Executive Summary

Q1 FY’25 revenue was $2.44M, up 44% QoQ vs Q4 FY’24 ($1.7M) but down 21% YoY vs Q1 FY’24 ($3.10M); gross margin expanded to 79% (vs 62% YoY), and adjusted EBITDA loss improved to $(0.46)M .
Management guided that the next three quarters should average >$3M per quarter and FY’25 revenue should be $11–$12M, with expected positive cash flow each of the remaining quarters (clean capital structure: no debt, convertibles, or preferred) .
Strategic actions: divested QReal to streamline operations; expected net cash value ~$4.0M over two years and ~60 fewer employees; retained revenues from QReal’s largest customer until a $1.35M milestone is met; received a $1.56M senior secured convertible note and minority equity in the NewCo .
Street consensus (S&P Global) for Q1 FY’25 EPS and revenue was unavailable due to data access limits; therefore beat/miss vs estimates cannot be assessed this quarter (see “Estimates Context”).

What Went Well and What Went Wrong

What Went Well

SpatialCore traction drove sequential revenue growth and margin expansion: “Q1 FY ’25 revenue…44% increase vs Q4 FY ’24…primarily driven by an increase in Spatial Core revenues,” and gross margin was ~79% vs 62% YoY .
Adjusted EBITDA loss improved materially to $(0.46)M vs $(1.29)M YoY; management expects positive cash flow in each of the next three quarters given revenue pipeline and reduced cost base .
Strong pipeline and multi‑million‑dollar opportunities: “short‑term aggregate value…in the $5–$10 million range,” with confirmation of one contract expected in Dec ’24 and others in early 2025 (budget timing) ; CEO reiterated “significant progress towards securing several multimillion-dollar…SpatialCore contracts” .

What Went Wrong

Top‑line declined YoY: Q1 FY’25 revenue fell 21% vs Q1 FY’24 due to strategic alignment, legacy customer turnover, and business consolidation/divestitures .
Still loss‑making on GAAP: Q1 FY’25 net loss $(1.01)M and EPS $(0.06), with total operating expenses of $2.96M, up YoY as restructuring flowed through .
Macro/government budget delays affecting award timing: continuing resolution and lack of a FY’25 federal budget delayed DoD/government opportunities, pushing expected confirmations into early 2025 .

Financial Results

Summary (YoY and Sequential)

Metric	Q1 FY’24 (Sep 2023)	Q4 FY’24 (Jun 2024)	Q1 FY’25 (Sep 2024)
Revenue ($USD Millions)	$3.105	$1.700	$2.438
Gross Margin (%)	62%	—	79%
Gross Profit ($USD Millions)	$1.923	—	$1.923
Adjusted EBITDA ($USD Millions)	$(1.29)	—	$(0.46)
Net Income ($USD Millions)	$(0.119)	—	$(1.014)
Diluted EPS ($USD)	$(0.01)	—	$(0.06)

Notes: Q4 margin and gross profit were not disclosed at a quarterly level in filings provided; adjusted EBITDA reconciliation is non‑GAAP as disclosed .

Revenue Breakdown (Q1 FY’25 vs Q1 FY’24)

Revenue Line	Q1 FY’24 ($USD)	Q1 FY’25 ($USD)
Software services	$3,012,071	$2,229,257
Software license / SaaS	$92,809	$209,112
Total Revenue	$3,104,880	$2,438,369

KPIs and Balance Sheet Snapshot (Quarter-End)

KPI	Q1 FY’24	Q1 FY’25
Cash & Equivalents ($USD)	$3,928,836	$1,413,794
Accounts Receivable ($USD)	$—	$871,493
Total Current Assets ($USD)	$—	$3,422,747
Total Current Liabilities ($USD)	$—	$4,137,316
Working Capital ($USD)	$—	$(714,569) (calc from current assets and liabilities)
Net Cash from Operations (Quarter) ($USD)	$(1,683,217)	$(425,045)

Non‑GAAP: Adjusted EBITDA loss of $(0.46)M in Q1 FY’25; reconciliation provided in 8‑K .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance (Q1 FY’25)	Change
Quarterly Revenue	Q1–Q3 FY’25	FY’24 release guided: Q1 higher than Q4 FY’24; Q2 and Q3 each >$3M	Next three quarters to average >$3M per quarter	Maintained/incrementally strengthened framing
FY Revenue	FY’25	“Expect significantly higher revenue in upcoming quarters” (directional)	$11–$12M FY’25	Raised to explicit range
Gross Margin	Ongoing	60–70% range	60–70% range	Maintained
Cash Flow	Q2–Q4 FY’25	Expect to be cash flow positive in upcoming quarters	Expect positive cash flow in each of the remaining three quarters	Maintained/clarified
Capital Raise	Near term	“Do not intend to raise capital…” (Q1 PR)	Subsequent update: raised $7.3M gross in Dec ’24 via registered direct (Q2 PR)	Updated post‑quarter (changed)
Quarterly Revenue	Q3 & Q4 FY’25	N/A	Subsequent update: Q3 $1.5–$2.0M; Q4 $3.3–$4.0M	Added post‑quarter visibility

Earnings Call Themes & Trends

Topic	Previous Mentions (Q-2 and Q-1)	Current Period (Q1 FY’25)	Trend
SpatialCore (AI/cloud) contracts	FY’24: advanced process; $5–$10M short‑term aggregate; DoD ecosystem; CRADA with US Army; Navy CRADA completed	Delivered first phase of large DoD contract; expect confirmations Dec ’24/early ’25 due to budget delays	Building momentum toward multi‑million awards
Government budget timing	N/A	Continuing resolution delays; expect budget by March ’25; awards to follow	External headwind near term, clears in 1H CY’25
Revenue mix/licensing	FY’24: multi‑entity pipeline; software license components cited (Glimpse Learning, Foretell)	Software license revenue doubled QoQ; management expects ~$200k quarterly run‑rate with potential growth	Improving recurring profile
Cost structure	FY’24: Opex base ~$1.0M/month	Run‑rate under $1.0M/month; targeting positive cash flow next quarters	Cost discipline sustained
Strategic review/divestitures	FY’24: strategic options under review; pruning/divestitures referenced	QReal divestiture executed; ~$4.0M expected net cash value; retained largest customer revenue until $1.35M milestone	Portfolio simplification and monetization

Management Commentary

CEO framing on valuation disconnect and strategy: “we expect revenues to continue to increase…cash flow positive…yet [stock] has a ridiculously low market cap…Board…exploring various aggressive strategic options” .
CFO visibility and profitability path: “We expect revenue in the next 3 upcoming quarters to exceed $3 million…FY ’25…$11–$12 million…Adjusted EBITDA loss…~$0.46M…expect to generate positive cash flow in each of the 3 remaining quarters” .
On QReal divestiture rationale: “creates approximately $4.0 million of expected net cash value…simplifies and streamlines…eliminates Turkey country risk…retains revenues from QReal’s largest customer…$1.56M Senior Secured Convertible Note…minority equity stake in Newco” .

Q&A Highlights

Operating expense run‑rate: “we are run rating at under $1 million of monthly costs” .
Licensing durability/recurrence: ~$200k quarterly license revenue is “more or less a reasonable number to expect” with potential recurring follow‑ons tied to SpatialCore .
Demand/inbound pipeline: “Many of the customers are actually coming to us with needs…leaders…constantly talking to customers” .
Government budget cadence: continuing resolution; new Congress to approve budget by March, then awards filter down .
Commercialization of AI use cases: examples across defense and training simulations (doctor‑patient, sales, HR) integrating AI into immersive platforms .

Estimates Context

Wall Street consensus from S&P Global for Q1 FY’25 revenue and EPS was unavailable due to daily request limits on the data service; consequently, we cannot assess beat/miss vs Street for the quarter. If you’d like, we can re‑pull consensus when data access resets and update comparisons accordingly.

Key Takeaways for Investors

Sequential recovery underway with SpatialCore driving a 44% QoQ revenue increase and gross margin expansion to 79%; the mix shift toward software and SpatialCore benefits profitability .
Operating discipline is evident: adjusted EBITDA loss improved to $(0.46)M YoY and cash from operations improved significantly; management targets positive cash flow in each remaining FY’25 quarter .
Near‑term award timing depends on federal budget resolution; expect DoD/government confirmations after March ’25, which could drive step‑ups in revenue and licensing recurrence .
Strategic portfolio actions (QReal divestiture) reduce risk, simplify operations, and provide ~$4.0M expected net cash value plus retained revenue streams and note/equity upside .
Subsequent capital raise (Dec ’24) strengthened liquidity ($8.5M cash at Q2 FY’25), maintaining a clean balance sheet with no debt—providing runway to execute pipeline .
Trading implications: absent Street estimates, catalysts are contract confirmations (DoD/Navy), license growth durability, and any strategic options/share buyback deployment; monitor Q4 FY’25 delivery of large DoD milestone and gross margin trajectory .
Medium‑term thesis: SpatialCore positioned as a middleware/OS for 3D environments integrating AI; expanding government work may translate into commercial applications and recurring software revenue .

Glimpse Group, Inc. (VRAR)·Q1 2025 Earnings Summary