Executive Summary

Q1 FY25 revenue was $8.67M, down 3.3% year over year; operating income improved to $0.13M on lower monitoring center costs, but a $1.50M FX loss drove GAAP net loss to ($2.01M) and EPS ($0.17) .
Non-GAAP Adjusted EBITDA was $1.25M (14.4% margin), up vs Q1 FY24 ($1.06M), but down sequentially vs Q4 FY24 ($1.97M; 20.2% margin) as FX and interest expense weighed on profitability .
Guidance maintained: FY25 revenue $35–$36M and Adjusted EBITDA margin 14–15%; management cites pipeline and cost discipline after the Chile divestiture .
Narrative catalysts: domestic gross margin strength (51%), Chile sale completed, FX volatility and rising facility interest rate (5% in FY25) could drive estimate revisions and sentiment near-term .

What Went Well and What Went Wrong

What Went Well
- Gross margin expanded to ~51% on lower monitoring center costs; operating income swung to $0.13M from a loss YoY .
- Management completed sale of Chile subsidiary; cash ended at $3.74M, with improved working capital QoQ; CEO: “poised for continued success in fiscal year 2025” .
- Adjusted EBITDA up YoY to $1.25M (14.4% margin) on higher gross profit and lower OpEx vs prior year .
What Went Wrong
- Revenue declined 3.3% YoY to $8.67M, with lower monitored offender counts at Michigan and Virginia and Chile impact .
- FX swung to a $1.50M loss vs prior year gain, and interest expense rose on the escalator in the Conrent facility, pressuring GAAP earnings .
- Product sales fell 22% YoY to $0.23M on weaker international sales (Brazil), partly offset by Chile device sales post-divestiture .

Financial Results

Metric	Q3 FY24	Q4 FY24	Q1 FY25
Revenue ($USD Millions)	$9.19	n/a	$8.67
Gross Profit ($USD Millions)	$4.27	n/a	$4.42
Gross Profit Margin %	46%	n/a	51%
Operating Income ($USD Millions)	($0.52)	n/a	$0.13
Net Income ($USD Millions)	($0.87)	n/a	($2.01)
Diluted EPS ($USD)	($0.07)	n/a	($0.17)

Non-GAAP KPIs

Metric	Q3 FY24	Q4 FY24	Q1 FY25
Adjusted EBITDA ($USD Millions)	$1.58	$1.97	$1.25
Adjusted EBITDA Margin %	17.1%	20.2%	14.4%
Non-GAAP EPS ($USD)	$0.13	$0.17	$0.11

Segment/Revenue Mix

Revenue Mix	Q1 FY25 ($USD)	Q1 FY24 ($USD)
Monitoring & Related Services	$8,441,307	$8,674,485
Product Sales & Other	$227,021	$292,487
Total Revenue	$8,668,328	$8,966,972

Geography (Q1 FY25)

Region	Revenue ($USD)	% of Total
United States	$6,473,657	75%
Latin America	$1,973,054	23%
Other (Canada)	$221,617	2%

Balance Sheet KPIs (Quarter-End)

Metric	Sep 30, 2024	Dec 31, 2024
Cash	$3.57M	$3.74M
Accounts Receivable (net)	$4.43M	$5.32M
Inventory (net)	$0.58M	$0.81M
Long-Term Debt (net)	$42.64M	$42.66M

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	FY 2025	$35M – $36M	$35M – $36M	Maintained
Adjusted EBITDA Margin	FY 2025	14% – 15%	14% – 15%	Maintained

Earnings Call Themes & Trends

Note: No Q1 FY25 earnings call transcript was available; themes reflect 10‑Q and press releases.

Topic	Previous Mentions (Q3 FY24 and Q4 FY24)	Current Period (Q1 FY25)	Trend
Chile program/asset	Settlement and performance bond return; impairment at FY24; preparing divestiture	Chile subsidiary sold; $66k loss on sale; Latin America revenue mix reflects transition	De-risking, partner-led model
Foreign exchange (FX)	Large FX loss Q3 FY24 vs prior; currency exposure highlighted	FX loss of ($1.50M) vs prior-year gain; cited as main driver of GAAP loss	Adverse volatility
Cost efficiency	Gross profit up; lower monitoring center/comm costs Q3 FY24	Lower monitoring center costs drove gross margin to ~51%	Improving
Debt/interest	Conrent facility extended to 2027; escalator rates disclosed	Interest owed $1.10M; rate stepped to 5% in FY25; interest expense up	Rising burden
Supply chain	Improving lead times noted	Lead times improved to industry norms	Improving
Technology/R&D	Steady investment	R&D $0.67M; continued PaaS roadmap and apps	Steady
Legal/regulatory	Puerto Rico case stayed; Barnes case ongoing	Legal matters unchanged; no accruals	Stable

Management Commentary

“The quarter ending December 31, 2024 showed increases in gross profit, operating income and Adjusted EBITDA… poised for continued success in fiscal year 2025.” — CEO Derek Cassell .
Business outlook reiterated: FY25 revenue $35–36M; Adjusted EBITDA margin 14–15% .
Revenue declines tied to fewer monitored individuals in Michigan and Virginia and Chile divestiture; offsets from Illinois, Puerto Rico and Bahamas .

Q&A Highlights

No Q1 FY25 earnings call transcript was available to extract Q&A themes (company filed press release and 10‑Q only) .

Estimates Context

S&P Global consensus EPS and revenue estimates for Q1 FY25 were unavailable at time of analysis due to data access limits; therefore, comparison to Street was not possible. Default source for estimates would be S&P Global (Capital IQ), but values could not be retrieved.

Key Takeaways for Investors

Gross margin resilience (51%) and OpEx discipline turned operating income positive despite top-line decline; watch sustainability as FX and interest costs persist .
Guidance maintained (revenue $35–$36M; EBITDA margin 14–15%), signaling confidence in pipeline and legacy program utilization post-Chile sale .
FX sensitivity is the primary GAAP earnings swing factor; a normalization could materially improve reported EPS without operational changes .
Facility interest step-up (5% in FY25, rising thereafter) raises carry costs; deleveraging or refinancing optionality would be a key medium-term catalyst .
Geographic mix tilted to U.S. (75% of revenue); Latin America share should evolve under partner-led Chile model; monitor Michigan/Virginia volumes vs Illinois/Puerto Rico/Bahamas offsets .
Non-GAAP EBITDA remains healthy YoY, but sequential margin compression vs Q4 underscores FX/interest headwinds; focus on cash conversion and working capital (AR build QoQ) .
With no Street comparison available, near-term reactions hinge on margin trajectory, FX prints, and any updates on debt strategy or new contract awards .

Notes:
- All data are from company filings and press releases cited inline. Non-GAAP metrics (Adjusted EBITDA, Non-GAAP EPS) are presented as reported and reconciled in company materials **[1045942_0001437749-25-003117_ex_775316.htm:4]** **[1045942_516b252ad826430692d2c28977df7782_5]** **[1045942_93559552d5cf4109ad19b94b66da318b_5]**.

Track Group, Inc. (TRCK)·Q1 2025 Earnings Summary