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Genasys Inc. (GNSS)·Q4 2024 Earnings Summary

Executive Summary

  • Fiscal Q4 2024 revenue fell to $6.74M, down 37% year over year and down sequentially from Q3; gross margin contracted to 40.8%, GAAP EPS was -$0.26, and adjusted EBITDA was -$6.0M .
  • Record FY 2024 bookings of $111M and a 12‑month backlog of $40M set up FY 2025 growth; management highlighted approvals on the first three of seven Puerto Rico dam groups ($35M) with deposits received and invoicing underway, with initial PREPA revenue contribution expected in the March quarter of FY 2025 .
  • Software momentum continued: Q4 recurring software revenue grew 110% YoY; full-year recurring software revenue grew 115%, and FY25 opening ARR was $8.3M .
  • No specific numerical guidance given; management expects substantial FY 2025 hardware revenue growth (Puerto Rico-driven) and moderating software growth rates; deposits precede revenue on PREPA .
  • Potential stock catalysts: confirmation of PREPA installation cadence and first revenue in March quarter, backlog conversion timing, and visibility on U.S. Army CROWS/AHD program ramp .

What Went Well and What Went Wrong

What Went Well

  • “Record Fiscal 2024 bookings of $111 million” and starting FY 2025 with “12-month backlog of $40 million,” with PREPA’s $75M dams project driving hardware momentum; three groups approved ($35M), deposits received/invoiced .
  • Software traction: Q4 recurring software up 110% YoY; full-year recurring software revenue +115%; ARR entered FY 2025 at $8.3M, supported by wins like Los Angeles County ALERT/EVAC and Oregon statewide EVAC .
  • International hardware bookings rebounded 86% YoY; law enforcement LRAD bookings improved with a $3.35M Indian Navy LRAD maintenance renewal, validating broader hardware pipeline recovery .

What Went Wrong

  • Hardware revenues were weak: Q4 hardware fell 52% YoY to $4.6M; total Q4 revenue declined 37% YoY; gross margin down ~9 pts YoY to 40.8% on reduced overhead absorption .
  • Operating expenses rose: Q4 OpEx increased to $9.9M (SG&A +20.6%, R&D +37.1% YoY), pressuring profitability; adjusted EBITDA deteriorated to -$6.0M in Q4 .
  • Non-cash and financing impacts: Q4 GAAP net loss included ~$3.5M non-cash loss from warrant fair value tied to the term loan, contributing to $11.4M net loss; FY 2024 GAAP net loss widened to $31.7M .

Financial Results

Summary Metrics vs Prior Year and Prior Quarter

MetricQ4 2023Q3 2024Q4 2024
Revenue ($USD Millions)$10.70 $7.17 $6.74
Gross Margin (%)49.6% 52.8% 40.8%
Operating Expenses ($USD Millions)$7.95 $9.15 $9.88
Operating Income (Loss) ($USD Millions)($2.64) ($5.36) ($7.13)
GAAP Net Income (Loss) ($USD Millions)($10.06) ($6.68) ($11.39)
Diluted EPS - Continuing Operations ($USD)($0.27) ($0.15) ($0.26)
Adjusted EBITDA ($USD Millions)($1.69) ($4.33) ($6.01)

Segment Revenue Breakdown

SegmentQ3 2024 ($USD Millions)Q4 2024 ($USD Millions)
Software Revenue$2.1 $2.1
Hardware Revenue$5.1 $4.6
Total$7.2 $6.7

KPIs and Balance Sheet

KPI / Balance Sheet ItemFY 2023FY 2024
Bookings ($USD Millions)N/A$111
Backlog (12-month, $USD Millions)N/A>$40
ARR at FY start ($USD Millions)N/A$8.3 (start FY25)
Cash, Cash Equivalents & Marketable Securities ($USD Millions)$10.1 (as of 9/30/23) $13.1 (as of 9/30/24)
PREPA Project Value ($USD Millions)N/A~$75
PREPA Groups Approved (Value, $USD Millions)N/A~3 groups approved totaling ~$35
PREPA DepositsN/ADeposit received on first group; invoiced second group
PREPA Deposit Amount (Calendar update)N/A$8.0M deposit received (calendar year end update)

Quarterly Revenue Trend (for trajectory)

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$5.7 $7.17 $6.74

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Software Revenue GrowthFY 2025Not providedGrowth to “moderate” from triple-digit FY 2024 pace; full-year inclusion of Evertel and normalization of growth rate Maintained directional; moderated
Hardware RevenueFY 2025Not providedSubstantial growth expected driven by FY 2024 bookings and Puerto Rico project; deposits precede revenue Raised directional
PREPA Revenue TimingFY 2025Not providedFirst revenue contribution “reasonable” in March quarter, subject to installation variability New timing color
Numerical Financial GuidanceFY 2025N/ANot provided due to variability in delivery/installation and grant timing Maintained: none

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2, Q3)Current Period (Q4)Trend
Puerto Rico PREPA dams projectContract value grew to ~$75M; funding fully FEMA-backed; FOMB approval secured; cash inflows precede revenue; most revenue expected FY25–FY26 3 groups approved (~$35M); first deposit received; second invoiced; initial revenue likely in March quarter; installation cadence depends on multi-owner coordination Advancing toward execution
Software ARR/recurringARR $6.5M exiting Q2; expectation to at least double ARR in FY24 Recurring +110% YoY in Q4; ARR $8.3M entering FY25; pipeline and closure rates “very good” Strong and scaling
International hardware bookingsUp ~117% YTD through first three quarters Up 86% YoY for FY24; Indian Navy $3.35M renewal underscores rebound Sustained rebound
Law enforcement LRAD + CONNECT synergyLE hardware bookings nearly 50% above FY23 by Q3; combined sales driving uptake Continued LRAD usage; CONNECT customer count “400+” with wide size variance; expanding sales team (5–6 open reqs) Growing with cross-sell
U.S. Army CROWS/AHD programProgram established; potential $10–$15M annualized post ramp; kickoff in June Actively planning/scheduling; supportive federal budget outlook Pipeline building
Financing/warrants and P&L impacts$15M term loan closed in May; SOFR-based interest with equity component option Q4 included $3.5M non-cash warrant fair value loss; interest/other expense elevated Near-term headwind
Macro/federal budgetDoD budget delays impacted Q2/Q3 deliveries Current CR had “no impact”; expectation new administration friendly to defense Easing constraint
Competitive landscapeEverbridge focus on enterprise; SLED a GNSS focus Not updated in Q4Stable positioning

Management Commentary

  • CEO: “Fiscal year 2024 was a challenging year from a financial perspective… revenue and subsequent margins throughout 2024 were well below expectations,” but “Fiscal 2024 did have a number of important positive milestones… Puerto Rico dam contract for $75 million is far and away the most significant… backlog is $40 million… approval on the first three of seven groups of dams in Puerto Rico” .
  • CFO: “GAAP net loss in this fiscal year’s fourth quarter was $11.4 million, including $4.2 million of other expense. This expense includes a $3.5 million noncash loss on the change in the fair value of the warrants related to a term loan” .
  • CEO: “Genasys is starting fiscal 2025 with tremendous momentum… booked $111 million in new business. Our 12-month backlog is $40-plus million… our software business is starting fiscal 2025 with an ARR of 8.3 million” .
  • CFO: “Hardware revenues decreased 61%… partially offset by a 93% increase in software revenue… operating expenses grew $4.2 million to $36.9 million primarily due to the addition of Evertel” .

Q&A Highlights

  • PREPA timing: Management sees March quarter as “reasonable expectation” for first revenue, with additional groups invoicing scheduled; installation cadence remains variable due to multiple dam owners .
  • Additional Puerto Rico opportunities: Expect an RFP for unrelated hardware later in FY 2025 .
  • Federal budget/CR: No current impact; outlook supportive under incoming administration .
  • CONNECT metrics: Customer count “400+” with wide range of customer sizes; company tracking CAC/ARPU but will disclose once scale improves .
  • ARR outlook: Plans and expectations for FY25 ARR exist but not shared; continue to expect significant SaaS growth .
  • Backlog composition: PREPA is largest portion, software ARR included, but no granular breakdown provided .
  • Sales capacity: Increasing software sales headcount with 5–6 open roles .

Estimates Context

  • S&P Global consensus estimates for Q4 2024 and prior periods were unavailable at time of request due to data access limits; the company did not provide numeric guidance, so we cannot assess beat/miss vs Street consensus at this time. Management commentary indicates directional expectations (hardware growth, moderated software growth), but no specific revenue/EPS targets were issued .
  • Note: SPGI request returned a daily-limit error; estimates comparison not performed.

Key Takeaways for Investors

  • Near-term inflection depends on PREPA execution: deposits received, three groups approved (~$35M); confirmation of March-quarter revenue start and installation cadence are key stock catalysts .
  • Software provides recurring ballast: Q4 recurring +110% YoY; ARR $8.3M entering FY25; large SLED customers (LA County, Oregon) support continued ARR build and cross-sell of hardware .
  • Hardware recovery underway: International bookings rebounded; law enforcement LRAD orders and critical infrastructure projects broaden the base beyond PREPA .
  • Profitability path requires scale and mix shift: Margin compression from lower hardware volumes and higher OpEx suggests operating leverage will hinge on backlog conversion (Puerto Rico) and sustained software mix .
  • Watch financing impacts: Warrant-related non-cash P&L volatility and interest expense from term loan are headwinds; backstop liquidity supported by deposits and backlog .
  • Defense tailwinds: CROWS/AHD program planning underway; potential $10–$15M annualized contribution post ramp can diversify revenue streams .
  • No numerical guidance: Position sizing and risk management should account for installation/delivery variability, grant timing, and multi-stakeholder coordination in Puerto Rico .