, 2023. Accounts receivable at quarter end totaled $4.4 million versus $6.0 million as of September 30, 2023.
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, CFAir@genasys.com
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 )
What was Genasys Inc.'s revenue in the fiscal first quarter of 2024?
Genasys Inc. reported revenue of $4.4 million in the fiscal first quarter of 2024.
What contracts did Genasys Inc. secure recently?
Genasys Inc. secured contracts with Los Angeles County, Utah Department of Corrections, and Puerto Rico for its Protective Communications solutions.
How did software and hardware revenue perform in the first quarter of fiscal 2024?
Software revenue increased by 56.6%, while hardware revenue decreased by 69.3% in the first quarter of fiscal 2024.
What was Genasys Inc.'s Adjusted EBITDA in the first quarter of fiscal 2024?
Genasys Inc.'s Adjusted EBITDA was ($6.1) million in the first quarter of fiscal 2024.
What is Genasys Inc.'s outlook for the fiscal year 2024?
Genasys Inc. expects a back-end loaded fiscal year with confidence in future growth.
