Sign in

You're signed outSign in or to get full access.

VI

VirTra, Inc (VTSI)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered year-over-year growth with revenue at $7.0M (+15% YoY) and continued profitability; gross margin was 69% as last year’s unusually high margin normalized due to mix and prior capitalized labor effects .
  • Bookings of $4.6M rose YoY but were lighter sequentially on award timing; backlog remained solid at $18.8M with a balanced mix (Capital $7.1M, Service $5.7M, STEP $6.0M) and STEP renewals around 95% .
  • Management highlighted improving funding signals (DOJ COPS grant reopened June 1–30) and expects order activity to strengthen into late 2025/2026; operational discipline and product quality improvements were emphasized .
  • Estimates context: Revenue beat consensus ($7.0M actual vs $6.34M*) and EPS was in line ($0.02 vs $0.02*); prior quarter (Q1) was a notable beat on both revenue and EPS* .
  • Potential stock reaction catalysts include improving federal grant momentum, clarity on IVAS program transition to Anduril, GSA re-entry to streamline procurement, and growing VXR interest across public safety, academic, and healthcare .

What Went Well and What Went Wrong

What Went Well

  • Year-over-year revenue growth and continued profitability; “VirTra delivered year-over-year growth in both revenue and bookings … continued profitability and a strong cash position.” .
  • STEP recurring revenue renewals remained around 95%, with customers converting to new three-year agreements and several early renewals to access new tech .
  • Operational enhancements improved product quality and durability; “meaningfully improved hardware durability, reliability, and overall performance … allowing us to price competitively without sacrificing performance” .

What Went Wrong

  • Sequential bookings softness (Q2 bookings $4.6M vs $6.4M in Q1) due to timing and customer deferrals; some international deliveries deferred into early 2026 .
  • Gross margin declined YoY (69% vs 91%) as mix normalized and prior-year benefited from capitalized labor and higher service/STEP mix; adjusted EBITDA declined YoY .
  • Federal and international funding delays continued to slow procurement cycles; management noted agencies holding back funding until budget resets, impacting order patterns .

Financial Results

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Millions)$5.4 $7.2 $7.0
Revenue Consensus Mean* ($USD Millions)$7.45*$5.46*$6.34*
Gross Margin (%)69% 73% 69%
Operating Income ($USD Millions)$(0.5) $1.4 $0.9
Net Income ($USD Millions)$(0.9) $1.3 $0.2
Diluted EPS ($)$(0.08) $0.11 $0.02
EPS Consensus Mean* ($)$0.07*$(0.07)*$0.02*
Adjusted EBITDA ($USD Millions)—$1.7 $0.7

Note: Values marked with * retrieved from S&P Global.

Segment breakdown (market mix – Q2 YoY):

MarketQ2 2024Q2 2025
Government Revenue ($USD Millions)$5.3 $5.4
International Revenue ($USD Millions)$0.6 $1.4

KPIs and Operating Metrics:

KPIQ4 2024Q1 2025Q2 2025
Bookings ($USD Millions)$12.2 $6.4 $4.6
Backlog ($USD Millions)$22.0 $21.2 $18.8
Backlog Mix ($USD Millions)Capital $10.6 / Service $6.6 / STEP $4.8 Capital $9.9 / Service $5.8 / STEP $5.5 Capital $7.1 / Service $5.7 / STEP $6.0
Cash & Equivalents ($USD Millions)$18.0 $17.6 $20.7
Working Capital ($USD Millions)—$35.3 $34.1
STEP Renewal Rate≈95% ≈95% ≈95%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY 2025Not provided Not provided; qualitative improvement expected as funding flows improve Maintained (no formal numeric guidance)
Gross MarginFY 2025Not provided Not provided; mix normalized vs 2024 capitalized labor benefit Maintained (no formal numeric guidance)
OpExFY 2025Not provided Continued cost discipline noted; no numeric guidance Maintained (no formal numeric guidance)
Backlog ConversionH2 2025Not provided “Most new capital bookings from 1H expected to convert in 2025; some international deferred to early 2026” New qualitative framing
STEPOngoing5-year legacy terms 3-year commitments, early renewals, ≈95% renewal rate Shifted terms (earlier renewals, higher visibility)

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024 & Q1 2025)Current Period (Q2 2025)Trend
Federal funding/GrantsFunding delays; advocacy with 25+ policymakers; backlog grew to $22M DOJ COPS grant reopened June 1–30; improving funding signals; slower procurement cycles remain Improving but still slow
IVAS programContract novated to Anduril; testing ended early due to “flawless” performance; reliability testing ongoing Position unchanged; headset selection competition ongoing; expect production award to include full kit Constructive clarity; timeline-dependent
VXR platformFirst sale in Canada; price point targets smaller agencies; STEP not applicable Growing pipeline and partner development; traction in public safety, academic, healthcare; content conversion progressing Building momentum
Sales process/GSARe-entry into GSA channel; regional sales model; improved lead capture GSA re-entry expected to impact Q4+; redesigned website “coming weeks” to enhance funnel conversion Execution continues
International marketsContracts in Europe/LatAm; bookings +68% YoY in int’l Q2 international revenue up sharply YoY ($1.4M vs $0.6M); some deliveries deferred to 2026 Strength with timing deferrals
STEP programMoving to 3-year commitments; ~95% renewal Early renewals; ~95% renewal; visibility improved Stable, strengthening

Management Commentary

  • “VirTra delivered year-over-year growth in both revenue and bookings … continued profitability and a strong cash position.” — CEO John Givens .
  • “Our first half results were highlighted by continued strong gross margins and cost discipline. Backlog remains solid at $18.8 million … International markets remain an attractive avenue for growth.” — CFO Alanna Boudreau .
  • “We have made deliberate investments to enhance our manufacturing processes … improved hardware durability, reliability, and overall performance … allowing us to price our systems competitively.” — CEO .
  • “Our updated STEP program … three year commitments and strong 95% renewal trends … transform what was once optional renewal potential into high confidence recurring revenue.” — CFO .
  • “The DOJ COPS grant program reopened on June 1 and closed on June 30 … a positive step that should help unlock some funding later in the year.” — CEO .

Q&A Highlights

  • IVAS positioning unchanged despite headset reconfiguration; VirTra’s recoil kit remains approved and ready for production pending headset competition outcome (Anduril/Meta effort noted) .
  • Integration with Bohemia’s VBS seen as a positive for distribution and compatibility; inquiries from military units leveraging VBS on VirTra systems .
  • VXR traction: strong interest across sectors; headset-based training best suited for certified curriculum/immersion versus weapon use (avoids negative training effects) .
  • STEP renewals: ≈95% renewal rate sustained; some customers renew early to access new tech; conversions between STEP and capital based on funding pathways .
  • Funding cadence: grants reopening driving customer activity; private foundations supporting police departments; international activity rising .

Estimates Context

  • Q2 2025: Revenue $7.0M vs consensus $6.34M* → Beat; EPS $0.02 vs $0.02* → In-line .
  • Q1 2025: Revenue $7.2M vs $5.46M* → Beat; EPS $0.11 vs $(0.07)* → Significant beat .
  • Q4 2024: Revenue $5.4M vs $7.45M* → Miss; EPS $(0.08) vs $0.07* → Miss .
PeriodActual Revenue ($M)Revenue Consensus Mean* ($M)Actual EPS ($)EPS Consensus Mean* ($)Surprise
Q4 2024$5.4 $7.45*$(0.08) $0.07*Miss
Q1 2025$7.2 $5.46*$0.11 $(0.07)*Beat
Q2 2025$7.0 $6.34*$0.02 $0.02*In-line (EPS); Beat (Revenue)

Note: Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Sequential volatility continues due to funding timing, but YoY growth, profitability, and backlog stability indicate resilient fundamentals .
  • Federal grants reopening (DOJ COPS) and advocacy efforts are improving demand visibility; order flow likely to strengthen into late 2025/2026 .
  • STEP’s shift to 3-year commitments and ≈95% renewal rate enhances revenue visibility and customer retention; multiple early renewals underscore product/tech pull .
  • IVAS transition to Anduril clarifies program governance; VirTra’s recoil kit is production-ready pending headset downselect—potential upside if the full kit progresses to production .
  • International demand is a bright spot (Q2 YoY revenue +$0.8M), though some deliveries shift into 2026; maintain balanced expectations on timing .
  • Product quality and manufacturing improvements support competitive pricing without sacrificing reliability—key to winning/retaining agencies .
  • Operational discipline preserved strong gross margins alongside cost control; cash increased to $20.7M with working capital at $34.1M, supporting execution through funding cycles .

Additional references:

  • Q2 earnings press release with detailed financial statements .
  • Q2 earnings call transcript (prepared remarks and Q&A) .
  • 8-K furnishing Q2 results (Item 2.02) .
  • Q1 2025 and Q4 2024 earnings calls for trend analysis .
  • Q2 conference call scheduling press release .