Executive Summary

Q1 2025 delivered GAAP profitability on modest revenue, with total revenue of $7.16M (-3% YoY) and strong gross margin of 72.6%; net income rose to $1.3M and diluted EPS to $0.11 .
Bookings were $6.4M (+120% YoY), backlog was $21.2M (Capital $9.9M, Service $5.8M, STEP $5.5M), and working capital remained robust at $35.3M .
Versus SPGI consensus, Q1 revenue beat by ~31% ($7.16M vs $5.46M*) and EPS beat by $0.18 ($0.11 vs -$0.07*); prior quarter (Q4) was a miss on both revenue and EPS*, creating a “beat-and-rebound” narrative for Q1 (values from S&P Global)*.
Management reiterated demand headwinds tied to delayed federal appropriations yet highlighted improved sales execution, reentry into GSA procurement, and early V‑XR traction as catalysts to convert backlog in 2025 .

What Went Well and What Went Wrong

What Went Well

Gross margin expanded to 72.6% (from 64.2% YoY) due to a 25% decrease in cost of sales and favorable mix, supporting operating leverage .
Adjusted EBITDA increased 22% to $1.70M, reflecting margin strength and disciplined OpEx management .
Bookings scaled to $6.4M (+120% YoY) and backlog reached $21.2M, underpinning forward revenue visibility despite funding delays .
Quote: “We started 2025 with improved operational execution and a solid backlog foundation... VirTra is positioned to convert opportunity into growth in the quarters ahead” — CEO John Givens .

What Went Wrong

Revenue dipped 3% YoY as several late‑Q4 orders pushed deliveries (and revenue recognition) into future periods .
Government revenue mix softened in Q1 ($5.2M vs $6.7M prior year), offset by stronger international ($1.9M vs $0.55M prior year) .
Persistent federal budget uncertainty elongated sales cycles and delayed disbursements, creating timing variability in quarterly revenue conversion .

Financial Results

Metric	Q3 2024	Q4 2024	Q1 2025
Revenue ($USD Millions)	$7.48	$5.40	$7.16
Gross Profit ($USD Millions)	$5.50	$3.70	$5.20
Gross Margin %	73%	68.5%	72.6%
Operating Income ($USD Millions)	$0.76	$(0.50)	$1.37
Net Income ($USD Millions)	$0.58	$(0.90)	$1.26
Diluted EPS ($)	$0.05	$(0.08)	$0.11
Adjusted EBITDA ($USD Millions)	$1.08	$(1.80)	$1.70

Segment/Market Mix (Q1 2025):

Market	Q1 2025
Government Revenue ($USD Millions)	$5.2
International Revenue ($USD Millions)	$1.9

KPIs and Balance Sheet Highlights:

KPI	Q3 2024	Q4 2024	Q1 2025
Bookings ($USD Millions)	$8.9	$12.2	$6.4
Backlog ($USD Millions)	—	$22.0	$21.2 (Capital $9.9; Service $5.8; STEP $5.5)
Cash & Equivalents ($USD Millions)	$19.67	$18.04	$17.61
Working Capital ($USD Millions)	~$36.0	$34.8	$35.3
Weighted Avg Diluted Shares (Millions)	11.18	11.16	11.16

Non‑GAAP note: Adjusted EBITDA reconciliation provided in Q1 8‑K Exhibit 99.1 .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Formal Revenue/EPS Guidance	FY/Q2 2025	None disclosed	None disclosed	Maintained (No formal guidance)
V‑XR Deliveries	Q2 2025	Not specified	First deliveries expected; two units sold to date	New update
STEP Contract Structure	Ongoing	Optional renewals	3‑year commitments; renewals ~95%	Raised confidence in recurring revenue
Backlog Conversion Timing	2025–2026	Not specified	Most capital bookings convert in 2025; some deferred to 2026	Clarified timing

No dividend or tax rate guidance was provided in the quarter’s materials .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q‑2: Q4 2024; Q‑1: Q3 2024)	Current Period (Q1 2025)	Trend
AI/content acceleration	Q4: “leveraging AI to drastically reduce video editing time” ; Q3: strong scenario library and margins	Increased AI use to accelerate content development and expand certified courses (>120 hours)	Increasing deployment and output
Federal funding/CR headwinds	Q4: budget delays and disbursement pauses impacting conversion ; Q3: continuing resolution risk and timing	Agencies facing delayed budget approvals/grants; longer sales cycles	Persistent headwind, managed via sales/process upgrades
Procurement channels	—	Reentered GSA with standardized bundles to reduce friction	Improved channel access
V‑XR product traction	Q4: first Canada sale; initial orders ; Q3: preparing for deliveries	Two units sold; deliveries expected in Q2; expanding headset compatibility	Building momentum
IVAS (U.S. Army)	Q4: final development ahead of schedule; novation to Anduril	Expanded recoil kit validation; reliability testing; novation confirmed	Progressing toward potential production
Sales org/process	Q4: refine sales org, improve conversion	Regional model, CRM discipline, marketing ROI, more qualified leads (SHOT/Border Expo)	Execution improvements translating to bookings

Management Commentary

“We started 2025 with improved operational execution and a solid backlog foundation... VirTra is positioned to convert opportunity into growth in the quarters ahead.” — CEO John Givens .
“Our Q1 results reflect a steady shift in the right direction, with strong gross margins, disciplined cost management, and increased clarity on backlog conversion into future revenue... STEP agreements now include full three‑year commitments, converting previously uncertain renewal potential into reliable recurring revenue, with renewal rates expected to continue around 95%.” — CFO Alanna Boudreau .
“Two [V‑XR] units have been sold to date with the first customer deliveries expected in Q2... We also continue to increase the use of our AI tools to accelerate content development...” — CEO John Givens .
“We completed advanced recoil kit validation and began implementing reliability testing protocols as we prepare for potential production. The Army has now officially novated the IVAS contract from Microsoft to Anduril...” — CEO John Givens .

Q&A Highlights

Macro/funding dynamics: agencies varied in budget status; some grants distributed despite shutdowns; leadership transitions slowing approvals, elongating cycles .
V‑XR demand: interest across healthcare, police, fire, military, and private security; de‑escalation/training grants are drivers; some asks await tech maturity .
STEP program structure: moving customers toward 3‑year commitments to align with technology refresh cycles and booking cadence; optional years 4–5 available if funding lags; CFO emphasized greater certainty vs prior “easy out” terms .

Estimates Context

Metric	Q3 2024	Q4 2024	Q1 2025
Revenue Estimate ($USD Millions)	$6.50*	$7.45*	$5.46*
Revenue Actual ($USD Millions)	$7.48	$5.40	$7.16
Revenue Surprise (%)	+15.1%*	-27.4%*	+31.3%*
EPS Estimate ($)	$0.05*	$0.07*	-$0.07*
EPS Actual ($)	$0.05	-$0.08	$0.11
EPS Surprise ($)	$0.00*	-$0.15*	+$0.18*

Note: Values retrieved from S&P Global*.

Q1 2025 showed a material beat on both revenue and EPS; Q4 2024 was a miss; Q3 2024 was an in‑line EPS print with a revenue beat (values from S&P Global and company filings)* .

Key Takeaways for Investors

Margin resilience: 72.6% gross margin on lower revenue underscores mix and cost efficiency; operating income more than doubled YoY to $1.37M .
Demand visibility: Bookings +120% YoY and $21.2M backlog provide a base for 2025 conversion; most capital bookings expected to convert in 2025 with some international deferrals to 2026 .
Recurring revenue confidence rising: STEP terms moved to firm 3‑year commitments; renewal rates tracking ~95% per CFO, supporting multi‑year revenue durability .
Go‑to‑market upgrades: GSA reentry and standardized bundles reduce sales friction; regional sales model and disciplined CRM support improved conversion .
Product catalysts: Early V‑XR sales with Q2 deliveries expected; expanding headset compatibility and certified content library (>120 hours) position VTSI to penetrate adjacent markets (e.g., healthcare, private security) .
Defense optionality: IVAS contract novation to Anduril and successful testing advance VirTra’s position for potential production work, increasing defense sector exposure .
Trading setup: A strong beat after a weak Q4 resets expectations; with backlog, STEP conversion, and channel improvements, estimate revisions likely bias upward near term, albeit timing remains sensitive to federal appropriations and customer delivery schedules (values from S&P Global)* .

Appendix: Additional Q1 2025 Materials

Q1 2025 press release with full tables and Adjusted EBITDA reconciliation .
Q1 2025 call notice and replay info .
Prior quarters: Q4 2024 earnings release (quarterly highlights, full‑year tables) ; Q3 2024 earnings release (quarterly tables) .

VirTra, Inc (VTSI)·Q1 2025 Earnings Summary